The Crypto market is versatile and offers multiple trading styles, and each is suitable for someone with unique goals, tastes, and tolerance levels. Let’s deeply look into different available trading styles that can help choose the best one for good practice and the future.
Some prominent cryptocurrency trading styles include:
Day Trading, Swing Trading, Scalping, Position Trading, Intraday Trading, Range Trading, and Investing.
The target of day trading is to make a profit through trades over a single day period; in swing trading, the traders try to collect short to medium-term gains in a period of a few days or many weeks, scalping targets the swift moves and make quick profits. While position trading deals with long-term trading that doesn’t care about the miner market fluctuations, intraday trading is considered as a type of day trading that happens during business hours instead of the twenty-four hours of the day. The range trading and the investing represent the trading between a selected range and trading on a position for the long term, respectively. Investing is the HODLing strategy that helps collect your favorite coins at a lower average price.
All these styles are only for the sake of information; it isn’t mandatory to choose a single one. You can select one or more or can create a combo of desired trading styles. The traders must modify their tactics for their favorite trading style because every type needs different tactics to perform better. For example, scalping focuses on quick moves, which is why it needs front-run support and resistance on a short interval chart using leverage.
There is a fundamental question how can one find a trading style that works for him? Yes, it is a bit difficult, but one thing is confirmed. Observe wisely and try the type you assume is best for you. Don’t try to cheat yourself; your honesty will find the best for you. It would help if you analyzed your efficiency and the effectiveness of your tried trading style regarding its effect on your emotional and logical health.
If a style of practicing puts you out of the game or off balance, it is not suitable for you. Furthermore, regular losses also indicate the same thing. You must consider another appropriate trading style that can bring positive change in your trading and finance.
When you take a step to enter the market with quick moves, it lessens the risk on your assets. A continuous practice through paper trading account enhances your expertise to utilize in real trading accounts. Going through more moves keeps you away from complexities associated with cryptocurrency trading.
If you are a newbie or an unplanned trader, then investing and position trading are the best options for you. The reason is that they don’t need enormous micromanaging and technical abilities. But these are also not tension free; they have their stress type because the crypto market is volatile, and a long time doesn’t reduce or eliminate this volatility.
Whatever trading style you select has its associated stress because the crypto market is global and remains on 24/7; there are zero chances of corrections and alterations; it can turn overnight when you are sleeping. Those not believing in trading styles can go for investing, DCA, or position trading for a good start in the crypto market.
It is valuable to note that some people may think that all the above-stated styles are investment styles, but actually, it is not. Investment styles are a different topic; here, we’re discussing trading styles that help open a position and make profits.
Let’s define different trading styles
As it is obvious from the name, it happens in one-day duration. The traders wait to make a profit the whole day instead of making moves within minutes over minor fluctuations in price. It resembles scalping, but the significant difference is the time frame.
Day traders are free to select any trading method such as scalping, position trade, and range trading that is limited to one day. Trading is day trading, and traders are known as day traders only because they remain limited to one-day time instead of spreading their activity to several days.
It also facilitates the use of stop losses and scaling in and out for any position you are willing to open in the market. However, it is a bit more profitable and requires increased volatility tolerance. The traders have the right to decide some of their position and keep running for more than one day. It doesn’t bound anyone strictly, but it is usually limited to a one-day time frame.
Please note that most of the time, scalping is considered as a kind of day trading, but due to the difference in their notational system, these are defined here separately.
Scalping focuses on making continuous profits regardless of its size. To achieve this target, it makes quick trades and keeps collecting profit even if it is minor. It collects quick profits and also reduces the losses quickly. Quickly doesn’t mean that scalping is participating in every trade. Instead, it waits for ideal conditions and performs fast in favorable conditions.
Scalping also doesn’t restrict the traders for fast and short trades; they are free to decide about it. They can use multiple trading methods for scalping, for instance, margin trading, even at very low leverage, so that trade remains short. The traders can scalp by spot trading (buying and selling cryptocurrencies).
For example, the trader buys ETH for $700 and sells at $705 after a short time, again purchases at $702 and vends it at $710. In these quick and fast moves, the traders collect the profit, although it is small. The trader can set a tight stop loss of $698 or $700 to control the losses. The traders have the opportunity to scale out their position if they find trades or the market is going to oppose them. In scalping, continuing any position for a long time is rare.
Scalping needs your continuous focus and attention. You’ll win the market with your quick moves and make fast money if you can do it. Risk management skills are also mandatory for it, along with luck and abilities. However, practice on paper or a paper account, you can make good profits and add up in your real account by applying your expertise.
Intraday means within a day, and in the corporate sector, a day consists of business hours. It is a type of day trading, and many traders implement it and earn profit through it. It permits to hold a position for several days. Usually, a business day is limited to 8-9 hours, but the global crypto market remains open 24/7, so it also continues. While using software enables the traders to automate their trades and keep them continue even after business hours. So, your short-term trade can be operational even if you sleep and collect profit. The traders can choose the trading method they feel the most suitable for them.
As evident from the name, it remains between the selected entry position and the set target. It finds the support trade up to the coming resistance level. The trade starts with a suitable entry position and waits until the set target is hit or the trade exit circumstances are reached.
In swing trading, the trader will start a position, maybe gradually or at once, that he considers as the supported AKA bottom and then focus on a position up to which he wants to HODL and see it as the potential AKA supported top or resistance. A gradual scaling out of position is better to lock your profit. Evidently, it is based on reverse logic to shorten; your target becomes the shortening of the top of developing trend to the lowermost.
Actually, swing trading remains continuous for days or weeks, and during this time, the traders move up and down with the trends without being panic. They take a position, hold it, sleep, watch the market, and keep swinging between the market ups and downs, aiming at their desired profit.
Swing trading becomes a hot cake if you have the ability to analyze the patterns and find the support and resistance levels. Good technical analysis makes it easy to focus on swing trading.
The crypto market moves upward and downward, creating wave structures, and swing trading is the type of trading that focuses on finding the bottom of a wave to join and drive it to the top while having an extended position. If you are acquiring a short position, it goes the opposite.
Generally, a move in the market takes only a while, but your long operating in the market depends on the chart time frame and patterns you have analyzed for this purpose.
All the traders that choose swig trading and do it on long and short positions try to detect patterns, analyze the market, and most of all, stay calm. All this becomes result oriented and gives them the opportunity to earn good profit.
Please remember: In my opinion, swing trading is the most uncomplicated trading style and lets you earn because of high time frame support and resistance; take care of holding the long positions than the low time frame and not react fast to trades. It enables you to catch the beneficial moves. For beginners, it is good to start with swing trading, and for new investors who are not interested in trading but want to earn a profit, position trading is the best option.
If you observe the crypto market, you’ll see there is always a range in which all trading is done. Usually, this range is a type of consolidation, whatever it is, coin accumulation or any other. Sharks of the crypto market often collect more coins to win any following situation.
Range trading allows the traders to set up stops. They don’t care whether they are trading at the high or lower ranges. Plainly, they are buying the lower part of the range and then selling it at a high price.
In case you have a range, it enables you to see the explicit support and resistance. In this situation, trading is sensible. However, in such a scenario, the other traders look for breakout and breakdown for trading. But range traders focus on making more profit through trading in the current range.
It also can be considered a type of day trading or intraday trading. However, the main goal is to trade the range, not the buying or selling, into an uptrend or downtrend. When you understand the range trading, you love to do it.
As obvious from the name, position trading is relevant to positions, whether high or low. Position trading is a zoomed-out variant of swing trading or investing. In this type of trading, the traders try to build a position and hold it for a long time, for weeks, months, and even years.
Position trading is one of the simplest types, but it follows some rules and needs your attention. For example, suppose a trader holds a long position on BTC since $5k or a short position since $12k (Currently, BTC price is $8.3k). There is a visible fluctuation in BTC price, which is between $20k and $11k. In this course of time, different levels of highs are reached. In this scenario, the disciplined traders go through these events and decide what they find the most suitable for them. They can scale out the position, reopen or even exit the trade completely when they see it against them.
It pretty much resembles investing as it goes for a long time. However, it is different than investing as the main goal is to perform a long-term trade following the trends. In crypto, there are many ups and downs, and the main focus in position trading is to keep calm and focus on the primary target.
Some people consider investing and trading the same things. But actually, both are pretty different. Trading is mainly focused on holding a position aiming to get profit through trading. While investing is having the ownership of an asset and waiting for a long time until the value increases.
Warren Buffet is a clear example of an investor. He owns the company shares or purchases stocks. When someone owns an asset and its value increases over time, this is not profit but growth. A lower price shows a company’s worth is less, and traders never even consider such things.
On the other hand, investors vend their positions or holdings for their current value rather than waiting for the rise in the price value of the asset. Investors do not set any stop loss point; instead, they construct a position and remain stuck to it for a long time unless the reason for investment remains true.
The investors resemble the HODLer because they do not consider the prices and charts unless they find a solid reason to add to their position.
How to select the best one for you
We’ve discussed different trading styles above and highlighted their main points. But when we talk about which kind is best for someone, it depends on many factors. The person type is the main factor; always select a style that matches your skills, abilities, and interests. Following are a few pieces of advice for choosing a trading type for you.
1. Choose a trading style after good research and stick to it. If you think after sometimes it stops working, then do not change it, only adjust your selected style according to the changing environment.
2. focus on growing your portfolio rather than finishing it by being an investor at a high and becoming a day trader on a low.
3. Practice risk management. Every trading style requires unique risk management, and the main target of risk management is to save your downside and reduce the losses. Choose the best techniques to manage the risk in your selected trading style.
4. Select a bull market to enter the cryptocurrency trading market. Always be prepared to stay safe in this high-level sport.
5. Be ready to have pain and learn a lesson for future success. For example, if you join a bull market, then be prepared for the coming difficulties because the ease of a bull market doesn’t remain for a long time.
6. no doubt, learning is earning, but your lessons must be affordable to you. Risk management helps to keep your trading lessons cheap. Never try to change your selected trading style only because now it is not working for you. Instead, try to reset your strategy and style according to the changing environment.
It is significant for becoming a successful trader that you should get the information and learn from other traders too. Choose a trading style and remain stuck to it; create your style based on your learning and experience. You must get the information about the bull and bear market and other significant terminologies to boost your performance and portfolio.