When trading cryptocurrencies, it is important to have an understanding of different crypto trading strategies to be successful. However, you do not have to or may not be able to master all the different crypto trading strategies.

Still, you should learn to make a profit from one strategy and utilize the technique which best suits your ability, preferences, and lifestyle. You will always need to optimize your trading strategy but it is not advisable to test new strategies every day and hope to score profits. That is why this article will explain the basic strategies in crypto trading and help you to choose the one that suits you best.

This article was published by Cryptocointrade. If you are interested in more articles regarding crypto trading, such as crypto trading platforms, crypto technical analysis, crypto fundamental analysis, bots, education, visit Cryptocointrade.

Day trading Cryptocurrencies

What is day trading?

Day trading is a strategy where traders aim to utilize a short term (daily) price movement of cryptocurrency. Be it predicting sudden surges or shorting since cryptos are such volatile assets, they are perfect for implementing that kind of strategy since all trades are closed within one trading session.

How much time do I need to commit for day trading?

Day trading is most certainly the most time-consuming strategy used. Since the price of cryptocurrencies sometimes acts in unpredictable ways, it is always advised that a trader actively follows market movements and most recent news so he would be able to act accordingly. It is not an uncommon thing for day trading to become a full-time job, sometimes consuming more than 8 hours of trader’s time.

Should I use technical analysis for crypto day trading?

Technical analysis (TA) is a fundamental part of day trading. Essentially, traders need to be experts with a wide variety of technical indicators and be able to dissect many oscillators to be able to minimize the risk of losses. TA gives a trader an insight into probable movements through such things as golden/death crosses in moving averages or MACD, or divergences that may reveal possible price reversals, etc.

Should I use fundamental analysis for crypto day trading?

Although fundamental analysis is always a great asset in traders arsenal, it is not so important for day trading since it only correlates with the long-term success of the cryptocurrency. However, sometimes, having an insight into such things as a road map of the project can reveal if the price is going to pump on a certain date.

Can I automate my day trading?

Many traders leave their day trading to bots since bots use algorithms which act quickly to utilize the price micro-movements. Also, bots never “sleep” and can be present in the market 24/7 so they can make profits for traders even when their owners sleep.

Crypto day Trading Pros and Cons

Pros:

  • Quick profits
  • No need for fundamental analysis
  • Can become a career
  • Possibility of bot trading

Cons

  • High risk
  • A lot of practice to master various secrets of TA
  • Possibility to miss out on prolonged price rallies
  • Time-consuming
  • Possibility of exiting a trade too early and missing on bigger gains

Swing trading cryptocurrency

What is swing trading?

Swing trading is a tactic implemented by traders who keep their positions longer than one trading session in an attempt to use price swings that last from a few days to a few months.

How much time do I need to commit for swing trading?

This trading tactic is less time consuming than day trading, but also requires a lot of technical analysis to reveal good trade entries and exits.

Should I use technical analysis for crypto swing trading?

Like in day trading, it is almost impossible to make an educated decision on when to enter and exit a trade without a deep knowledge of TA. If a trader misinterprets market conditions or price action reversal, he is bound to lose a portion of his investing funds.

Should I use fundamental analysis for crypto swing trading?

Great swing traders always combine TA with fundamental analysis because it is important to know what to expect of a crypto asset, in the long run, to be able to catch mid-term swings. Information such as big development milestones can push the price upward for a prolonged period of time and swing trader needs to do research in order to be ready for such events.

Can I automate my crypto swing trading?

Although bots are able to perform swing trading, they are unable to implement a fundamental knowledge so it is advisable that traders swing trade themselves to be able to utilize both TA and fundamental analysis to get optimal results. The only truly beneficial way a trader can automate swing trading is to set limit buy and sell orders on exchanges based on the previously performed analysis.

Crypto swing Trading Pros and Cons

Pros

  • Possibility to score bigger gains than from day trading
  • Less time-consuming than day trading

Cons

  • Knowledge of both technical and fundamental analysis needed
  • Trader may fall victim to unpredictable market events such as exchange hacks
  • Bots are far less effective in swing trading

Crypto HODL

What is crypto HODL trading?

HODL (first misspelling of HOLD, later became an abbreviation of Hold On for Dear Life) is a strategy where trader, after entering a trade, holds a cryptocurrency for a long period of time, sometimes even more than a year, hoping that the price of his asset will finally reach some predetermined value.

How much time do I need to commit for hodl trading?

HODL strategy is the least time consuming of all trading strategies used by crypto traders. It virtually doesn’t consume any time at all apart from the initial decision making the process during which a trader decides which cryptocurrency to buy, and eventual price checks.

Should I use technical analysis for crypto hodl trading?

TA is not important for HODL strategy since divergences, strength indexes, oscillators, Bollinger bends and other indicators are completely useless when predicting the price of a cryptocurrency in such a long period.

Should I use fundamental analysis for crypto hodl trading?

Just like TA is irrelevant for HODLing, fundamental analysis is absolutely vital for a trader to make the right decision and choose a cryptocurrency with the most long-term potential. In fundamental analysis, everything is important; the team behind the project as well as how innovative their technology is and the regulatory environment in which the project is being developed. There is also an issue of the competition and potential competition the project is facing which can push the price up or collapse it into the ground (Example of a bad HODL investment: Bitconnect).

Can I automate my crypto hodl trading?

Bots are also useless in HODLing cryptocurrencies. However, traders can, after investing their money in a cryptocurrency of their choice, set a sell order at the price they would be satisfied to sell it, and wait to see if their asset will ever get that far.

Crypto swing Trading Pros and Cons

Pros

  • The least time-consuming
  • Possibility of huge gains with the least work in the long-run
  • The least stressful if an investor doesn’t check the price every day
  • HODLing is supporting the cryptocurrency revolution

Cons

  • Missing price swings and opportunities to further enhance gains
  • A trader can fall victim to FUD (Fear Uncertainty and Doubt) and sell in a loss
  • Wrong fundamental analysis can lead to huge losses

This article was published by Cryptocointrade. If you are interested in more articles regarding crypto trading, such as crypto trading platforms, crypto technical analysis, crypto fundamental analysis, bots, education, visit Cryptocointrade.

Disclaimer: Note that this is not investment advice. Cryptocurrencies are highly volatile and very risky speculations. Please, consider consulting an investment professional before investing. Never invest more than you can afford to lose. Do not borrow funds to invest.

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