Crypto Fundamentals 4: Types of Crypto Trading

Are you ready to dive deep into the world of crypto trading?

Many types of trading are available on exchange platforms, such as copy trading and influencer trading. However, how does one choose a crypto trading style? Everyone has their taste and style, and this is no different when it comes to crypto trading. The type you choose will depend on your goals and taste. Understanding crypto trading styles can help you to decide which one works best for you. Want to learn more? We’re here to help with this new Crypto Fundamentals chapter. Read on for more information on common types of crypto trading.

Copy-trading

Copy-trading is a hub that allows users to mimic experienced crypto traders. It’s perfect for beginners who are still learning about crypto. It is also a great trading style that allows you to start trading without a lot of knowledge. An example of copy trading would be if you buy the same number of shares that an experienced trader does. You then mimic their style of trading and selling coins when they do (or stop trading when they do). Copy-trading uses information on the investment of top investors to provide users with suitable information to follow. This allows them to copy the user’s trade activity.

Why is copy-trading successful?

Copy-trading helps to educate people about crypto trading practices to help minimize their losses whilst they learn. Depending on the amount you put in, (and who you choose to copy), copy-trading can make you quite a profit. It reduces the need to spend years losing money on taking chances as you’re mimicking a successful trader. You can make money if you copy from a trader who invests wisely… and you do not have to waste any more time on cryptocurrency books. Copy-trading can be expensive if you use a platform with expensive trading fees, so make sure you use a good trading platform with affordable fees.

Influencer trading

Several social media influencers are using and promoting crypto trading even ‘post-pandemic’. Influencer trading occurs when expert traders use their social media channels to recruit investors. The influencer trading method relies on the validity of influencers, their existing investments, and their crypto knowledge. Influencer trading, although new to the crypto world, is a good way for investors to earn money through mimicking, as with copy trading, or through the use of investments directly through the influencers’ cryptocurrencies.

Why is influencer trading successful?

Influencers can help you achieve a good return on your investments. They can also teach you the methods of trading that have been successful for them. You must choose an influencer with a good reputation (and not a high-risk profile). These influencers will help you grow and provide useful information on trading while reducing your risk of loss. As with any investment, there are always scammers nearby. To prevent being scammed and losing money, ensure you use good platforms and do your research before investing.

Scalping

Scalping is a type of trading that involves making a small amount of profit fast. It requires you to make a trade every day, or even a few times a day, and to draw your profits promptly. You can scalp by buying and selling crypto shares and trading them right away to make long-term investments with the profits.

Why is scalping successful?

If you use stops when you need to and stay focused on your investments, scalping can be a good way to earn quick money. It requires you to take a risk but if you’re experienced and skilled, this can be a sure way to earn a quick return on your investments.

Swing Trading

Swing trading is the process of catching the market’s “swings”. If a market is doing well, you’ll invest and hold the position until you hit your goal. You’ll then pull out in the short or medium-term before you hit any risks ahead. Swing trading is best used for trending markets.

Why is swing trading successful?

Swing trading is great for beginners looking to make short-term investments. It is a good way to earn a bit of money without putting in too many hours of trading. The best way to get a good return on your investment is to keep your money in through any small waves, and to not panic — as long as the market is doing well, you’re likely to see a profit.

Day Trading

Day trading is a simple process of processing trades over a 24-hour day. It is an investment done in the short term without putting much work in. The aim is for you to invest an amount of coin but to stop investing before any risks occur.

Why is day trading successful?

Depending on market fluctuations, you could earn money pretty quickly. As with Scalping, there’s always a risk involved but if you’re an experienced trader or have excellent crypto skills, this could be a good method for you.

Position trading

Position trading is a trading method that takes place over the long term. You’ll find a good investment based on trends and hold this investment for some time. The goal is to make a long-term profit on a good investment by holding onto your investments through the ups and downs.

Why is position trading successful?

Like all long-term investments, position trading has its ups and downs. It might be tempting to pull out your investments, but an investment in a good trading market will help you gain money over the long term.

Range trading

Range trading relies on support and resistance levels. In this method, you must rely on analysts and experienced players who will provide you with a resistance and support level. A support level, in this context, refers to a cryptocurrency price level that falls below its current price, while a resistance level is a cryptocurrency price that falls above.

Why is range trading successful?

It takes advantage of fluctuations in the market. Shares will either be high or low, and range trading uses this to establish points to make money in the short and long term.

Now that you know what trade methods and styles are out there and what their advantages are, you might be in a better position to consider choosing your own. In the next chapter, we’ll be sharing some tips on how to choose what type of crypto trading best suits you.

So be sure to keep an eye out for the next Crypto Fundamentals chapter, brought to you by Your Friendly Crypto Exchange, IXFI.