How can you minimize risks and trade crypto safely? You can by learning about different styles of crypto trading.
Crypto trading is on the buzz since the whole world is in lockdown, and traditional investors are selling their stocks and holdings. We are certain to see a surge in new enthusiasts who would leverage the high return associated with crypto markets. There are ’n’ number of trading styles or rather trading strategies used by traders and investors around the world. A trading style is a function of mindset and perception, hence there are infinite trading styles out there in the market. So to start with, here are a few crypto trading styles that can help you start your journey on the crypto road to profits.
HODLing– Long-term crypto trading
HODLing isn’t really a type of trading, instead, it is a long term holding strategy to capitalize on a certain asset’s price appreciation over a period of months or years.
It doesn’t require constant gluing to the markets at all times. HODL is the most used word in the crypto domain due to its mass practice by beginners and institutional investors. One can simply buy some cryptocurrencies and let them sit in their wallets until it reaches a favorable price. HODLers need to remember they don’t have to panic if they see a sudden price decline in the value of the coins. You have to let them sit for a course of months to be able to leverage their profits.
This is how 90% of the present traders stepped into the cryptocurrency space and it is highly advisable to start HODLing if you’re new to the digital assets economy. This strategy usually works best for the projects which have a strong fundamental value and sustainable products.
Users can find TradeDOG’s research reports present on our website to find worthwhile investment in HODLing digital assets that are likely to pay off your investment with great returns.
You won’t have to read longer charts, keep doing technical analysis or sit ducks while watching the price action and market trends being reversed over and over again. Most enthusiasts start their journey with HODLing and slowly inculcate crypto trading to their portfolio in order to make quicker and increased gains.
Scalping- very short term crypto trading
Scalping suits those who are after marginal profits over a short period of time rather than the long term which has risks. The most important thing while scalping is to be laser focused and be very sharp in reflexes to respond in an instant. One can practice it with lower amounts and then increase their orders to a higher price gradually. You have to monitor the growing trading volume, focus on your stop-loss, and escalate your investment with small gains.
When done effectively, you can go on making bigger gains and as high as 10–100 trades in a single day since scalping is short-lived. You just need to focus on the growing market volume and price, and you can set your stop-loss and start making intermittent profits along the way. You can thus make substantial profits with trade lives of 1–5 minutes leveraging price highs and selling them before the dip.
It is important for the user to understand that scalping is more of a probability calculation because short term price movement does not hold much correlation with the project’s underlying value.
You can take advantage of reading the trade charts by zooming out as per 1 minute and 30-minute charts. This will help you learn how many times in a single timeframe the trend reverse, which is also a great indicator for determining when you should exit the trade.
You can learn when a trend was bullish and when it turned bearish; candlesticks will be the perfect tool for identifying this. Using charts for specific timeframes will surely yield great results and make you more of a pragmatic crypto trader rather than a whimsical one. Once the price breaks below the neckline, you can manually place a buy/sell stop order/ and wait until you can exit the same trade to profit from it.
Day Trading– Short-term crypto trading
Day trading is much faster when it comes to execution and profiting. Day trading is performed when the crypto markets are most active and requires constant monitoring of market trends and TA (Technical Analysis). Day traders are known to make a living out of this strategy, and it has proven an ideal trading method for people looking to invest most of their time in return for potential profits.
Crypto traders use Day trading as a hobby and as a full-time trader, they are ready to leverage any potential changes in market prices and changes. To day-trade cryptocurrencies, you should have keen sight in reading trends and price movements, and when mastered, there’s no limit to how much profits you can make on a daily basis. It requires strong will, determination, and trading intellect.
As easy as it may sound, it isn’t necessary that you will take advantage of a bull run every time. Crypto day trading carries more risks than rewards for beginners and we advise trading with smaller amounts in order to minimize risks involved. Also, day trading involves frequent chart analysis, hence more screen time.
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Range Trading- Short term crypto trading
Since crypto markets are highly volatile and don’t stay in a certain trend for long, Range trading can carry some opportunities when a market is not displaying a clear trend in any one direction.
Traders go both long and short depending on the price positions within that range. Cryptocurrencies will always have a range in which they are trading, and the markets go through consistent high and low prices for a period of time. Each trading range here has a support price in which traders purchase an asset and a resistance price at which they sell it.
Traders use many indicators, such as volume and price action, to enter or exit a range and using stop loss traders can mitigate risks but also take advantage of resistance and support levels. Using indicators such as RSI can be utilised to confirm the overbought and oversold conditions that often accompany price movements at the top and bottom of a trading range.
Swing Trading- Long Term crypto trading
Swing trading is more of an advanced way to trade cryptocurrencies. Swing traders are more composed, patient and take calculated decisions pertaining to choosing a trade. They do their prior due-diligence in understanding the market fluctuations and zero in on specific moments and parameter trades to increase their chances of making it a profitable trade.
In swing trading, traders hold their positions for a longer period of time as opposed to day trading. When swing trading, traders make an opening and leave it for a long period of time during which the trader just watches the markets until he sees a perfect exit moment.
Day traders are highly skilled at crypto trading and can smell where they will find profits and where they won’t. This saves them both time and money and can control their sentiments to make profitable trades. Swing traders are better with market analysis and are less likely to fall to any FOMO news or dishonest manipulation.
Position Trading– Long term crypto trading
Positioning is another form of long term trading wherein the traders do not necessarily have to monitor the markets at all times. As opposed to the day traders, position traders do not take it as a livelihood and can be doing almost anything throughout their trading. These traders are more likely to have a critical outlook on cryptocurrencies and are cautious where they are investing.
They might not be associated with trading in the past or have less to no experience and since position trading is a shorter version of HODLing, traders certainly make some good profits overtime.
No market monitoring, reading charts, performing TA is required when position trading. Traders choose to leave their bought assets idle and wait for the perfect market trend where they may sell it to get a hefty profit. This strategy can however take months to years as per the traders needs. A skilled position trader sits through volatile ups and downs, bears and bulls, FOMO, Hype and does not flinch at any news whatsoever and keeps his target at the foremost importance.
Once you get efficient in most of the aforementioned trading techniques, you can couple them with the technical analysis ‘TA’ of charts and market sentiments to become even more productive and errorless while trading. In the next article, we will introduce you to TA, charts, and tools to use while trading crypto.
That’s one of the major reasons that Tradedog provides Individual Financial Advisory (IFA) to its users . Every user has a different investment objective and risk appetite, hence there has to be a different investment strategy you can find more details about this on Tradedog. We will guide you on which strategies may work for you and which won’t. So bear with us while we help you leverage key market insights to begin crypto trading with.
Keep Trading. Keep Investing.
Let your money earn for you while you sleep comfortably.