Investors always join the crypto industry with the motive to generate money ,fast money and more money.Timeframes and techniques could be different but goal always remains the same, definitely money. But with making money , loosing money is also a parallel truth.No one can deny this fact.
Therefore before starting any trade a trader either newcomers or experienced should investigate all encircled aspects of crypto market multiple times.This article is based on different types of trading strategies, risk involvements and advantages , also providing real-life examples, and offering some of pro tips to get maximum advantage out of any type of trade.
Let's unbox the different types of trading strategies.
Different types of Crypto trading strategies:
There are different types of crypto trading strategies, some of common strategies are, ;
HODling Or Long term trading Or Positioning Trading
Swing Trading
Day trading or Intraday trading
Scalping
Now let's have a check on one by one with details including risk involvements and advantages.
1.HODling
HODl is a slang term frequently used in crypto market that stands for
"Hold on for Dear Life"
HODling is a long term trading strategy to get maximum benefit from a certain crypto. Different terms like "Long term trading", "positioning trading",and "HODling" are used for this type of trading.
HODl is a higher time frame strategy that usually passes through months to years.Even the beginners can rely on this strategy.
In this type ,traders buy a certain crypto in the dip, hold it and wait for the boom to sell at the highest price even if it takes time from many months to years.
Associated Risks :
Timespan:
A very detailed investigation of certain crypto is required to trust that it will go up in future,otherwise more dips means more suitable time to get out with profits.
Implicit or Opportunity costs:
Investment held for crypto by adapting this strategy remains bound until it gets matured even though more profits can be generated by other short-term investments.
Volatility:
As crypto is unpredictable and mostly volatile in nature, although many countries are making new rules and regulations regarding crypto ,long-term investment could be risky, any kind of ban or legality can make a crypto flip on instant bases.
Associated Advantages:
Basic strategy:
This is the most basic strategy even beginners can practice by just buying in the dip and selling in the rise.
Safest:
This is the safest strategy for the classic traders who don't mind investing through years even if dip remains.
Low Investments:
there is not more Capital required,low investments are fine to get more money.
Time saving: This is a one time investment, there is no need to check the complex market frequently, just wait for the right time to get profits.
Trading charges:
Frequent trading always charge frequent fees too. HODl is spared from these frequent charges.
Example:
Bitcoin is the first case where HODLing proved more beneficial in trading.Traders who bought BTC under $1000 before 2017 and hold it for its price rising,became millionaires in 2021.Many are HODling still for the next boom.
2.Swing tradings
Swing tradings are flexible in time frame as it can be from a day to several weeks .These types of trades hold short to medium pace depending on the swinging price. Buying on dip selling on rise, like this a swing trading forms.
Associated Risks:
Volatility:
As volatility is associated with crypto, the market can go against anytime.
Decisions making:
Wrong timings to enter or exit can lead to massive losses.
Market pattern:
Market swing patterns are also unpredictable.
Low-medium investment:
In this strategy low to medium capital is required to get a decent amount of profits.But in case of opposite market swing trends losses would increase with time span.
Associated Advantages:
Moderate Time saving:
This strategy takes less time as compared to HODling in the sense of hold and also takes less monitoring as compared to intra day trade.
Potential:
As it is flexible in time so it has more potential to increase profit limits.
Flexibility:
Traders can wait until its trade gets mature.It could be either soon or late.
Example:
Swing trading is profitably applicable only if technical analysis is done properly.So when the certain technical indicators indicate to buy ,"buy it" ,and when show the indication to sell ,"sell it". All cryptos can be practiced by swing trading strategy but Pro-traders can do it with proper risk management.
3.Day trading or Intraday trading
This strategy means trading with opening and closing in the same day.The traders emphasize maximizing profits by buying and selling on the daily basis movements .Analysts also consider this strategy more profitable than others .
For the time frame Day trading is a short term daily trade in which preferably all positions are closed before the market closes.
Associated Risks:
Required Technical analysis:
This strategy requires a deep technical analysis to enter the market ,also needed entry and exit at the right time. It means the trader should have appropriate knowledge of Crypto market's latest trends.
Trading charges:
As on the daily basis trading is getting done so charges are accordingly.
Volatility:
As crypto is volatile in nature so if decisions making go against ,there would be quick losses happened.
Time taking:
It is a time taking practice, traders have to be vigilant to take entry and exit that cause stress too.
Appropriate investment:
As to get more profits appropriate investment would be there as Capital.
Associated Advantages:
Timespan :
Daily time frame is so ideal to spread the capital on multiple trades to maximize profits on the daily basis in spite of choosing the long-term trades .
High Profits:
A proper technical strategy can maximize profits on a daily basis.
Flexibility :
Traders always prefer flexibility in trading to avoid any HODling risk and to close the trade to avoid the next day gap between opening and closing prices.
Example :
A very good example of intra day trade is to choose any crypto etc Solana. Buy in the dip and find its highest ,sell it ,book the profit and close the trade.
4.Scalping:
Scalping is the most wanted and most dangerous strategy in Future crypto trades.Traders can make money in a few minutes. A minor change in price can make decent profits with appropriate risk management techniques. A short time frame is used for this strategy.Pro-traders are recommended for this strategy, beginners should avoid unless they learn technicalities of trades.
Associated Risks:
Permanent loss: A wrong buying/selling can cause permanent capital loss in case of future trade ,in spot at least HODling will help to retrieve the capital within a long time span.
Stress: Short time trade always causes mental stress with price fluctuations.
Transaction charges: As trading is being done frequently transactions charges would be frequent.
Full Concentration: 360⁰ concentration is required for scalp trading.
Associated Advantages:
Less timespan: Each trade lies on short time frames ,no certain volatility of the market involves.
Frequent Profits: Frequent profits add up over time and Capital will increase gradually.
Example:
A scalp trader buy in dip and sell in rise but needs to do this frequently with more effort and with concentration.
Practical Tips and recommendations:
Crypto is always unpredictable and volatile in nature ,so traders should always do a proper investigation before attempting any strategy.
Some of the Pro tips which are essential to follow are listed below;
A trader must learn all necessary and update techniques.
Should never tried an attempt to be emotional .
Never keep all of your investment in one crypto.
Always manage risk accordingly.
Must use stop loss strategy.
Should never go against market trend.
If a sudden lose happend or a trade went wrong, stay away from market for some time.Never try to attempt trade again to get your money back.
Have a start again with fresh mind.
Conclusion:
All strategies encircle advantages as well as risks .This is up to a trader how he can avail maximum benefit out of it.So stay tuned with recent market updates and also keep learning about the latest techniques to enhance your experience as a Pro-trader.
So Happy Trading 😃