Cryptocurrencies give many opportunities for investors to make short-term, as well as long-term investments.
It is not a secret that the crypto market is highly volatile. Anyway, this can be both a bad and a good thing.
While there are many people who prefer to hold (hodl) their cryptocurrencies. They buy and do not sell Bitcoin or other assets, as their prices are expected to go up in the long-term. And they are not wrong.
On the other side, there are those who want to stay ahead of the curve. And for them, there are trading strategies, helping them find the best opportunities for good profits. Without a strategy, there is a big chance of buying based on FOMO (fear of missing out), which usually leads to buying high and selling low. As you might guess, this is not what trading is all about.
Day trading
This is a trading strategy for short-term profits. Day traders use complex strategies in a given time frame. At the end of the day, they are out of the market, avoiding potential losses.
Day trading seems simple - all you have to do is buy and sell crypto many times for one day, and make profit from small price fluctuations.
Well, it is a little more complex than that. There are many factors affecting the price, and this is exactly why you need a strategy, based on indicators, analyses, researches and profit and loss tolerance.
So, before you dive in daily trading, do your research. Another thing to keep in mind are the fees, as sometimes they may be much bigger than the profit you make from day trading.
Trend trading
As the name of the strategy suggests, trend trading is based on mid or long-term trends, suggesting the changes of cryptocurrency prices and when the direction is changing.
Unlike day trading, trend trading is a long-term strategy, using analytical tools and ignoring short-term price movements.
It is based on historical data and is price action over time, and is for advanced traders who spend time analyzing the market and managing the risk.
Swing trading
Swing trading strategy is somewhere between the day trading and trend trading. It is usually based on midterm patterns, in day-to-week range.
Similar to trend traders, swing traders use historical data and analysis to find the best trading opportunity. It is definitely a beginner-friendly strategy, as it does not need constant attention or the ability to hold for the long term.
Actually, swing trading gives some good chances for making profit.
Scalping
Scalping is a way more complex trading strategy, involving many small profits off of market inefficiencies and not of assets performance.
It is a quick and demanding strategy requiring fast moves (minutes or even seconds), or sophisticated tools, designed with the purpose to take advantage of market inefficiencies.
Most of the time, the risk with scalping, as well as the profits, are smaller, but if you are an experienced trader, making fast decisions, you can make lots of little wins.
Which is the right strategy to choose?
As we said, every trading strategy has its pros and cons, and can give you some good profits. Anyway, to choose the right strategy, you must be aware of all your strengths and weaknesses, as well as your experience level.
As we always say, cryptocurrency trading and investments is a risky process, and you should always invest as much as you are willing to lose.
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