The cryptocurrency market is very similar to the typical financial markets like securities, commodities, etc. One of the most prominent features of crypto is its extreme volatility. Some people might find high volatility to be of extreme use. On the contrary, some people might experience great losses. The difference between these groups does not occur because of luck, a trader that makes a profit has well thought out strategy by making observations and researched guesses. Whereas, an unsuccessful trader is who makes decisions based on emotions and whatever is being said by the market news.
This article will discuss a few strategies that have been tried and tested. These are based on price movements and market trends. Each of these strategies is suited to a specific trader who can make use of this to earn profit from their investments.
Below, we have listed down all the strategies that show that if used properly can yield good results.
General Types of Crypto Trading Strategies
The number of activities that a trader wants to carry out determines which strategy needs to be carried out. There are typically two types of strategies.
- Active trading strategies
- Passive trading strategies
Active Trading Strategies
Few strategies that fall under active trading strategies are mentioned below:
Scalping Crypto Trading Strategy
One of the fastest types of crypto strategy used by traders is scalping. The traders that utilize this strategy are called scalers. They try to yield as much profit as they can from the smallest moves. These traders do not even attempt to earn a lot of profit through long-term investments. Their entire profit is through the help of small profits. They are not the ones who would prefer to hold their cryptocurrencies for a longer duration of time.
Day trading is defined as a crypto trading strategy where the user does the buying and selling of an asset all in one day. They purchase a specific asset one day and then after waiting for its price movement, proceed to sell it all in one day. Referencing its name, the main objective of day trading is to exploit changes in the price of an asset during the day. This is rooted in the common trading markets where trading only took place during specific hours. This can become an easier task with the Bitcoin Fortress App that helps in analyzing the market and guides in making educated decisions.
Swing trading is a strategy that works by holding the positions for a longer period as opposed to day trading, but this period does not exceed a week or a month at most. On a price chart of an asset, a few waves can be noticed that are constantly going high or low. These up and down waves indicate crypto’s volatile nature. It usually takes a couple of days for the price chart to finish. The strategy that swing traders play is that they attempt to benefit from the high volatility with the help of technical and fundamental analysis to create their trading plans. This trading strategy is relatively easier for beginners to carry out successfully.
Trend trading, which is also referred to as position trading, can be described as a strategy that benefits from the directional trends. The trend is a term that is generally used to describe the change in the value of an asset in weeks or a few months. Such traders wait for an uptrend to occur and buy an asset during that time, they then plan to sell the asset when its value goes in the downtrend.
Passive Crypto Trading Strategies
There are a few strategies that fall under passive crypto strategies.
HODLing or Buy And Hold
A very common strategy. In this, the asset is bought in the initial stages where its value is relatively cheaper and easier to buy. They then hold it and wait for it to increase in value despite market changes.
This is a type of trading strategy that needs little to no attention to price changes and the news. This method was first started by stock markets to check the performance of high-class assets.
Nowadays, numerous platforms allow a beginner-level trader to copy and follow an experienced trader’s trading plan. Such strategies help an amateur to earn profitable gains by simply going off already made trading plans.
All of these strategies have their own pros and cons. However, it is advisable for a trader to structure a plan and set a goal before choosing a well-suited trading strategy to support their cause.