Types of Trading Styles

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Admin

Sep 20, 2021

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Fortunately, there isn’t only one style of trading cryptocurrency that you can adopt. There are a variety of trading styles to choose from depending on how long you want to hold a position for. 

The Different Trading Styles

Scalping 
Scalping is a type of trading strategy that takes place over the shortest period of time, usually minutes or seconds. Scalpers aim to take advantage of small price fluctuations. Because of the short time frames associated with scalping, traders generally only generate a small percentage of profit, usually around 1% or lower.

Scalping can be extremely lucrative, especially for larger traders (whales) who can trade large positions for smaller percentage profits.

Day trading
Day trading is arguably the most well-known trading strategy. Like the name suggests, day trading involves entering and exiting trades/positions on the same day. The term “day trading” originates from the traditional markets as they are only open for set periods of the day, unlike the crypto market, which is open 24 hours a day, 365 days a year. 

Traders who utilise day trading as their trading strategy aim to take advantage of intraday price fluctuations (price movements that occur in a single day). Day traders generally use short-term price action and technical analysis to create trade ideas. Although day trading can be highly profitable for some traders, it is often very time consuming, demanding and can involve substantial risk. Day trading is, therefore, usually recommended for more experienced traders.

Swing trading
Swing trading is quite similar to day trading, the main difference are the time periods of which a trade is held. Swing traders are usually more patient than day traders and take more time to analyse and make decisions. Swing trades are usually held over the course of several days or weeks. Traders who utilise this strategy use technical analysis to formulate their ideas and look to take advantage of the volatility in the crypto markets over a period of a few days or weeks. 

Swing trading is usually more common in beginner traders as it allows them more time to evaluate their decision whereas day trading often requires quick thinking and fast executions. 

Range trading
Range trading is a trading strategy which largely involves candlestick analysis and a good understanding of support and resistance levels. Range trading is utilised by traders when the market is trading consistently between two prices or levels (support or resistance) for a period of time. 

Range trading can be used in almost any time frame, from 5 minute charts to a daily and even monthly chart. This type of trading strategy enables a trader to take both long and short positions, depending where the price is positioned in the range.

Position trading
Position trading is regarded as a long-term trading strategy. Traders will purchase an asset, like Bitcoin, and hold it for an extended period of time, usually months or even years. The goal in this form of trading is to buy low and then sell at a higher price in the future. Position trading usually requires some form of trust in the cryptocurrency project. Like swing trading, position trading is a great strategy for beginners as it allows for ample time to analyse and evaluate decisions. 

Regardless of which trading style you choose to adopt, you should always establish a plan which clearly outlines your goals. This will help prevent you from veering off course due to your emotions. Remember, never risk more than you are willing to lose.

Remember, proper diligence and sound judgement should be used in evaluating the risks associated with these activities. Trading cryptocurrency carries significant risk and losses can exceed deposits. Refer to our Terms and Conditions and disclosure material.
 

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