Crypto trading can be unfathomably lucrative if you know what you are doing, and it goes without saying that more than just a few people have made their fortunes from crypto trading alone.
Whether it be trading crypto futures, scalping, or range trading, there are a plethora of different strategies that people employ to try and get an edge over the market, and the advantages of learning a solid strategy and sticking to it are far numerous to count.
In this article, we will be taking a look at three different crypto trading strategies you just need to know about, as well as going through a few of the advantages and disadvantages of each to give you a better idea of which strategy might be best for you.
Swing Trading
Swing trading is perhaps the classic trading strategy that you would think of when you think about crypto trading. Swing trading simply involves speculating on which cryptos are likely to fall/increase in price and taking advantage of the high volatility found within the crypto markets.
Swing trading is usually a good option for beginners as it is one of the simplest trading strategies out there; buy when the price is low, sell when the price is high.
It is also a strategy that heavily incentivises making use of charting tools and graph data to better predict the prices of specific cryptos, and this can allow traders to have at least a degree of confidence whenever putting their capital at risk.
Swing trading is an excellent trading strategy that takes advantage of the fundamental way in which crypto works, and if you are looking for a simple trading strategy that has a ton of potential for optimization, then swing trading may just be your best bet.
Arbitrage Trading
Arbitrage trading is a little unusual when compared to most other trading strategies, and this is simply due to the fact that it has little to no reliance on the crypto market to make a profit.
The core concept of arbitrage trading is simply making a profit off a crypto that is valued differently on two different markets. To give an example of how this works; you may find that ethereum is priced differently on one market than another, and this means that you could invest in the market where it has a lower value, store it in your crypto wallet, and sell it on the market where its value is higher.
This is one of the few trading strategies in the world that has little to no risk, and it is an incredible way to negate many of the downsides that comes with trading crypto.
However, whilst arbitrage trading comes with almost no risk, it also has a very low earnings potential. Any differences in price on different markets are likely going to be extremely minuscule, and you may find yourself only making a few dollars per trade if done on a smaller scale.
On the other hand, if you have the free capital to put a small fortune into crypto, then the earnings potential from arbitrage trading can actually be relatively high, and this is exactly why it is becoming a favourite with wealthy investors all over the world.
Day Trading
Day trading has been somewhat romanticised in mainstream culture because of the idea it portrays. The thought of sitting at the top of a high-rise building surrounded by a plethora of charts and graphs whilst wearing an expensive suit is incredibly enticing, but in reality, this just isn’t the case.
Day trading can be incredibly arduous, and unless you have the entire day to spend staring at your computer, then day trading likely isn’t going to be very feasible for you.
There is a myriad of day trading strategies in and of itself, and citing day trading as one specific trading strategy would be somewhat misleading. However, the core components of day trading usually stay the same throughout all strategies, and that is that of keeping a close eye on the market and taking advantage of any small price jumps/drops.
Day trading is an advanced strategy and isn’t recommended for beginners. Whilst day trading has an unfathomably high earnings potential, it also comes with a ton of risk, and that goes without mentioning the fact that you practically have to dedicate your entire life to the art in order to see any sort of success.
If you choose to employ any of the strategies we mentioned in this article, you are going to have a much better chance than most of becoming successful when trading crypto. However, it is important to note that the potential for you to lose money is always there, and just because you choose to take advantage of any of the strategies we talked about does not mean you are guaranteed success.
Even the best of traders come out at a loss from time to time, and in reality, there is never going to be any sure-fire way to guarantee that you come out on top.