It’s general knowledge that having a strategy before taking an action or a series of actions is bound to yield better results. This is true in the case of crypto trading as well. Let’s explore some of the strategies that could best serve traders and how they can be implemented.

But first, what exactly are trading strategies?

A trading strategy is a well-developed plan used to purchase and sell instruments on financial markets, wherever they’re spot or futures. Such a process relies on rules and predefined criteria used in decision-making that can be simple or complex. Rules imply more bars, the most defining being the investor’s profile, what type of risk the trader is willing to take, what timeframe they will use or how long they will hold the position, portfolio’s diversification level, and investment style.

If we’re talking trading strategies, then it’s essential to keep in mind technical chart indicators, fundamental analysis, and the market’s general sentiment.

Why would I need a trading strategy?

Calculated systematic trading is essential for long-term success. Here is why: a serious trading strategy allows traders to remain focused, regardless of market sentiment, and build on news and economic data given by experts that may intervene in the analysis process.

If we trust our calculus and know how to interpret technical and fundamental data, the market’s fear or greed will not affect us. Emotions are hard to get over, especially regarding hard-earned money. Fear and greed can quickly take over a beginner’s mind after a series of bad or good transactions. A good strategy can mitigate the risk of that happening.

Maybe you’re sold on the importance of a trading strategy, but you don’t know where to start. If that’s the case, this next part is meant for you.

What trading styles are there to choose from?

Day Trading

Day trading is for people with a lot of free time or passion, who desire profit over a short period. This type of trading is for active traders that execute several strategies to profit from price fluctuations — all in a single day. Even if day trading comes from traditional markets, daily cryptocurrency trading requires a much deeper knowledge of Blockchain Technology to obtain consistent success. Such strategies represent the opposite of the traditional Buy&Hold method and can be used by diverse applications and resources. The risk associated with day trading is high, but the rewards can be more consistent.

Trend Trading

Trend trading is a trading style that tries to capture profits by analyzing an asset’s next move in a specific direction. When the price moves in a prevailing direction, traders call that a trend, like only up or only down. Traders tend to go long when an asset shows an uptrend on its chart, betting that its price will be higher in the future. Contrary, if the dominant trend is bearish: traders will short sell to hedge their portfolio against losses.

Swing Trading

In this case, the time required for position trading could be medium to long, implying that trades can take a couple of days to months to develop and profit from price movement. On the other hand, swing trading exposes the trader to risks overnight while they are asleep, and the price can move in the opposite direction.

Scalping

Scalping can be used in day trading because it’s a style specialized in profiting from small price movements. The goal is to mark the profit as often as possible. Unlike swing trading, where positions can last for days or even weeks, scalping is about keeping the positions for a short time, from seconds to minutes, to reduce the risk.

Breakout Trading

Breakout trading represents getting into a trend as early as possible, suitable when the price moves out of its consolidation range. Day traders and swing traders usually use breakout trading because it profits from market movements over a short and medium period. Traders that use this strategy will search for price levels that indicate the start of a volatile period or a change in market sentiment. Then, by adopting positions at the right level, traders using the breakout strategy can keep their transactions open from the beginning until the end.

Reversal Trading

This strategy is based on identifying the moment when a current trend will change direction. Once the reversal is made, reversal trading will take over many characteristics of trend trading because it can last over a more extended period. A turnaround can occur in both directions because it’s simply a turning point in market sentiment and asset chart.

How do I choose a strategy?

If we ask different traders what the perfect strategy is, they will probably point to a different one. Not only that, but they will be divided depending on analysis type and if these can be combined or not. The truth is that there’s no perfect universal strategy because markets change so fast, and we’re too different to all think alike.

When it comes to trading strategies — all of them can work properly in specific market conditions, depending on traded instruments and for different people. That’s why it’s recommended to choose a trading strategy suited for your personality, discipline level, available capital, risk tolerance, and the time you’re going to invest.

The only rule that will always be relevant is that we need to be constantly informed to evolve. With enough information about a cryptocurrency, equity, company, or project, we will know what trading strategies to adopt and continuously make conscious decisions. Make use of the information available on our Medium blog to learn more about cryptocurrencies.

Now that you’ve seen what trading strategies you can choose from, the good news is that you can use any of them to trade on Your Friendly Crypto Exchange. Just make sure that it suits your style. Register on IXFI and open up a whole new world of possibilities.

Disclaimer: The content of this article is not investment advice and does not constitute an offer or solicitation to offer or recommendation of any investment product. It is for general purposes only and does not take into account your individual needs, investment objectives and specific financial and fiscal circumstances.

Although the material contained in this article was prepared based on information from public and private sources that IXFI believes to be reliable, no representation, warranty or undertaking, stated or implied, is given as to the accuracy of the information contained herein, and IXFI expressly disclaims any liability for the accuracy and completeness of the information contained in this article.

Investment involves risk; any ideas or strategies discussed herein should therefore not be undertaken by any individual without prior consultation with a financial professional for the purpose of assessing whether the ideas or strategies that are discussed are suitable to you based on your own personal financial and fiscal objectives, needs and risk tolerance. IXFI expressly disclaims any liability or loss incurred by any person who acts on the information, ideas or strategies discussed herein.