Knowledge base

How to Create/Choose a Trading Strategy?

If you enter the phrase "trading strategy" into a search engine, you will be shocked by the number of results you get. Currently, there are millions of tactics in the market. This leaves traders with the daunting task of finding a truly effective trading algorithm that can help grow their capital.

3 steps to choosing a successful strategy

1) Match the strategy to your level of expertise.

For novice cryptocurrency traders, we recommend considering strategies that involve trading with minimal or balanced risk levels. These include any trend-following tactics. Starting with an aggressive strategy (such as scalping or long-term trading with a large deposit) poses a significant risk for beginners. Such trading methods require a good understanding of technical and fundamental market analysis and are recommended exclusively for professionals.

2) Ensure the strategy fits your trading style's timeframes.

If you are very busy and unsure if you can dedicate a lot of time to trading, it is not worth attempting a strategy that requires constant chart monitoring. For example, swing trading, where price bars are typically checked every half hour or hour, won't suit you. But an ideal option could be position trading, where you only need to review charts at the end of the day.

3) Choose a strategy that aligns with your temperament.

Success in trading depends largely on the psychological aspect, so it is crucial to select a strategy that doesn't contradict your personality type. Cholerics, for instance, are recommended to choose short-term tactics with a moderate risk profile. Intraday trading is also a great fit for sanguines. Melancholics are better off focusing on long-term investments. Phlegmatics are the luckiest in this regard as they can adapt to any trading system.

Creating Your Own Strategy

Sometimes, a trader may not find the perfect strategy and decides to create their own methodology. In very rare cases, a tactic is developed from scratch. More often, it is "written" based on an existing system by adding some modifications. Regardless of whether you create a strategy yourself or choose a ready-made one, you must remember: you should always test any tactic before using it on a real account.