3 Most Effective Trading Strategies For Crypto traders
5 mins read
7 mths ago
There are many ways a crypto trader can make a profit while trading cryptocurrencies; some are very effective, while others are entirely based on uncontrollable factors.
Crypto trading strategies are principles and guidelines that will help you build an effective pathway to follow when trading cryptocurrencies for profit. The more efficient and effective a crypto trading strategy is, the more the feasibility of making more money while trading increases.
So before jumping on the bandwagon of crypto traders, it is important to take time and create a strategy that will make a funnel of profit during a trade. While there are many cryptocurrency trading strategies, we will be exploring those that are effective and efficient in this post.
What Is a Crypto Trading Strategy?
A crypto trading strategy is a method or technique designed to help a crypto trader profit from trading assets in the crypto market. There are various trading strategies, and each strategy will depend on the crypto trader and his preference.
For a newbie crypto trader, you must have different kinds of existing frameworks on which you align your crypto trades. As you begin to trade, keeping this in mind will help you easily know what kind of crypto trading strategy fits your aim.
Just as you have different crypto goals, you also need different strategies to match each crypto trade. Crypto trading strategies help eliminate unnecessary indecision in case the unexpected happens in the market.
Impulsive and hasty decisions are what every good crypto trader will try to avoid as a trading strategy and solution to this problem.
3 Most Popular Crypto Trading Strategies
Most beginner crypto traders think that it is only the tools and indicators they make use of that determine how successful their trade is. While all this may help, you need effective crypto trading strategies which include measurement of portfolio performance to pull off a successful trade. The trading strategy you adopt will depend on your trading goal, capital, experience and they include:
- Position Trading
- Scalping Trading
- Day Trading
Position trading is a long-term cryptocurrency trading strategy. It requires crypto traders to purchase assets and hold them for long periods (a month or even six months or more). The goal is to make profits by selling those assets when the price goes high in the future.
A position crypto trader is concerned with trends and reversal of asset trends. The position trade is one of the simplest forms of crypto trading strategies 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 between - whether it rises or falls. The position crypto trader endures the bear and bullish runs of his asset.
The rationale behind executing their trades distinguishes position trades from long-term swing trades.
Scalping is a crypto trading strategy for executing quick trades in succession or within a stipulated time interval. The goal of this trading strategy is to make constant profits at short intervals of time.
A scalp crypto trader attempts to take advantage of the price fluctuations of crypto assets. Often, the crypto trader enters and exits positions within minutes (or even seconds). In most cases, a scalper executes a trade using technical analysis to predict price movements.
Due to the short time frames of the scalping crypto trading strategy, scalpers often get a small percentage of profits. But scalping is all about numbers, so the repeated gain that may seem small serves as a turnover at the end of the trade.
Day trading strategy involves executing trades by entering the market and closing trades within that same day.
This is a form of an advanced crypto trading strategy where a crypto trader executes his trade by relying on technical analysis to determine his trading asset. Profit in short periods such as this can be minimal, so day crypto traders often trade several markets or a range of assets. You still use stop losses and scale in and out of positions, but you are looking for a little more profit on each trade than a scalper.
Like every other profitable crypto trading strategy, a day trading style comes with risks, and proper risk management is required.
Trading without the best crypto trading strategies within reach is disastrous and can make even a good crypto trader lose money.
As always, it is important to research before adopting or implementing any of these crypto trading strategies and not consider others’ opinions as financial advice - unless they are your financial advisor, of course.
Disclaimer: This article is meant to provide general guidance and understanding of cryptocurrency and the Blockchain network. It’s not an exhaustive list and should not be taken as financial advice. Yellow Card Academy is not responsible for your investment decisions.