Active Trading Strategies For Crypto Traders
Here are some trading strategies that crypto traders can utilize to have effective results.
By Anna B Kiwanuka
A trading strategy is a method or technique designed to help a trader make a profit from buying and selling crypto assets.
Cryptocurrency trading involves speculating on price movement and the strategy one chooses reflects the results they achieve. Trading cryptocurrency comes with several trading strategies and over the years a few have been implemented to suit the trader’s need, risk, and tolerance level.
For a new trader, it is important to properly determine and outline, your aim of trading, your risk tolerance, and basically, your trading personality. This, however, does not mean that you have to stick only to one trading strategy. The important thing is to understand whatever strategy you want to use and how it helps you meet your trading goals.
Below, we explain some of the trading strategies that crypto traders can utilize to have effective results.
- Position Trading
Position trading is a long-term trading strategy. It requires traders to purchase assets and hold them for long periods (a month, 6 months, or more). The goal is to make profits by selling those assets when the price goes high in the future.
A position trader is concerned with trends and reversal of asset trends. The position trade is the simplest form of trading and ideal for beginners, but it also takes a lot of discipline.
A perfect example of a position trade is to enter the Bitcoin market at $30000 and take a position at $37000 not regarding the price fluctuations in between, whether it rises or falls. The position trader endures the bear and bullish runs of his asset.
- Scalping Trading
Scalping is a trading strategy that involves making a series of fast trades in a short period of time. The purpose of this trading strategy is to produce consistent gains over a short period of time.
A scalper trader tries to profit on price volatility in cryptocurrency assets. The trader frequently joins and departs positions in a matter of minutes (or even seconds). In most cases, a scalper uses technical analysis to predict price moves and then executes a transaction.
Scalpers frequently receive a small percentage of profits due to the short time frames of the scalping type of trading. However, because scalping is all about numbers, even if the gains are minor, they act as turnover at the end of the trade.
- Day Trading
Day trading is a strategy for executing trades by entering the market and exiting the market on the same day.
A trader in day trading conducts his trade using technical analysis to select his trading asset. Because profits in such short periods can be slim, day traders sometimes trade multiple markets or asset classes. Stop losses and scaling in and out of positions are still used, but you’re seeking a little more profit per trade than a scalper.
A day trading strategy, like any other trading method, has risks, and good risk management is necessary.
As always, it is always important to Do Your Own Research and educate yourself before adopting any style of trading or implementing a trading strategy.