Cryptocurrency trading is just the exchange of cryptocurrencies. Just like Forex, one can also purchase and sell a cryptocurrency for different cryptocurrencies like Bitcoin or any other altcoin for USD and Euro. Trading tactics are there to give goals for traders to make more with lesser money; just like how a flourishing business should work.
A stable cryptocurrency strategy is one that increases profit possibility and reduces risk. Trading cryptocurrencies may be more perilous than trading traditional monetary methods like Forex currency combinations. Cryptos are more volatile than fiat currencies and are also less liquid. Let’s see some useful cryptocurrency trading strategies:
Buy and Holding
Buy-and-hold trading is possibly the most popular trading strategy among the global investing community. This is because it is the simplest and least difficult method. It is also seldom mentioned as a long-term approach, as it requires buying assets and holding on to them.
Presumably, the most significant advantage of this approach is that it lessens time and energy. Basically, all you need to perform is buy cryptocurrencies and put them in a secure place. In this strategy, you won’t require to constantly check price records and market performance. Furthermore, this strategy indicates lower transaction fees, as you will be making a significantly less amount of transactions than other traders.
Margin and Leverage Trading
In margin trading, you will adopt buying and selling authority in exchange for the issuance of a part of your stocks (known as margin) which will only be available again after a trade, when you pay the funds you obtained. Leverage trading enables you to trade an amount that you don’t have.
Long or Short
These are fundamental idioms that are being applied in the crypto trading system. When a trader is in a “Long” trade means they have purchased something and are anticipating that the value will increase to make earnings. In the case of short, the trader trades what they have in control. Profit is generated if you can purchase for a lower price after you have traded it for a much bigger one.
Active trading is a strategy that requires a more extensive analysis into the market and needs a lot more time, experience and skill than buy-and-hold. In the world of conventional bonds trading, there are numerous distinct ways of active trading. Still, we are trading with cryptocurrencies, a totally random market, so utilizing established trading strategies might not serve.
If you’re going for active trading, you are actually reflecting on cryptocurrency price, which implies you will need to watch the market and price variation periodically, if not hourly. Relevant news articles, reports, and evaluations are also an indispensable read for an active trader, as those can affect the price and the market.
Swing Trading Strategy
Swing trading is around in the midst of Day Trading and Trend Trading. In day trading, the asset will be kept for a few hours but never more than a day. Trend Trading is when the trader studies for a more extended timetable and holds the asset between weeks to months. Swing traders keep an asset for two days to a few weeks.
Trading strategies are applied to bypass behavioral investment prejudices and secure uniform results. For example, traders following precepts dictating when to exit a trade would be less inclined to submit to the distribution consequence, which makes investors to keep stocks that have fallen value and sell those that increase in value. Trading strategies can be stress-examined under modifying market circumstances to estimate elasticity.
Disclaimer: This information should not be interpreted as an endorsement of any cryptocurrency. It is not a recommendation to trade. The crypto market is full of surprises and overhyped assets. Do your research before buying anything. Do not invest more than you can afford to lose.
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Disclaimer: The authors of this website may have invested in crypto currencies themselves. They are not financial advisors and only express their opinions. Anyone considering investing in crypto currencies should be well informed about these high-risk assets.
Currently we are not recommending trading at eToro. A better alternative is Coinbase. However, for old articles please refer to the general risk disclosure on eToro. CFDs are complex instruments and carry a high risk of losing money quickly through leverage. 76% of retail accounts lose money when trading CFDs from this provider.