Are you keen to start trading in Bitcoins? In that case it is advisable to learn the ropes by researching on the best known trading strategies before jumping onto the crypto trading bandwagon. Trading in cryptocurrencies is far from easy and following the tried-and-tested techniques can help you execute successful trades when you are starting out.
Trading strategies may be both active and passive. You may even try using a hybrid approach that combines many strategies. Passive trading does not require full attention, as automated trading apps will take care of all transactions 24/7. Leading trading apps falling in this category would be kryptoszene.de. Whereas Active strategies will demand continuous monitoring and regular portfolio review and management, and are as follows:
- Day Trading: This is one of the most popular Bitcoin trade strategies for beginners and involves entering or exiting trade positions within a single day. So, as a newcomer, you will have to try and take advantage of price movements within a single day itself. Day trading is common in stock markets where trading is open only during specific hours. But, in crypto trading, the market stays open day and night. Here, day trading refers to short-term trading techniques where the crypto traders enter and leave trade positions within 24 hours. You will be required to use technical analysis and price movements for making trade decisions. While day trading may assure high profits, it is very demanding and hectic. So, this trading strategy may not be well-suited for newcomers.
- Swing Trading: This trading strategy is a long-term one that entails holding positions for a longer time period, more than a day definitely, but not longer than a month. This strategy is something in between trend trading and day trading. As a swing trader, you can take advantage of high volatility that goes on for many weeks. You must use bot technical and fundamental analysis to come up with trade ideas. Technical indicators and trading charts may prove to be useful for swing traders. This technique is recommended for the newbie. Decisions can be taken without being in a hurry and using proper logic. This makes this strategy safer for Bitcoin trading beginners.
- Trend Trading: This trade strategy is also popularly called position trading. It involves holding onto specific trade positions for a long time, usually a couple of months at the least. In this strategy, Bitcoin traders will try to exploit directional trends; they enter long positions when there is an upwards trend and short positions when the trend is downwards. Such traders will use fundamental analysis, analysing events that have been going on for a long time. The assumption is that the asset in question will continue to maintain an upward trend. But there may be a trend reversal at any time. So, it requires a lot of risk management and diligence when you are new to Bitcoin trading.
- Scalping: This is a fast-paced trade strategy focusing on exploiting small price movements time and again. For instance, traders can seek to make money from gaps in liquidity, market inefficiencies, etc. They will not hold onto trade positions for long and this is why it called High Frequency Trading. It is highly profitable if the trader can find market inefficiencies to exploit, and not recommended for beginners as it is complex.
- Hodling: this is a passive trading strategy where traders will buy and hold onto Bitcoins for a long time in the hope that prices will rise. This strategy is founded on fundamental analysis mainly and does not get affected by technical indicators.