There are different crypto trading styles that can suit the purpose and interest of any trader and enable them to achieve successful trading. You can choose a particular style of trading or mix them. Before choosing the best style you need to try them all out to know how well you can go with each.
When you are starting out trading, think of how to avoid scams, choose a reputable exchange to trade your assets. Some exchanges enable you to trade dollars for crypto, while some enable you to trade crypto to crypto. Exchanges like Coinbase enable you to trade both crypto and dollar, if you want to trade the only crypto, such exchanges as Binance, Bittrex are the best options. A crypto exchange is not like the regular Wall Street and its exchange.
Some crypto trading companies offer both exchange and wallet. At this starting point, it is only wise that you choose such an exchange.
Trade on Prominent Coins
Crypto trading is a risky venture, before you start, think of how to mitigate the risks involved. You can start by trading prominent coins like Bitcoin (BTC) and Ethereum (ETH) which are currently the top-performing coin by market capitalization.
Don’t be Captivated by the Lure of New Coins
The crypto market is constantly flooded with new coins that come with the lure of high rewards. Most of these coins do not have any proven history or a good track of performance that can determine their level of support or resistance.
Trading success depends largely on the experience and skills of the trader.
Crypto Trading Styles That
If you are struggling with a trading style or constantly making losses, it is an indication that your chosen style isn’t good for you. Here are some of the trading styles you may want to use.
1. Scalping Trading Style
If you are focused on making quick gains in crypto trading that add up quickly, scalping is the style for you. This style enables you to make quick trades and make constant profits. Though the gains may be small, you can trade every few minutes and make gains.
It allows you to scalp by spot buying and selling. You may buy BTC at $500 and sell at $505 or buy at $502 and sell at $505. In this case, you can stop trade at $498.
This is a game of luck or skill but requires good knowledge of risk management and focus for you to make quick money.
2. Day Trading
You may want to make a little higher profit than what you can get in scalping. If so, day trading is the best style for you, it allows you to trade daily and also stop losses.
3. Range Trading
This is another type of day trading, a range trader cares about trading the range and setting the stops not minding whether it is an all-time high or low. The main aim of a trader is to trade the range not buying into the highest trend.
Trading Styles for Beginners
Having the basic knowledge of crypto is important, but there is something else, you also need to know how to approach crypto trading. Volatility in crypto is not in question, there is a high risk caused by price fluctuation, scams, shady exchanges, bear markets, and all.
However, it is a very lucrative way to make money but as a beginner, you need to approach it in a way that will not be too challenging, and that is what we will provide in this guide.
Unlike Forex and stock trading, the price movement is very fast and easily manipulated, so you need to be smart and strategic about your trading. Here are different ways you can apply your strategy in crypto trading.
1. Hodl or Hold
This is the best crypto trading strategy for a beginner. It is coined from a wrongly spelled word “hold” in December 2013, in a post by Game Kyuubi at Bitcointalk.org. No skill or experience is required to trade in this strategy.
It involves buying any asset of your choice and holding it for a long time in anticipation of a rise in price. You can sell up the held-up cryptocurrency in a few years. But you need to know how to purchase crypto and how to store it. You can use a cold storage wallet like a paper wallet and hardware.
Facts to Consider When Holding an Asset
⦁ There is no guarantee the value of the asset you purchased will rise in the future
⦁ Holding a particular asset may make you lose your chance of buying into another asset in the future.
⦁ You may lose your private key if you don’t store your assets safely.
⦁ You may also lose out if there is a continuous downward trend in the market price.
2. Swing Trading
This strategy is a little more technical, you need a knowledge of some basic technical analysis, that will enable you to monitor the market and access price movement.
In swing trading, you keep multiplying the market to take quick action to trade at the right time. This involves monitoring both the upward and downward movements to take advantage of a potential price move.
It involves making the right move at the right time, the aim is to make the highest profit as the market changes. You may have like $1000 open position on bitcoin as the market is going up, you can hedge it at the top, maybe by changing it to another type of asset such as USDT before the market changes again to buy back at the lowest price. Then change your USDT back to BTC to increase your position.
To make profitable swing trading, set definite entry points and stop losses, determine your profit level before you take a trade, and stick to that. If you aim at making 2% to 3% per move, it is still okay, if your gains are higher than your risks. Sometimes you may get a 100% signal but always have it at the back of your mind that you cannot hit exactly 100%.
Here are some tips for you:
⦁ Look out for not too high trends
⦁ Target when the market is close to moving average and hold for price rejection
⦁ Let your stop loss be below the low, take a profit before you make a move.
⦁ Swing when you notice a bullish price rejection
3. Day Trading
A day trader is someone who makes a living from trading crypto. So to be a successful day trader, you need to do it daily to acquire more skills.
Day trading is a little bit advanced, you need to have good knowledge and skills to apply this strategy. Though rewarding, it could also be a bit challenging for beginners. If you are looking to make a career in crypto trading, day trading is a good strategy but it requires patience before you start seeing any profit.
Day trading involves making a quick and rewarding decision that will decrease your risk and increase gains. This does not mean there will be no losses, but be quick to figure out available support and resistance levels.
In day trading, you open and close your trades daily through margin accounts by borrowing extra funds from your day trading broker to trade with a huge amount and earn more profit.
Additional Tips to Trading Styles
⦁ Learn to re-enter your trades at the best time.
⦁ Before you start trading, list out how you want to achieve profit and also stop losses.
⦁ Stick to the chart and monitor the price movement.
⦁ As you focus on profit, switch often to avoid bull or bear traps and losses.
⦁ Monitor price fluctuations and how it is moving.
⦁ Aim to minimize your risk exposure by using a stop-loss on each of your trades.
Crypto trading can be lucrative if you have the right strategies. As a beginner, it is possible to record some losses, but a careful study of the styles and tips given above can help you avoid the pitfalls.