5 STRATEGIES YOU CAN FOLLOW WHILE TRADING IN CRYPTO.

in LeoFinancelast year (edited)

BTCUSDT_2021-10-22_08-30-56.png
( chart of Bitcoin)

Cryptocurrency trading is frowned upon due to its tremendous volatility. In comparison to a typical stock market, however, cryptocurrency trading is neither complex nor risky. Trading cryptocurrencies can yield consistent returns if you have adequate trading methods in place and a deeper understanding of the market.

When it comes to trading techniques, some traders prefer to build little profits over time, while others want to lock their assets for a long time in the hopes of making large profits. Understanding the cryptocurrency market and learning to read crypto charts are essential skills for any trader. In this article, we'll go over the various cryptocurrency trading styles in depth. Let's get this party started:

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( CHART OF ETH)

1.Cryptocurrency trading on a long-term basis -

You retain your asset for months in this trading method. Long-term crypto traders are unaffected by the noise around crypto pricing, and they hold their positions for extended periods of time because they expect massive gains in the future.

2.Cryptocurrency trading on a short-term basis -

Buying and selling cryptocurrencies in shorter timeframes is referred to as short-term crypto trading. Traders who use this approach do not lose a lot of money if the market goes down. At the same time, as long-term traders, they miss out on the crypto asset's long-term growth.

These two trading tactics are further subdivided into a number of other trading styles. We'll talk about it in the next part.

5 TYPES OF TRADING STYLES

HODLING

'Hold On For Dear Life (HODL)' is a passive trading strategy in which investors purchase an asset and hold it for months, regardless of market swings. Traders that use this method expect a large price gain in the long run, so they secure their original investment and profit once the asset's price reaches a major high. HODL investors, to put it another way, believe in 'cashing out large.'

HODLing does not necessitate daily crypto chart watching; merely once in a while is sufficient. Furthermore, fundamental analysis is heavily used by HODL investors. This entails determining an asset's intrinsic value and examining the elements that may influence its price in the future, such as market trends, the crypto project's team, reputation, and market capitalization, to mention a few.

This strategy's timing is quite erratic, as it is determined by the amount of profit you anticipate. However, you should not be overly greedy and collect winnings at the appropriate times. At the same time, do not be alarmed by negative patterns.

SCALPING

Scalping is amongst the most used day algorithmic trading. You sell a cryptocurrency asset for a modest profit in a matter of minutes before the price plummets. Scalping is a strategy for increasing tiny profits rather than placing a large wager.

As nothing more than a result, this trading technique avoids taking advantage of large moves or downtrends. Instead, it forces you to repeatedly gamble on minor fluctuations. You can do this by taking advantage of market inefficiencies like bid-ask spreads (the difference between the lowest asking and highest bid price), liquidity gaps, and so on. When scalping, however, you should keep in mind the exchange trading expenses. If the trading fee is excessively expensive, you will barely break even.

Scalping is additionally more profitable in higher-liquid markets since they're more predictable, allowing you to complete your positions more smoothly. Scalping is additionally not recommended for newcomers because it necessitates an intensive understanding of the market and price action. Furthermore, it necessitates spending longer online reading the market so as to exploit even the tiniest changes.

DAY TRADING

The cryptocurrency market, unlike traditional stock markets, does not have an opening or closing time. Cryptocurrency markets are open 24 hours a day, 7 days a week.

So, what exactly is cryptocurrency day trading?

Cryptocurrency day trading takes place during the busiest hours of the day. This is a short-term trading strategy in which trades are closed in 30 minutes to a few hours (no overnight positions). Day trading, as opposed to scalping, allows you to take more time to close your position.

Nonetheless, the cryptocurrency world is a very volatile place. At any time of day, prices might go in your favour or against you. As a result, you'll have to spend more time day trading. You can use stop loss and take profit limits on your orders to reduce the risk of day trading.

SWING TRADING

Cryptocurrency prices, according to many in the industry, rise and fall in a zigzag pattern. Swing trading is all about spotting that trend and taking advantage of it to make money. It's a short-term strategy in which the position is held for a few days or weeks.

Swing trading for long positions is taking a position at the bottom, riding the wave to the top, and closing the position while profiting. This logic is flipped in short positions.

Swing trading is a strategy that is used for a brief period of time. The position is held for a period of days to weeks in this trading method. If you've recognised a pattern by evaluating the support and resistance levels, you shouldn't be concerned about sudden fluctuations when swing trading. To do so, you'll need to apply a combination of technical indicators and fundamental analysis.

Swing trading is a good place to start if you're new to crypto trading because it offers you more time to determine your trading positions than day trading or scalping, which requires you to make judgments in the blink of an eye.

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POSITION TRADING

When it comes to position trading, you must have faith in your digital holdings. You should not, however, become blind-eyed. Indulge yourself in a thorough examination of the crypto-asset in question; examine the basics, read expert viewpoints, learn about the team behind the project, and so on. Open your trade after you have confidence in the crypto project, and then sit back and relax until it's time to collect profits.

If you've done your homework, you shouldn't be impacted by so-called popular opinion as a position trader. Position traders who believed in bitcoin despite the recession's noise made a fortune because they believed in the currency's future.

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@coininstant correct bro HODL is best to use currently