The Best Bitcoin Trading Strategies You Should Know

7 Common Mistakes New Cryptocurrency Investors Make
May 14, 2019
Cryptocurrency v Cryptographic Tokens; Everything You Need To Know
May 23, 2019

Hand drawn math formulas on chalkboard. Vector illustration

When it comes to trading in cryptocurrency, there is no one style fits all approach. We can differentiate between many suitable trading strategies which are usually dependent on your personality, your preferred manner of trading, the risks you are willing to take, your goals, and the investment time frame you have in mind. You can trade long or short term, whatever category you fall into, there’s a cryptocurrency trading strategy for you. In this article, I’ll be showing you the best cryptocurrency trading strategies every crypto enthusiast should know about. It ranges from Position Trading to Swing Trading, Scalping and Day Trading.

1. Position Trading:

This strategy is as simple as it sounds. It involves patiently storing your cryptocurrency until you’re in the most favorable position to sell. It is buying cryptocurrency and holding it until an opportunity presents itself. This is one of the most profitable ways of trading Cryptocurrency, especially when executed to perfection. This trading strategy is open to both newbies and pros, however, it requires lots of patience and discipline since you have to remain calm and unflinching through all the price fluctuations and the volatility of the market.

Some refer to it as a wait and see game, waiting through bear and bull market periods and all the crazy speculations. Better put, position trading is the trade version of a long term investment. It’s buying your cryptocurrency and holding it for weeks, months or even years. Position traders don’t concern themselves so much with short term market fluctuations, but instead, they have their eyes on a longer-term goal and stay clear of any unnecessary deviation.

The only time a position trader takes immediate action is when they identify an activity which threatens their asset value. Interestingly, position traders are known by the crypto market as HODLers, a term for investors who hold their coins or tokens through highs and lows without selling it. It was initially a typographical error made in a Bitcoin chat forum back in 2013 by an investor who was watching Bitcoin price fall sharply but still decided not to sell. This misspelling caught on with the Bitcoin community, and they turned it into an evocative acronym “Hold On For Dear Life”.

2. Swing Trading

Swing trading has a lot to do with the trends and tides present in the cryptocurrency market. Although not all trends may appear to be relevant, there are times when the market could appear to be tilting in a particular direction, and when there is a gap between different price trends, swing traders are ready to take advantage of the massive volatility of the market. Some traders seek out this exact moment of changing momentum to dive right in, with the hopes of making lots of money quickly. It’s buying your cryptocurrency when prices have hit rock bottom within that period and holding up till the prices rise to the top. This is usually done within the span of days or weeks.  If you’re good at analyzing market patterns and detecting likely support and resistance levels, swing trading can be a good choice for you.

Due to the volatility of the market, the value of crypto swings up and down like waves, and swing trading is all about finding the bottom of the wave and riding it to the top. A swing trader must keep an eye on the market, predicting any trends which can increase or decrease the value of his asset and swooping and selling out whenever the opportunity arises. This is a strategy that works well in the cryptocurrency market, but it requires a fair mastery of the cryptocurrency market space.

3. Scalping 

Scalping is a method used by investors to capitalize on the volatility of the market. For those who are seeking to make earnings as quickly as possible, scalping can be a valid approach. It is a common strategy among active crypto traders and it involves exploiting every opportunity or price gap in the crypto space. Whenever someone makes trades based on sudden changes in asset values, the person is commonly referred to as a scalper.

Unlike other strategies, scalping is a very meticulous, but fast-paced method. Scalping doesn’t require any large orders, it can be done by taking advantage of small shifts which occur frequently. However, just like any other trading strategy, it requires lots of attention and patience. Scalping is about making quick trades, buying low, selling high, with the hopes of making a consistent profit, even if the profit margin is initially small. You can scalp by trading every few minutes, and also by spot buying and selling.

Compared to other trading strategies, a scalper completes up to one hundred trades per day, making it fast-paced and at high risk, but a tested way to generate profit. This pattern requires constant focus and considerable skill, but if you keep at it, the small profits could add up to something substantial. A good scalper must have a good understanding of the market, and the associated trends that could affect his assets.

4. Day Trading

  1. As the name suggests, it involves buying and selling bitcoin within the same day, and it can occur several times a day as well.  Day traders utilize short term fluctuations in the crypto space, which could generate one to three Percent profit on each transaction. They buy and sell various assets through the day, taking advantage of market fluctuations wherever possible. They make the most out of small changes, cashing out and generating a profit on each. On worse days, the could lose a lot of money. Day trading is just like scalping, but instead of making trades over the course of minutes, you make them over the course of the day, resulting in a lower volume of daily trade activity.

    Many individuals have quit their jobs to become full-time day traders. The price of bitcoin could go up or down by 1,2 or 3 percent within a matter of hours. All you need to do is wait for the best moment to buy and then sell within hours when the price has slightly increased. By repeating this process, you can make good returns on a daily basis.

    Good day traders are mindful of the volatility of their asset, the underlying liquidity of the market, and their trading volume. This strategy is best when the cryptocurrency market is experiencing good performance. This is because, since day traders are more concerned with selling than holding, a bearish market would mean that the day trader stands to lose a lot of money.

 

Wrap up

These are the best trading strategies, and you can always find a strategy that aligns with your investment goals. If you’re constantly incurring losses on your investment, you’re probably engaging the wrong trading strategy. Find a strategy that works for you and stick with it, avoid jumping from one to the other, and with patience, you would start earning a decent ROI. Be sure to contact us for more crypto investment opportunities. We’ve got you covered.

About the Author

Dr. Edson Pindza

My greatest Passion is helping people change their lives. That’s why I became a lecturer, so I could help others achieve their potential. However, I have realized that college education does not always guarantee success. That has led me to start helping people in a deeper way. I now teach people how to gain financial freedom through Cryptocurrency and Blockchain. To find out more click the button below

Leave a Reply

Your email address will not be published. Required fields are marked *