Dogecoin Trading For Beginners: Basics, Types, And Strategies

Dogecoin was intended as a memecoin, but over time it has become a popular cryptocurrency for making payments. Moreover, it is also used for trading purposes as it has high transaction speed and low fees. In this article, we learn in detail the features of DOGE coin trading, including its primary strategies and types. You will also find out how to trade this coin successfully.

What Is DOGE Trading And How Does It Work?

Trading Dogecoin is the process of buying and selling the coin at various moments of time. It assumes active market monitoring because DOGE's price fluctuations can be profitable. When a trader purchases coins at a low cost and sells them more expensively when their value increases, he makes money.

Dogecoin trading occurs on cryptocurrency exchanges seven days a week, including weekends and holidays. Investors use a variety of orders to enter transactions, including market and limited ones. Market types presume that assets are bought or sold at the going rate, whereas limit orders are executed at a fixed price. The Dogecoin market circumstances are carefully examined by traders to ascertain whether it is the optimal time to make a deal.

Dogecoin Trading Strategies

The approaches by which coin holders buy and sell DOGE are called trading strategies. They can be used in a variety of market scenarios and traders’ preferences. Day trading, dollar-cost averaging (DCA), swing trading, HODLing, and breakout trading are the main of them. Below, we talk about each of the strategies in detail.

Day Trading

The key component of day trading is buying and selling Dogecoin on the same day. The strategy is centered on getting the profit on rapid price fluctuations and lowering the risks associated with the sharp swings that happen at night. Day trading requires continuous market observation, so investors forecast using charts and indicators (such as the RSI).

Swing Trading

Swing trading is the practice of holding Dogecoin for a few days or even weeks. These intermediate-term price swings are more profitable for crypto owners because they are greater than the daily ones. For investors who wish to profit from DOGE price changes but lack the time to often watch the market, this technique is ideal.

HODLing

HODLing refers to holding Dogecoin for a period of time greater than a few weeks. Since the emphasis here is on long-term profits rather than daily or weekly price changes, it is not about active trading. The strategy is predicated on the notion that as the network grows, Dogecoin's value will increase.

Dollar-Cost Averaging (DCA)

Regardless of the market price, the dollar-cost averaging approach means investing a specific amount of money in Dogecoin. As an example, you may invest $2 in DOGE each month. By doing it, you can average the coin value and avoid volatility. Using this approach, you purchase more coins at a lower price and fewer when it is higher. For traders who want to profit from DOGE changes without having to worry about market volatility, DCA is the best option.

Breakout Trading

It is a good decision to use a breakout trading method when Dogecoin's price crosses both the resistance (highest cost) and support (lowest cost) levels. When the coin's price breaks out of the range it has been trading in, such a scenario occurs. For instance, during the course of many weeks, the cost of DOGE may fluctuate between $2 and $5. Traders might profit from the erratic price by trading Dogecoin during this time.

Dogecoin Trading Types

Dogecoin trading types, in contrast to strategies, concentrate on the methods of buying or selling the coin. For example, while some traders consider DOGE a long-term investment, others would like to make a rapid profit. Let's study the types closer.

Spot Trading

Spot trading allows for the quick purchase and sale of Dogecoin at market value. It is also known as short-term trading. You directly purchase DOGE, and receive coins as soon as the transaction concludes. You are then free to do with your assets anything you like, for example, holding, selling, or withdrawing. This possibility is available on such crypto exchanges as Binance and Coinbase.

Margin/Leverage Trading

Leverage is an option when trading on margin. In order to utilize Dogecoin for transactions, you are borrowing money from the exchange. This way, you can manage more DOGE with a smaller initial investment.

For instance, if Dogecoin costs $3 and you only have $1, you may use five times your leverage to buy $5 worth of the coin. Because of the 5x leverage, even a 4% increase in the DOGE's market price would result in a 20% return on your initial investment; but in case the price falls, you will have to liquidate and encounter the risk of losing your money. Due to these challenges, only traders who are capable of assessing risk usually decide to trade with the margin type. They operate it on exchanges such as Bybit and Binance.

Futures Trading

The type of futures trading is the process by which investors enter into a contract obligated to buy or sell DOGE at a specific price on a prearranged future date. If the trader pays the agreed-upon sum and the coin market value on the designated day is higher than it was earlier, the transaction will be lucrative. On the other side, something will be lost if Dogecoin's price drops. Futures traders ought to be aware of market trends to have good results. The method is available on Binance, FTX, and Bybit exchanges.

Options Trading

Trading Dogecoin with options is similar to trading futures in that both involve a set future date for purchase or sale. But options, unlike futures, enable traders to finish a transaction before the designated date. For instance, if the trader believes that the value of DOGE will increase or decrease, he utilizes an option. MEXC and OKX are two exchanges that allow options trading.

Short Selling

If Dogecoin's price increases, short sales could be advantageous. A broker, or crypto exchange, lends DOGE to the trader, who subsequently sells it for market value. The broker purchases the coins at a reduced price and keeps the difference as profit after receiving the borrowed coins back. However, short selling has a risk; losses could be a result of a sudden increase in price. You can utilize Bybit or Binance exchanges to try this kind of trading.

Arbitrage

When referring to Dogecoin trading, arbitrage is about profiting on variations in coin prices across several exchanges. Traders purchase DOGE at a lower value on one platform and sell it at a higher cost on another. Though there is no danger involved, it is worth it to act quickly because price differences disappear immediately. If you want to give this trading option a try, use exchanges like Cryptomus or Kraken that have user-friendly interfaces.

Automated Trading (Bots)

Dogecoin trading bots employ software that enables transactions to be carried out automatically in response to preset strategies and market conditions. Because these bots are constantly monitoring market data, their decision-making process is quicker and more precise than the manual approach. You must be tech-savvy and make wise choices if you want to apply the strategy efficiently. Cryptohopper and Pionex are two services that offer these automated bots.

How To Start Trading Dogecoin?

Let's now take a closer look into Dogecoin trading on crypto exchanges. The steps will be the same regardless of the type and strategy used because the procedure is identical on all platforms. The full algorithm looks like follows:

• Step 1: Select a trading type and strategy. Choose the method and trading approach that best fit your needs while trading Dogecoin. You can select them from the options listed above.

• Step 2: Choose a crypto exchange. Select the platform to work with Dogecoin. Consider whether you could apply the chosen tactic there. The exchange should have a wide range of functionalities and offer robust security features. For instance, the Cryptomus P2P exchange assumes 2FA and AML to protect user funds and data, so traders can operate there with peace of mind. Examine the website's security policy and users’ feedback to ensure the platform is trustworthy.

• Step 3: Create an account. Enter your name and email address to register on the selected platform. After that, pass the KYC procedure by providing your driver's license or passport information and taking selfies to verify your identification.

• Step 4: Fund your account. Make a deposit into your exchange wallet using cash or cryptocurrency. For this reason, certain exchanges offer an opportunity to connect credit or debit cards.

• Step 5: Enter your trading pair. Verify that the quantity of money you wish to buy in Dogecoin is the same as the amount you placed on the exchange. If you deposited dollars, your trading pair will appear as "USD/DOGE," and if you placed Litecoins, it will appear as "LTC/DOGE."

• Step 6: Make a deal. Proceed with the transaction based on the selected approach; visit the appropriate page, provide the necessary information (such as a market or limit order), and validate your input. After that, you'll be able to keep an eye on and oversee your trade.

Tips To Trade DOGE And Make The Most Profit

It is advised to trade Dogecoin carefully in order to reduce losses and maximize gains. We have compiled the following suggestions in relation to it.

• Work on a reliable crypto exchange. Transactions involving cryptocurrencies are usually about large sums of money; thus, trade on a platform where you can be certain that your DOGE is secure. Consider the coins’ value on the exchange and the amount of commissions, as these can have an impact on your final earnings.

• Watch the market. To stay informed about changes in the cryptocurrency space, read the news about Dogecoin and the market as a whole. To predict the potential movements of DOGE's price, consider all the updates.

• Use technical analysis. Acquire knowledge in interpreting Dogecoin price graphs and technical indicators. It could assist you in forecasting market trends.

• Control the risks. Sometimes significant price drops can occur, so make sure you only deal with money you can afford to lose. To protect your assets against market volatility, make every effort to spend as little borrowed money as possible.

To guarantee safe and effective transactions, try to follow these guidelines when trading Dogecoin. It's essential to remember that the crypto market can be unpredictable, especially as it expands. This way, the Dogecoin trading types and techniques you employ in your trading processes will undoubtedly result in profits for you.

We hope that this article was helpful to you, and you now know how to trade Dogecoin successfully and efficiently. Have you ever traded cryptocurrency before? Post a comment to share!