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A Look at the Different Types of Crypto Trading Strategies

Published

2 years ago

September 23, 2022

A Look at the Different Types of Crypto Trading Strategies

To find success with crypto, you must learn about the many crypto trading strategies. Read here to get all the info you need about them.

According to a recent Pew Research Center survey, almost half of all Americans who have invested in cryptocurrency say their investments did worse than they expected them to.

This suggests that many people haven’t made as much money investing in crypto as they anticipated. If you fall into this category, you might be frustrated with what crypto has had to offer to you thus far.

You might also be wondering how you can get your crypto investments to work out better than they have. Utilizing the right crypto trading strategies is one way that people can make the most of their crypto investments.

A good crypto strategy should yield better results than not using a strategy at all. Today, we’re going to discuss some of the top crypto trading strategies that exist. We’re also going to sprinkle in some crypto trading tips to help you make your crypto investments more profitable from now on.

Here are several of the best types of crypto trading strategies with Bitsgap that you can use when investing in cryptocurrency.

Day Trading

Most forms of cryptocurrency, including Bitcoin, are very volatile. Their values will go up and down quite a bit throughout the course of a single day.

As a result, you could potentially make a lot of money by doing day trading when it comes to crypto.

It’s actually one of the most profitable crypto trading strategies for those who really understand what they’re doing.

You can bring in some nice profits if you’re able to buy crypto at a low price point at the start of a day before selling it at a higher price a few hours later.

Daytrading crypto is a great way to use the volatility of crypto to your advantage.

There is, of course, going to be some risk associated with the day trading of crypto.

But as long as you know what you’re doing, you might be able to reap the rewards of using this crypto trading strategy.

HODL

While daytrading crypto involves buying and selling it very quickly, HODL involves taking the exact opposite approach to trading it.

Short for “hold on for dear life,” HODL is a crypto trading strategy that will call for you to buy crypto and hang onto it for an extended period of time.

If you want to make trading crypto a little bit less intense than it would be otherwise, you might want to consider using this strategy.

It’ll give you an opportunity to take your time when it comes to buying and selling crypto.

You won’t necessarily be able to cash in on the volatility of cryptocurrency when you utilize the HODL strategy.

But you might be able to collect a much bigger profit in the end if the type of crypto that you invest in steadily increases in value over the course of many months or even years.

Futures Trading

If you would like to protect yourself from some of the market fluctuations that exist within the crypto world, your best bet might be to use the future trading strategy.

It’s designed to help investors to buy and sell crypto without subjecting themselves to the volatility of the market.

Essentially, futures trading will involve you entering into a contract with another party that will call for you to buy or sell crypto at a particular price point on a specific date. It adds an element of predictability to the crypto trading process.

Futures trading will limit how much of a profit you could stand to make on crypto trading.

But it’s a nice option for those who want to take part in buying and selling crypto without subjecting their investments to too much risk.

Arbitrage Trading

Of all the crypto trading strategies on this list, this one might just be the most creative of the bunch.

Even if you’re not super well versed in the crypto world, you should still be able to make sense of arbitrage trading and use it to turn small profits consistently.

There are many different cryptocurrency exchanges that can be used to buy and sell Bitcoin and other forms of crypto. These exchanges will often list crypto for slightly different prices.

Arbitrage trading involves buying crypto through one exchange at a certain price and then taking crypto and selling it through another exchange for a higher price. You can profit from the difference in price between the two exchanges.

You will need to act fast if you’re going to use arbitrage trading to turn a profit.

Since the prices of crypto are always changing, you might miss out on the opportunity to make money through arbitrage trading if you aren’t quick enough.

You’ll also need to pay fees when buying and selling crypto through different exchanges, which can limit your profits.

But generally speaking, arbitrage trading can work well for those who know how to use it to their advantage.

High-Frequency Trading

If you’re just starting to buy and sell crypto for the first time, high-frequency trading is not going to be one of the best crypto trading strategies for you.

You won’t have the experience that it’ll take to use this form of trading to turn a profit.

But if you have some experience under your belt as far as investing in crypto is concerned, high-frequency trading could be a profitable venture for you.

It’ll involve you relying on advanced algorithms and trading bots to buy and sell crypto on different exchanges for prices that make the most sense.

The algorithms and trading bots that you’ll use when doing high-frequency trading will be able to let you know when you should buy and sell crypto to maximize your profits.

They can exploit the market conditions and put you in a position to make as much profit as you possibly can.

Scalping

Scalping is another one of the crypto trading strategies that should be reserved for those who have a wealth of experience within the crypto world.

If you don’t know exactly what you’re doing when scalping crypto, things might not work out the way you would like them to.

So-called scalp traders will make money by exploiting some of the inefficiencies that often exist in the crypto markets.

They’ll make large numbers of trades in a short period of time when small price movements occur.

If you aren’t able to make enough trades in the span of a day to capitalize on scalping crypto, this won’t be the crypto trading strategy for you.

But those who have a lot of money invested in crypto should be able to use scalping to make a pretty penny within just a few hours in many cases.

Range Trading

Although the price of crypto can be very unpredictable for the most part, some forms of crypto will tend to trade within a specific range for an extended period of time.

For instance, the price of Bitcoin might stay within the $20,000 to $25,000 range for weeks and even months on end.

Range trading is a crypto trading strategy that can help you to turn a profit by taking advantage of this.

If you’re able to buy Bitcoin at around $20,000 while knowing that it’ll likely shoot back up to $25,000 at some point, you can use this to make a profit.

It’ll just be very important for you to keep tabs on the price of a particular type of crypto at all times.

The last thing that you want is to miss the chance to sell crypto when it hits the top of its predicted range.

Get more information here about how you can use things like Bitcoin ATMs to monitor the price of Bitcoin so that you can buy and sell it at the right times.

Index Investing

If you don’t feel comfortable investing all of your money into one or two types of cryptocurrency, you might like the idea of doing index investing.

It’ll involve you investing money with other investors to get your hands on a portfolio filled with different types of crypto.

From there, you and your fellow investors can vote on how you would like to handle this portfolio.

You can buy and sell different types of crypto based on how they’re performing and on how you and the other investors feel about them.

Like the other crypto trading strategies listed here, there will be some risks associated with index investing.

But since you will be investing in a handful of different types of crypto, you’ll have a better chance of making a profit over time than you would otherwise.

Swing Trading

Some of the crypto trading strategies that we touched on at the beginning of this article focused on using the volatility of crypto to make quick trades to turn a profit.

Swing trading also does this, but it does it over a slightly longer period of time.

Instead of buying and selling crypto several times throughout the course of a day like you would with day trading, swing trading will call for you to buy and sell it several times throughout the course of a week or month.

You’ll be on a mission to use the crypto market volatility in your favor.

You will need to get used to making very quick decisions as you buy and sell crypto while taking part in swing trading.

You might also need to employ crypto trading bots to buy and sell crypto for you when the time is right.

All of this means that you’re going to need to have some experience with trading crypto before you give swing trading a try.

But when used correctly, swing trading could lead to bigger profits than you could have ever imagined.

Trend Trading

As we’ve mentioned a few times now, buying and selling crypto can be unpredictable.

You never know quite when it’s going to increase or decrease in value.

But if you pay close enough attention to the crypto market, you should be able to start to spot some trends.

It’ll enable you to guess when the price of crypto is going to fall and then rise again.

If you’re able to play your cards right, you should be able to spot signs that show that the value of crypto is on its way down.

This will be when you’ll want to strike and scoop up as much crypto as you can.

You should also be able to spot trends that suggest the price of crypto could increase in the weeks to come.

This will be when you’ll want to get ready to sell it to make a profit.

Trend trading will require you to be very patient when buying and selling crypto.

You might need to hold onto crypto for months on end before seeing its value start to rise again.

But as long as you’re willing to wait for the right time, you can use trend trading to make money while selling crypto. You’ll just need to be ready to pounce when the time comes.