Having enough funds to trade is just one aspect of being a successful cryptocurrency trader. The other important aspect is developing a mastery of the most important cryptocurrency trading strategies.
Of course, there is loads of information on the Internet talking about how to be a successful trader. You might end up getting confused because of the disparities in the information.
This is why we put together this guide to help you master the important strategies for beginners in the crypto world. Ready to start? Read more here in CoinList to learn everything you need to start crypto trading on the right foot.
What is a trading strategy?
A trading strategy is a framework or the extensive plans you have for your cryptocurrency trading activities.
These trading strategies are usually developed to help the traders have a defined objective for trading, as well as map out the steps to achieve that purpose.
The 5 best cryptocurrency trading strategies
Different cryptocurrency traders have different strategies that guide them when trading. While some prefer to “short” the market, others prefer to “long” it. Some other traders choose to take little profits along the way by scalping.
The key is to find the trading strategy that works best for you. Below are the five (5) best trading strategies you should start using today:
It starts with picking an active trading strategy
It is true that “the cryptocurrency market never sleeps” because the market is open 24/7. Because of this, traders that want to stay on top of their games need to be actively involved in the market, following the trends and adjusting their positions.
You don’t have all the time in the world to do this, even if cryptocurrency trading is a full-time job for you.
This is why you must pick an active trading strategy. The strategy should not only give you the time to attend to other things. It should also have the potentials of making you profits over time.
These are some of the active trading strategies worth considering:
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Day trading
This is one of the most popular trading strategies. It is coined from the traditional financial markets where the trading floor is only open for a couple of hours a day.
In day trading, the cryptocurrency trader tries to take little gains or profits by trading for a few hours. The trader also considers spreading the risks by trading multiple coins and taking little gains that compound to a large profit at the end of the day.
We must also mention that day trading is very risky because you are only trading for a few hours. You might lose more money than you make, especially as a beginner.
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Scalping
This is riskier than day trading. Unlike day trading that focuses on hourly timeframes, scalping is mostly done within a few minutes.
To be successful at this, consider using Technical Analysis (T.A.) and price actions to formulate profitable trading ideas.
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Position trading
Also called Trend Trading, Position Trading has to do with the holding of a position for a couple of months.
The key to succeeding as a Position Trader is to identify the trends and evaluate how long the trends will last. At the time of writing this article, the trend in the crypto market is based on the bullishness of crypto coins in the Solana and Decentralized Finance (DeFi) ecosystems.
Find out how long the trend is likely to last so you can get in on time and Hold on to Dear Life (HODL) until you make some profits.
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Swing trading
Swing Trading is considered an advanced trading strategy that beats both the Day Trading and Scalping strategies. Unlike the latter that requires opening and closing multiple positions in a day, Swing Trading allows you to keep a position or trade open for many days or weeks until it plays out.
All you have to do here is to buy your preferred crypto-assets at every dip of negative fluctuations in the price. Keep accumulating as much as you can so that when the crypto-assets spike, you will be in huge profits.
An extensive mastery and application of Fundamental Analysis (F.A.) and Technical Analysis (T.A.) will help you make profits as a Swing Trader.
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Which is better: Technical analysis or fundamental analysis?
Technical Analysis (T.A.) and Fundamental Analysis (F.A.) are two of the most important cryptocurrency trading techniques.
The most successful traders combine the two. But as a beginner, you want to pick the one that suits your current level of exposure in the crypto market.
On the one hand, Fundamental Analysis has to do with formulating trading ideas using financial factors and news to determine the future value of a crypto asset. As a fundamental analyst, you can predict this by evaluating the government regulations, coin issuance rate, exchange listings, and the network hash rate of the crypto asset.
On the other hand, being a technical analyst requires the use of trend lines, historical price actions, chart patterns, Moving Averages (MAs), and trading volume to predict the future valuation of a crypto asset.
Final thoughts
A combination of different trading strategies will help you become a better trader. Consider trying some of those strategies, taking note of your success and mistakes.
In the end, you will find the one that does not only suit your personality style but will also fasten your chances of making profits from the crypto market.
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