The cryptocurrency market is renowned that having generated and destroyed a lot of wealth. Unlike the stocks with a profit of 2%, the crypto market delivered returns of up to 10 times in a few hours. This is why millions of users resort to trading with cryptocurrencies for instant profits.
At the same time, exchanges have the opportunity to reorganize a larger user group by introducing more business options. Because most white label bitcoin trading platforms support all primary trading methods, beginners can quickly learn and participate in the major markets.
Most of the business people who succeed in crypto trading have suggested this:
“Don't start trading cryptocurrencies without first defining your trading strategy”
Moreover, to consistently make money in the cryptocurrency market, you need a proven strategy. This strategy allows you to focus on the continuous flow of news, economic data, and market events that may interfere with your analysis.
So, it is necessary to understand what is a cryptocurrency trading strategy and which trading strategy is best for you?
Trading plans that teach traders how to discipline their trading activities require thorough analysis called trading strategies. A good trading strategy can help traders reduce their financial risk and improve their important knowledge of the timing and trends in volatile cryptocurrency markets.
Basically, HODLing is a popular term that has been around for several years. It simply means holding crypto assets, regardless of market conditions.
Here are a few things to keep in mind when you start trading -
Your cryptocurrency trading strategy is a fixed plan that you develop to make profitable earnings when you buy and sell in the cryptocurrency market. The plan uses a variety of analytical tools to identify predetermined market conditions and price levels, including key areas of resistance and support.
It is wrong to see the events on the cryptocurrency market at random and to act according to your instincts. Intuition-based trading can pay off. However, such achievements are only random results. No matter how hard we try, we can't be sure that these results will be repeated over and over again.
Professional marketers rely on well-designed methods to succeed. They know that even when cryptocurrency prices fluctuate, they tend to follow predictable patterns. As a result, trade requires a strategic approach. Our goal is to help you understand the different trading strategies needed for consistent results.
There are many trading strategies, but we will discuss the most popular ones. Most of the trading strategies we are referring to are Forex, Stocks, ETFs, etc. It works in the same financial markets. However, the focus of this article is cryptocurrency.
1. Day Trading
Many new cryptocurrency traders try to trade on the same day. Therefore, it is very important to have an intuitive interface to become an exchange for beginners.
As the name suggests, this type of trade opens and closes on the same day. Simply put, day traders want to take full advantage of cryptocurrency price movements within a single trading day (ie 24 hours in the cryptocurrency space).
Day traders research the market, monitor price movements, and perform technical analyzes of the market to formulate trading strategies. With a well-thought-out strategy, these types of transactions can be very profitable, so this type of transaction is suitable for experienced traders.
2. Trend Trading
The term is self-explanatory, and trend traders hold positions as long as the directional trend continues. As a result, these trading positions are maintained for a long time. Traders can buy positions when an asset is rising and can sell positions when it is declining. The exchanges that offer special screens to track price movement patterns help traders make informed decisions.
White-Label Cryptocurrency exchange Development Services inserts the exchanges with the capacity in developing long/short positions. Unlike day trading, trend trading requires the trader to follow fundamental analysis rather than technical analysis. You should also follow moving averages (MA), trend lines, and a few technical indicators. Suitable for beginner traders.
Scalping is a trading strategy that allows traders to profit by placing small trades several times a day. Scalpers can hold a position for a longer time or open or close a position in minutes. It is also known as high-frequency trading. This is best for experienced traders. The most important aspect of exchange that the users will prefer for scalping is that the exchange should be very fast.
4. Swing Trading
If you are a beginner or long-term trader, swing trading is for you. In general, swing trading lasts more than a day and is shorter than a month. This is where traders travel on the waves of market volatility and make the most of it. They need to perform technical and fundamental analysis to formulate a strong strategy. For beginners, swing trading is one of the most profitable strategies to choose from. This allows you to wait for the transaction to develop over a period of time. However, to attract swing traders, exchanges need to ensure that their security features are marvellous.
5. Hold and Buy (Position Trading)
Position trading allows traders to hold trading positions for a longer period of time. It could be months or years. Traders who use this strategy usually ignore short-term price movements and focus more on long-term trends. To execute these types of transactions, traders usually focus on daily, weekly, and monthly periods. Position traders use fundamental analysis to assess potential market price trends and take into account other factors, such as market trends and historical patterns.
6. Arbitrage Trading
The practice of buying cryptocurrencies in one market and selling them in another market to take advantage of the price difference is called arbitrage trading. Traders can earn money by taking advantage of the low price correlation between the crypto assets offered by several exchanges.
For example, if the price of Bitcoin in the first market is $48,000 but $48,400 in the second market, you can select to buy bitcoin in the first market and transfer the BTC that you purchased to the second market to sell it at a higher rate.
With hundreds of exchanges on the spot market, the arbitrage opportunities for cryptocurrencies are virtually endless. As a result, traders are looking for effective ways to identify and capitalize on price differences across multiple exchanges, and this trend is expected to continue.
Your trading style is determined by your personality and the length of time you want to trade.
If you feel comfortable sitting in front of a trading chart all day, starting and exiting multiple trades at regular intervals, scalping can be a good option. On the other hand, if you want to work part-time while doing other things, you may find that a long-term trading strategy, such as swing trading, is more appropriate.
When developing a trading strategy, it is very important to consider how much time you will spend trading. Scalper aims to make money by moving more pips per trade. They do a lot of shopping every day and go in and out of the market over and over again. Swing traders, on the other hand, keep their trades open for periods ranging from days to weeks or months.
There is no "best" trading strategy that can be generalized to apply to everyone, as it varies greatly from one trader to another. Rather, it is the "best" trading style that suits you.
Developing a cryptocurrency trading strategy that fits your financial goals and personality is not easy. After taking a look at the most popular cryptocurrency trading methods, we hope you can decide which one is right for you.
Keep track of your transactions so you can easily determine which ones are actually successful and which aren't. Keep track of all the trading techniques you use. Don't deviate from the predetermined rules you've set for yourself to decide how and when you can get the results you want.
A cryptocurrency trading strategy is something that should be considered after conducting fundamental and technical analysis. We have tried to teach you about some of the most common cryptocurrency trading strategies and what functions your exchange should have to meet the needs of different types of traders.
You also need to know the asset classes you want to include in your investment portfolio and the level of risk you want to take. Also, learn the basics of cryptocurrency trading such as order types, and decide which trading indicators to use.
At Clarisco Solutions, we are a team of blockchain experts who build blockchain development services like cryptocurrency exchanges, smart contract-based MLMs, and more such products. If you wish to buy bitcoin trading software contact us and catch our experts.