Beyond Dawlish
In the fast-changing landscape of cryptocurrency, a keen investor has learned that the defining element of their success is strategic trade. Such is the recklessness stimulant of cryptocurrency, but traders bring down the odds of losing out unreasonably with the right measures and approach. The ‘buy and hold’ strategy that most of the investors are well-acquainted with is changing; more sophisticated trading methods are being adopted whereby risk is minimized and profit maximized. A case in point would be efficient trading that enables the traders to respond to the direction of the market, capture the moment and seek to learn from ‘pros’ in order to improve on their own results.
Copy Trading: Using the Skills of Other Traders
One of the most powerful strategies for new and seasoned traders alike is crypto copy trading. This functionality enables their users to transfer the trades which are made by the professional traders straight to items of the users portfolio. Experienced traders are available for those individuals who don’t trade full time or who can’t execute trades without thorough research. Without doing any movement on the part of the traders, you simply copy their actions, and use their skills and market intelligence.
Assuredly, copy trading activity will be viable in the cryptocurrency market, where timing and market knowledge can separate gain from loss. However, while this method decreases the overall complexity of trading, it does put into consideration herdicity of the correct traders. Every individual trader has their own risk appetite, way of conducting trades and previous performance and all this should be assessed before opting to copy their trades. Copy trading enables one to leverage the expertise of other traders but the activity has its own inherent risks which have to be mitigated.
Trading Bots: Reaping Profits all the Time
Automated trading bots is another one that must be included in a comprehensive plan for strategic trading of ‘cryptos’. Setting automated bots is an efficient way of trading positioned at the comfort of your home. These bots are programmed to initiate trades under specified conditions, thus enabling round the clock trading. In the crypto market, where one is likely to sleep and wake up to drastically changed prices, manual trading would be rendered ineffective which is why automated bots are useful.
Computers can employ various strategies, such as arbitrage, market making, or trend following. By taking this move, for instance, the factor of human hesitation and emotion, which is often present in poor trading decisions, is eliminated. Many people believe that using trading bots is a very useful addition to the overall trading strategy, yet there are certain limitations with these devices as well. When taking a system off the shelf, make sure that it was designed within the parameters of your trading style. For this reason, it is important to consider all aspects and do not invest money until you are completely satisfied with how your bot performs.
Arbitrage: Strategy Trading in a Market with Inefficiencies
Another area suitable for Arbitrage Trading that can be exceedingly rewarding in the crypto space is that of Arbitrage trading. This strategy for trading crypto currencies is based on differences in prices for the same asset traded at different markets. Such disparity is experienced because cryptocurrencies are not centralised, and thus a small difference in price may be observed in different trade markets. Arbitrage traders will take long positions on stocks at lower rates in one exchange and short them at higher rates in another exchange making revenude out of the differences in the prices of the two exchanges.
For traders who wish to limit risk while at the same time gaining consistent returns, it would be ideal to explore arbitrage trading. This method calls for speed in entry and close scrutiny of the price difference among the assets, which is why many arb trading is also bot driven. An intricate part of successful arbitrage trading is to make swift adjustments once signs of mispricing first appear, making the most of the transient price differentials. Thus even though the returns per transaction may be low, when measured over a period of time, there is a high likelihood of optimizing the returns.
Swing Trading: Tacking Short to Medium-Tern Returns
This is another tactical trading technique prone to exploiting changes in price from short to medium-term. Unlike day trading, where a trader is required to initiate several trades within a day, swing traders hold trades for a few days or weeks until price moves in their favor.
This approach tends to succeed especially well within the crypto market which is characterized by high volatility. It involves locking in interim gains by capitalizing on price swings using standard technical indicators and indicators of market touch. Patterns such as breakouts or reversals are the ones sought by swing traders and these patterns help them get the right time for their trades. This does not mean that unlike day trading swing trading is totally un-attended, it however calls for a good market knowledge and fast decision making. Swing trading of cryptos can pull in great returns especially to those with passion and time to dedicate to studying market trends.
Long Term Holding with Strategic Exits
While short-term trading strategies such as swing trading and arbitrage rely on the optimization of compounding to produce quick returns, a long-term holding strategy, (about which many in the crypto world have affectionately referred to as Hodling), can be equally rewarding if done in a certain way. Most of the popular and successful crypto investors have been able to earn lofty returns by just holding their assets for a long period of time, enduring the flats and downturns of the market so that they can take advantage of the peak.
Nonetheless, sticking to a significantly passive holding style is likely to result in wasted potential. There are various ways through which long-term profit potential can be maximized, including through portfolio strategic adjustments, which may involve reallocation of assets in bull or bear markets, or by staking some coins for passive rewards. For instance, strategic interventions in capital markets through allocations of long-term funds should offer the best of both worlds; the certainty of long-term funds and the characteristic potential for periodic profits.
Disclaimer:
Trading cryptocurrencies carries a high level of risk and may not be suitable for all investors. Always do your own research and seek advice from a financial advisor before engaging in any trading activity.
