Cryptocurrency also called digital currency, virtual currency or alternate currency is emerging as the future of money. The crypto world provides an enormous return on investment for traders to flourish and prosper. Due to the decentralized control and the blockchain technology, people find crypto trading to be more transparent as it doesn’t require a central authority.
On the other hand, the crypto market is very sensitive and security breaches can happen at fraction of a second. There are many hacks that happened in the crypto market that shook the world. Bithumb was hacked at June 2018 and $30 million coins were stolen. These incidents are a mounting evidence which proves how violative is the cryptocurrency market. This article will unveil the top trading strategies that can be used for both stock market and cryptocurrency trading.
Scalping is the act of attaining huge profits on minor changes in the asset(coin). Traders who implement this strategy is called a “scalper”. Here the scalpers believe that small moves in the stock price can gain huge profits. The idea is to buy or sell a number of assets at the holding time and sell them higher or lower for a profit. This scalping strategy is perfect for intraday trading.
Technical analysis has to be done before scalping and a scalper spends 8-10 hours in the forex market. A scalper should be proactive to take advantage of the fluctuations in the market. Scalping is more trending in the cryptocurrency market due to the fluctuations in the price of the tokens. Scalping if done statistically keeping in mind of avoiding late entries, overtrading and late exists, scalpers will be able to reap the desired profit in the cryptocurrency trading.
Day trading is the most lucrative strategy for people in both the stock and crypto market. This trading is quite similar to the scalping method. The difference is in scalping there are hundreds of transactions done whereas in day trading only very few transactions are done. To be precise, day trading is buying or selling of assets on the same day, to make the most of the market fluctuations. Traders make the most from the minute changes of the price of the asset/coin.
A day trader can make double the profit which means he or she can gain more money from the original money they have spend. Here the holding time is eliminated as the traders hold their assets to a maximum of 2 hours per day. This day trading strategy for cryptocurrency would work only if the market is stable.
Range-bound trading is the trading capitalizing on stocks in price channels. This trading is widely used by forex traders and other traders. The concept behind the range-bound trading is identifying the support and resistance areas in order to connect reaction highs and lows with a horizontal trendline.
The reliability of the trendlines depends on the number of times the price has reacted to it. The method is traders repeatedly buy at the support trendline and sell at the resistance trendline until the security breaks out from a price channel. In range-bound trading, it is imperative for the traders to watch for potential breakouts and breakdowns.
Swing trading is similar to the day trading. In day trading the holding time of an asset is a maximum couple of hours a day whereas in swing trade the holding time can extend up to a week or couple of weeks. This type of trading involves in identifying the trends lows, highs and calculating the risk. Before jumping into the swing trading a lot of market analysis has to be done by the trader. A sound technical analysis is needed than day trading. Using this strategy in cryptocurrency is based on the estimation of the trend line and when it is going swing high.
Position trading is also called as HOLDing, where an investor holds on his assets through its highs and lows without the intention to sell it. The concept of HOlDing is just buying the coins and put them in your wallet. The investors do not involve in any transactions from months to years and only sells his coins with his own intention or find a threat to his asset. A position trader is neither worried about the market fluctuations nor bothers of the daily, monthly news of the crypto market. This position trading is implemented once or twice a year which makes the trader a long-term investor.
Arbitrage is the simplest method of trading. The concept behind this trading is buying a coin from an exchange where the price is lower and selling it in another exchange where the price is relatively high for that particular coin. The price difference marks the profit gain for the trader. This kind of trading is widely used in the crypto market as it doesn’t require any technical knowledge to perform it. Arbitrage trading can be automated and can be performed by a bot. This trading may present a lucrative window of opportunity to generate passive income for the newbies entering the cryptomarket.