What Is Cryptocurrency Trading?
Cryptocurrency has moved from just being a digital currency to a haven asset, making it a lucrative trading instrument. Consequently, investors of all classes actively engage in crypto trading to churn profits.
The best part of crypto trading is that it provides traders a wide range of options to meet their trading styles. Although these different styles intend to simplify crypto trading, one needs to keep a tab on the market trends and formulate an effective trading strategy to achieve success.
In this article, we will talk about various crypto trading styles along with a piece of advice on picking the one that best suits a trader.
What Are Different Cryptocurrency Trading Styles?
Typically, crypto trading involves two basic concepts – rapid or short-term trading and slow or long-term trading. Let us take a look at the crypto trading options available for traders.
The idea behind scalping is how quickly someone makes a profit rather than how much. Crypto prices keep fluctuating, so small profits made by trading cryptos in quick succession will amount to gains over time. If you are getting profit from one of the top 5 cryptocurrencies like Dogecoin, then check our guide on how Dogecoin profit calculating tool works, which helps to get a brief idea about loss or gain. The most aggressive traders favor scalping as it requires a spontaneous reaction to crypto market behavior. In this short-term trading, traders need to stay online all day and benefit from the positive price change.
It is another form of short-term trading that traders perform during active trading hours instead of minutes in a single day. Usually, it begins with a time difference of 30 minutes or more and can last for hours, depending on the trader’s dedication to generate a passive income out of it. In doing so, traders end up making more profit than scalping while being less affected by volatility. The pro tips are starting small and acting fast.
As the name suggests, range trading occurs when a trader focuses on the price range defined by specific crypto. And, the trader needs to set a stop position to avoid the risk of losing funds. It gives traders a chance to benefit every time the crypto price moves anywhere between a range, no matter which direction.
It is somewhat similar to day trading but different in being performed for more than one day. As the crypto market functions 24/7, traders can subscribe to trading bots or use the trading platform to automate trading positions with a stop-loss limit. With no reason to close a trade, making a profit is possible this way.
Traders with a lot of patience and expertise in trading securities prefer swing trading. The trader’s goal here is to open a position at the support level, set a target position at the resistance level, and keep the assets until the goal is achieved. Such a wide position makes this short-term trading more profitable and takes days or weeks to show results.
It is a more advanced form of swing trading that can go from weeks to months or years. In this long-term trading, the trader buys crypto coins and holds them with the purpose of either building a short position high or a long position low after a thorough market analysis.
It is a common way of earning profits from cryptos. Unlike other trading styles, investing is more about using the crypto assets as a store of value for the long term and selling their positions only when the market is favorable.
Pointers To Consider When Picking A Crypto Trading Style
- Understanding how much time one can dedicate monitoring the markets
- Knowing to enter and exit at the right moment
- Being well-prepared for unexpected losses at the beginning of trading
- Assessing the experience level in trading and risk-tolerance toward losses
- Picking a trading style and sticking to it for quite some time
All these trading styles are advantageous and profitable, depending on the trader’s experience and risk-taking capabilities. Since these styles share a few similar strategies, they might overlap each other. Nevertheless, a trader can choose to try them simultaneously based on the trading goals. With that said, bear in mind that cryptos are volatile and could result in significant losses if traded irresponsibly. So before signup on any trading platform, you must check platform reviews so that, here, we provide you Stormgain trading platform review. So you can get a better idea of it.