The volatility in the cryptocurrency markets gives all sorts of variations when it comes to trading. The main difference between all trading styles is the timeframe of a particular trade and the frequency of trades executed per day.
Intraday traders open, manage and close trades within the same day. This style of trading synergizes well with Technical Analysis and has numerous different forms such as:
Trend Trading, Swing Trading, News Trading, Scalping, etc..
Swing Traders are usually going after heavily traded cryptocurrencies near a key support or resistance level hoping to catch a move.
There is a popular saying “Trend is your friend until it ends”. The goal of Trend Trading is to identify a trend and trade within the same direction of it. Trend trading is possible on any timeframe as all timeframes show trends, however, bigger timeframes are preferred by traders. Every trade, whether with the trend or against it, has to be measured on its own.
News Traders focus on trading around announcements and important news release reports, which often create strong short-term moves. The news could often come with a surprise and provide highly volatile trading opportunities.
Scalping is perhaps the most focus and time demanding trading style. It is arguably the most popular and the hardest trading style due to the high-profit opportunities and the difficulty and discipline to master. It revolves around profiting off small price changes right after opening a trade.
Long-term traders (or holders) who are not concerned with short-term price movements. It is less time demanding as this type of traders sets orders and manages them slowly until they eventually are filled. It is recommended to be practiced only on spot trading platforms, especially in crypto, as these types of platforms do not have overnight financing fees. Position Trading synergizes well with fundamental analysis.
Technical Analysists analyze, open, manage and close trades using Technical Analysis (TA). It is cheaper to perform than fundamental because it is quicker and all you need is a charting software, which comes free with all cryptocurrency brokers. Of course, you need to learn how to read charts in order to apply it effectively.
Whether Technical Analysis works for cryptocurrency trading or not is a hot topic over the past few years, however, it surely unlocks the ability to instantly spot trends and synergizes well with most of the trading styles on this list.
Fundamental Trading is closely tied to assessing information of given cryptocurrency’s strengths or weaknesses in the long term such as characteristics, business models, related news in order to forecast possible price movement and take advantage of it. Macro Trading synergizes well with common sense.
One style is never prevenient over others as each trading style is suitable for different situations. In some cases, experienced traders combine few trading styles to get the most out of a situation. The ability to adapt your trading style to various situations is crucial if you want to have successful trading sessions and stay profitable in the long term.