The very first dilemma that people making their foray into #crypto in 2023 face isn't choosing which to buy between industry accepted assets like $BTC and $ETH , or meme coins like $DOGE and #pepe , it is understanding, and choosing who they want to be in their crypto journey.
There are basically lots of paths to take in crypto, but these paths can be broadly subdivided into
Investing
Trading.
Each of these paths, find in themselves, various subcategories.
Investors
An investor basically, is one who after due research, puts his money into an asset over a period of time, with the intentions to make profit. The time frame could be long or short. Long term investors are those who after due research, invests in an asset over a period of time with 10 years being the very minimum. They are not bothered much about the daily market activities, because they believe that long term, most things are bullish. They wait for a decent ROI and then choose when to cash in on their assets. Imagine buying #BTC at less than $1000, and holding through the bear and bull markets up until when it hit north of $65,000. these are the true HODLers. The short term investors usually has 3 years as the maximum waiting period for an ROI.
Traders
There are different types of traders: Scalpers, day traders, range traders, intra-day traders and position traders. I would go ahead to touch on two of those.
Scalping revolves around executing rapid trades with the objective of generating consistent profits, even if they are relatively small. The key is to swiftly capture gains and promptly cut losses. You may engage in multiple trades within a few minutes, or only scalp a handful of positions throughout the day. Quality setups are crucial, prioritising opportunities over indiscriminate trades. Ideally, the ability to go long and short is desired. However, it is possible to scalp through spot buying and selling of #cryptocurrencies. For instance, you might buy Solana at $20, sell at $22, buy again at $21, and sell at $23. In such cases, you could set a tight stop-loss order around $19, or manually scale out of your position if the trade goes against you. This approach demands unwavering focus. Nonetheless, if executed skilfully, it can yield swift profits. It is important to note that an effective risk management and a combination of luck and skill are essential. The idea in scalping is to make consistent profit, no matter how little and then accumulate profits over a period of time.
Range Trading: Cryptocurrencies often exhibit a tendency to establish trading ranges. These ranges typically manifest as consolidation phases, which can be categorised as either accumulation (where prominent investors acquire more coins in preparation for an upward price movement) or distribution (where coins are sold at high prices before major players allow the market to decline). Range traders specialise in trading within these defined ranges by strategically setting stop orders. They are indifferent to whether they are trading near the all-time high or the local bottom of the range. Their approach involves buying near the bottom of the range with a predetermined stop order and subsequently selling towards the top or scaling out as the price rises. When a range is identified, it provides clear levels of support and resistance, making it a logical choice for trading. While some traders focus on breakouts or breakdowns from the range, you concentrate on executing profitable and predictable trades within the existing range. There are a lot of other trading styles too, a quick internet search should reveal more on these.
summarily, various trading styles exist, ranging from the rapid and short-term approach of scalping to the longer-term strategy of investing. These styles can overlap, and traders have the flexibility to choose a style that suits their preferences or even mix and match styles based on specific assets or goals. It is however essential to adapt tactics according to the chosen style, as different approaches work better within specific time frames. For example, investors are less concerned with short-term fluctuations, volatility, and technical support and resistance levels. They typically maintain their main position without leverage. On the other hand, scalpers might utilise leverage to anticipate support and resistance levels on a 5-minute chart. The most effective way to determine which style works best is through hands-on experience and honest self-assessment of its effectiveness on emotional and logical well-being. If a style throws off your balance or results in constant losses, it is likely not the right fit. In general, the quicker and smaller percentage of your bankroll you risk per trade, the lower the risk appears on paper. However, this also means more hands-on trading, inviting complexities such as slippage and fees due to frequent transactions. Position trading and investing are often recommended for new or casual traders as they require less micromanagement and technical skill. However, it's important to note that trading and investing in the volatile crypto market can still bring stress over the long term. It's worth mentioning that holding positions overnight in any trading style can induce stress since the crypto market operates 24/7, and corrections can occur while one is sleeping. For those who are uncertain, starting with position trading or investing combined with dollar-cost averaging is a solid consideration.
A lot of analysts and speculators and crypto enthusiasts, and crypto enthusiasts posit that there will be a massive bull run in 2023, others have 2024 as a very safe estimate. But irrespective of the when the bull does run, an understanding of one's self and business strategies is an essential step towards winning in the #crypto
