3 effective active trading strategies for crypto traders
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Joel E.
August, 22 2023
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Trading cryptocurrency comes with several trading styles.
Although there are different trading styles, cryptocurrency trading involves speculating on price movement. And the strategy you choose should reflect the result you aim to achieve.
While a strategy may demand a quick move during the day, others may demand trading the current range or holding a position for a few days or more.
There are several trading styles that have been implemented over the years, that suit the trader’s need, risk tolerance and level. But in this post, we will explain 3 crypto trading styles that you can easily implement and utilise them effectively.
What is a trading strategy?
A trading strategy is a method or technique designed to help a trader make a profit from buying and selling of crypto assets. There are various trading strategies and each strategy will depend on the trader and his preference.
For a new trader, it is important to discover properly determine and outline, your aim from trading, your risk tolerance, - basically, your trading personality. Keeping this in mind as you begging to trade will help you easily know what style of trading fits your aim.
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.
3 popular trading strategies
As you advance as a trader, you find it easier to understand and adopt other trading styles but here, we will share three styles of trading that you anyone can put into practice, regardless of trading level.
- Position Trading
- Scalping Trading
- Day Trading
Position Trading
Position trading is a long-term trading strategy. It requires traders to purchase assets and hold for long periods (a month or even 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.
What distinguishes position trades from long-term swing trades is the rationale behind executing their trades.
Scalping Trading
Scalping style of trading is about executing quick trades in succession or within a stipulated time interval. The goal of this style of trading is to make constant profits at short intervals of time.
A scalper trader attempts to take advantage of the price fluctuations of crypto assets. Often, the 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 style of trade, scalpers often get a small percentage of profits. But scalping is all about numbers, so the repeated gain that may seem small serves as turn over at the end of the trade.
Day Trading
Day trading strategy involves executing trades by entering into the market and closing trades within that same day. This is a good advantage of crypto as it is a flexible asset for traders.
In day trading, a 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 traders often trade several markets or 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.
As every trading strategy can be profitable, a day trading style comes with risks, and proper risk management is required.
As always, it is always important to Do Your Own Research before adopting any style of trading or implementing a trading strategy and not consider others’ opinions as financial advice - unless they are your financial advisor, of course.
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