(24th-December-2019)
The five different styles of cryptocurrency trading
The long and short-term cryptocurrency trading can be further subdivided into these five categories and they are grouped based on the time taken between buying and selling of crypto holdings.
1) HODLING:
This type of cryptocurrency trading is the most basic of all of them, it is a type of long-term cryptocurrency trading and to some it is barely considered a type of trading. It involves less amount of work monitoring the cryptocurrency market. HODLING involves buying cryptocurrency and leaving it to increase its value over time, even through a decline of value; To involve in a buy and hold cryptocurrency trading one needs to be able to control their anxiety and not sell as a result of panic in times of downward movement. Traders in this category may find it helpful to secure their initial investment at the time when the value of their cryptocurrency holdings double in value or increase significantly so that while their initial capital is secure, the equivalent amount cryptocurrency purchased at the beginning is still in their holdings. Traders in this category have to be careful not to get too greedy and take out their capital when they should. The timeline for this style of trading is mostly unpredictable because investors take out profits from time to time to use in other non-virtual investments or expenses.
2) Scalping:
Cryptocurrency traders that perform scalping are the most active cryptocurrency traders in the group because the type of trading demands a lot of time sent online, monitoring the market, an taking advantage of every slightest turn in the market. Scalping trading are also a form of day traders. Considering the prospective frequency of this type of trading, it is important for cryptocurrency traders to take into cognisance the trading/exchange fees on the platform because if the profit perceived is not substantially above the charges it might as well not be a good idea to trade at that time.
Scalping trading is done in the shortest of time sally in seconds, the idea behind scalping to sell out in a very short time so as to lock in profits in market price before a dip occurs so as to avoid suffering the consequences of very serious price drops in the market. Although the profits in this type of trading is generally low, but might be a more secure type of short term trading compared to prospective losses of long-term trading.
Scalping is for the rather impatient type of cryptocurrency traders that are good at making reasonable decisions under pressure and there is a reliable and conducive environment to work without disturbance. The timeline chart shows how long it takes between a buy and sell order when scalp trading is done.
3) Day Trading:
Day trading type of cryptocurrency trading is a type of trading done during the most hours of the day which is daytime at periods when the market is most active. This type of trading is a type of short term trading and generally is a good idea for traders that have decided to invest long hours in cryptocurrency trading, most likely it will be hard to stay dedicated to other commitments as a day trader. The difference between day trading and scalping is that day trading takes a longer time between buying and selling of crypto stocks.
Since decisions in day trading are done between a time span of 30 minutes to a few hours, it is ideal for traders that are hands-on and always searching the markets, ones that are not as impulsive as those involved in scalping. Day trading is a good idea especially if the trader decides to fully make a living out of their crypto trades. Which means you are a full time trader, with minimal distractions because cryptocurrency prices fluctuate easily and values can go to favourable points at any time of the day and you have to apply a hands-on approach. To minimise risks on day trading it is better to trade with smaller amounts.
Day trading is good for people that want the satisfaction of monitoring their investment and growing it at the end of each day; people that have the time to dedicate to it; and people that can keep their eyes out for market trends. Since this type of trading involves a lot of risks and acting quickly, it is important to work with limits on the cryptocurrency exchange (The types of limits will be discussed further down this article and how they affect trading).
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