Creating a Cryptocurrency Trading Plan for 2023
The cryptocurrency market continues to be an exciting prospect for Indian and international traders. With market volatility, 24/7 trading, the flexibility of positions, and more, there are many ways to capitalize on these assets. This is why revenue in the Indian cryptocurrencies market is projected to reach $222.7 million (₹18.2 billion) this year. However, like trading in any other market, diving into it without a plan is unwise.
Many factors can shift the crypto landscape and its prices; even something as seemingly minuscule as Elon Musk’s logo change on Twitter can move the market. This is why a proper plan, even among experienced traders, needs to account for current affairs in crypto that can help you navigate trends, price movements, risks, trading hours, and more to ensure you consistently get good results. As such, here’s how to create a cryptocurrency trading plan for 2023:
Plan with factors outside the market in mind
While keeping an eye on the market is important when trading crypto and creating a trading plan, you shouldn’t ignore the other factors and events going on that can affect trading and the market. For instance, India’s recent move to apply the anti-money laundering law policies to the cryptocurrency sector is something to consider when coming up with your crypto trading plan. Even if you’re not doing anything malicious with your crypto, you should be aware that your account can come under scrutiny if any suspicious activity is found.
Keeping tabs on other local updates, as well as news from abroad, can help you determine when to trade based on market-moving events. Planning with taxes in mind also helps you cover more bases; don’t just focus on the price of a coin or making a profit, but remember the tax payable on the income from crypto trading. Being aware of these aspects that may not be directly related to the act of trading, but can influence your trades, makes your crypto trading plan more thorough.
Find the right timing
Crypto traders must look for the right hours to execute their trades, identifying times with maximum liquidity. Times with high trading volume usually have more liquidity due to the increased “action” in the market. However, it has been especially apparent in 2023 that trading during busy hours usually leads to you paying higher or lower transaction fees (Ethereum gas fees). Most traders also avoid trading crypto on weekends due to lower trading volume and banks being closed. Crashes are also more likely to happen during this period.
It’s also crucial to note that, unlike other assets, crypto trading is available 24/7 — except for a few cryptocurrency pairs, including BTCAUD, BTCXAG, and BTCKRW, which have trading breaks. Choosing a broker that keeps their servers maintained regularly is also essential, now more than ever, especially since India’s crypto scene remains in flux.
Global brokerage Exness undergoes server maintenance to enhance the platforms’ performance and traders’ experience. Users are informed of this to prepare for interruptions so they can return to trading once the servers are up again. Knowing about trading volume, trading fees, trading breaks, and server maintenance times can help you work out a schedule. Depending on your strategy and other factors, you can trade during high trading volume hours or take the risk to capitalize on weekend volatility.
Diversify your portfolio
The crypto market has been experiencing rough patches this year, shifting from a broader sentiment of “positive” to “neutral.” Though it seems the market may be seeing some recovery, investors may still expect some losses. It can be tempting to put your money into a coin if you’ve earned a lot of gains from it, but you can trade or invest in other tokens to help you gain a steady amount of profit while cushioning you from losses.
2023 is a good year to plan to diversify your portfolio if you haven’t already. Spreading out your assets can help you minimize the impact of a potential downturn in any specific crypto. In this year’s crypto plan, you can list down some coins outside of your usual tokens to trade or invest in.
Don’t focus solely on the big names in the market, but you can look into newer or anticipated coins to help diversify your portfolio. Meme coins like Big Eyes or tokens like Cosmos can help provide you with some balance if you’ve invested in bigger players; their potential can bring much value to your portfolio. Keep monitoring the market to spot potential assets to trade, and if you’ve found some that interest you, add them to your plan.
