Back in June of this year, we described the usual strategies for trading in a bear market. Today we decided to refresh the information about the most famous crypto trading strategies. We have collected 5 popular mechanisms that professional and beginners use when working with the crypto market.
We do not focus on any strategy and do not recommend using specific tools. The material is provided for informational purposes only.
📘 Day trading
From the name, we can conclude that this strategy consists in entering and exiting a position within one trading day, benefiting from short changes in the price of a cryptocurrency in 24 hours. At the same time, traders do not care if the market sentiment, for this short period of time, is bear or bull market.
It is important to understand that the day trading strategy involves an understanding of technical analysis, and therefore is more suitable for longer experienced crypto industry participants.
Scalping involves profiting from small movements in the prices of cryptocurrencies at frequent intervals. The main goal of this method is to accumulate small profits daily in order to observe a significant accumulated amount over time.
The distinctive features of scalping are the active use of leverage, as well as well-established stop losses used to control risks. Traders who prefer scalping usually trade in the time range of trades from a few seconds to 60 minutes.
📕 Position trading
Positional trading, or the Buy and Hold strategy, consists in holding trading positions for a long time, sometimes several months or even years. Focusing on long-term market trends, along with ignoring short-term quotes in the crypto prices, are the main characteristics of the adherents of this strategy.
Traders note the need to track general industry news, in other words, focus on fundamental analysis, major market trends, and historical patterns in asset price movements.
📗 Arbitrage trading
In simple terms, arbitrage trading is the purchase of cryptocurrencies on one platform, and subsequent speculation on another. Traders are financially rewarded by exploiting the low correlation of coin prices across multiple platforms/exchanges.
In the spot market, there are many exchanges where both fees and prices for cryptocurrencies differ, in turn, this creates opportunities for earning with the help of a cryptocurrency arbitrage strategy.
📙 Swing trading
Some traders associate this strategy with medium-term trading. Trades within the swing trading strategy take from one day, but do not exceed several months. Such a strategy is something between “day” and “positional” trading.
This way of trading is familiar to novice traders, since the main factor is understanding when an uptrend ends. It is also worth noting that swing trading often does not involve the use of large leverage.
And what strategy is the fundamental component of your experience in crypto assets trading ❓