Get the weekly summary of crypto market analysis, news, and forecasts! This Week’s Summary The crypto market ends the week at a total market capitalization of $1,09 trillion. Bitcoin is up by over 2% to reach around $27,200. Ethereum increased by nearly 6% to close to $1,700. XRP gained almost 2% in value during a highly volatile week. Almost all altcoins are trading in the green, with virtually no exceptions. The DeFi sector maintains the total value of protocols (TVL)…
Several styles of cryptocurrency trading can be distinguished through the time frames within which single trades take place. For instance, you can trade daily to collect smaller profits over time or use a long-term market movement to enter positions instead of holding.
The specific trading style to select will depend on your personality, how you like to trade, your lifestyle, the time you can spend on trading, and your goals. That said, different trading styles have certain advantages over others.
There are several proven approaches available by which you can potentially profit from cryptocurrency trading. Here is a look at 4 top crypto trading strategies you can use today.
This type of trading is highly active and aims to take profits out of the minor intraday price movements, but many of them. In other words, you are targeting making smaller profits by making many trades, and it is a good tactic if trading fees are low or the spread is small.
If you have a high percentage of trades making profits, you will be successful, but this is essential because you need to target more significant moves with high yields at once. While the price of cryptocurrencies can go up and down within no time, you only need a good entry (buying) and selling position.
In scalping, you can start with a goal, say to generate 1% 2 to 5 times a day, and in most cases, volatility should work your way, considering most digital coins. Even if you were trading Bitcoin during its worst times, a 15 to 30-minute duration is enough to make consistent profits in day trading.
This type of trading is more suitable for those who fancy quick strategies and outputs and prefer to react more impulsively than analyze the markets and those with ample time to trade and a stable and fast internet connection. Trades usually end in seconds to minutes, making this an excellent strategy for gaining trading experience.
Scalping generally will not be a good strategy if you are quickly distracted, prefer to analyze than react, do not want to take many risks, and do not like to work under pressure.
2. Day Trading
Day trading is a short-term strategy consisting of opening a few positions at the beginning and closing them at the end. This way, there is a more excellent range of activities and a quieter operation period, controlling the risks of leaving a trade open for a few days and suffering a change of trends by an unexpected event.
Since day trading decisions are made between 30 minutes to a few hours, it is ideal for hands-on traders and constantly searching the markets, not as impulsive as those involved in scalping. Therefore, day trading is a good idea, especially if the trader decides to live out of their crypto trades fully.
In other words, day trading is suited for a full-time trader, with minimal distractions because cryptocurrency prices fluctuate quickly, values can go to good points at any time, and you must apply a hands-on approach. Furthermore, trading with limits on the cryptocurrency exchange is better to minimize risks in day trading.
Day trading is also suitable for people that want the satisfaction of monitoring their investment and growing it at the end of each day, people that have the time to dedicate to it, and those that can keep their eyes out for market trends.
3. Swing Trading
This is the most common type of trading in the crypto market. Usually, because of altcoins’ significant volatility, traders buy a digital coin and then change it to USD, BTC, or ETH to buy another altcoin and keep up their wave of revenue from this swap action.
For a swing trader, several indicators are super important to consider. Most use candles from 12 hours onwards with other essential indicators and technical analyses such as Fibonacci Regressions, Gann forks, Bollinger, and exponential moving averages (EMAs), also being of great importance. Volume movement and capitalization are also considered because this kind of trader looks at the bigger picture.
Swing trading is recommended if you have a Forex background, have some knowledge of statistics, and enjoy the technical analysis. It’s also ideal if you wait to acquire profits immediately and are a patient and calculating person, have a wide margin of Stop-Loss and Take-Profit, and are risk-averse.
But like many other cryptocurrency trading tactics, it may only work if you are impulsive, like technical analyses, or are relaxed about leaving open trades without controlling what happens when you sleep.
4. Position Trading
Position trading consists of opening positions and leaving them for several weeks to years, and it can thus be considered a long-term trade, like buy and hold. Sometimes, position trading is used synonymously with a holding trading style.
Long-term investors are willing to take a significant amount of risk in favor of the possibility of making a considerable amount of profit. An in-depth study is often necessary to know each move’s reliability, so traders must continuously apply fundamental analysis studies.
Position traders are the ones who ask questions and access the coin’s prospects in the market. This style can be suited for any investor who can maintain a position despite the different opinions that the market may spread circumstantially.
Moreover, the strategy typically fits in with traders who do not expect profits based on market behavior but on the aspects that influence the market. On the other hand, it could be better for people who plan to live out of crypto trading and is even considered more as an investment than a trade.
Trading crypto can be more manageable and risky than many investors unfamiliar with the sector perceive it. Even though every kind of trading activity carries a certain degree of risk, crypto traders can minimize the risks if they stick to the trading right.
There are four types of cryptocurrency traders based on the time between an operation’s opening and closing. Of course, you can combine two or more strategies, but knowing how to distinguish them and their differences are essential.
Crypto trading involves reading cryptocurrency market charts, understanding them, considering the amount of time at your disposal, and working with the different types of orders on crypto exchanges. Therefore, you must understand the market well and know yourself to succeed in cryptocurrency trading.