Strategies for High-Frequency Crypto Trading There are several time-tested strategies you can use in high-frequency crypto trading:
Arbitrage in Crypto: This is super fun, and all you have to take into account is the slight difference in the same crypto’s prices across different platforms. So basically you buy a crypto (say Bitcoin) from an exchange where it is priced at $53,865, and sell it on an exchange where it is valued at say $54,506. One such trade may seem trivial, but imagine hundreds of similar trades executed in seconds. Cool and devious, isn’t it?
Scalping: Another strategy that benefits from small price changes in a day. Basically you buy and sell the same asset throughout the day, hoping to earn small profits as the price increases even by a minuscule amount. Again, the small water droplets add up to make an ocean. Well, at least a lake.
Market Making in Crypto: This is again all about capturing small price shifts. You supply exchanges with crypto you own, so others have an easier time trading their own assets. This HFT crypto strategy allows you to profit from the difference between the ‘bid price’ or the price a buyer pays for a crypto, and the ‘ask price’ or the lowest price a seller is willing to give. You can place multiple limit orders on both buy and sell sides to earn from the aforementioned price difference.
Momentum Trading: This one is easy too, basically the HFT crypto algorithms track the current market sentiment and go with the flow to earn profits, and hone in on sharp up or downward movements.