Cryptocurrency Trading Strategies

Submitted by Share Trading on 7 September, 2017 - 23:29

Strategies with Cryptocurrency trading. Long and short term trading strategy? Fundamental or Technical trading strategy?

Cryptocurrency trading strategies are categorized into two parts namely;

  1. Day-trading and
  2. Long-term trading

Day Trading Cryptocurrency

Day trading is a very popular Bitcoin trading pattern worldwide and this means trades speculated within the same day. This means a trader closes their position by the end of the day or within a specific time frame. Day trading strategies are driven by profit, and can lead to a lucrative occupation or the significant loss of wealth. Trading this way takes research and practice to perfect the skills good enough to profit

Cryptocurrency Long Term Trading

Long term trading is basically the opposite where the trader believes that the price will push higher over time. This type of trading is like buying a product and hoping the product’s price will drop or rise with the trader profiting from the difference.

Pump and Dump Cryptocurrency

For a pump or dump to occur to a cryptocurrency, there's always a tussle of power between the Bull and the Bear’s market participants. In layman terms, it's a struggle between two sides of the market: the buy side and the sell side. A bearish market occurs when the price goes down due to an increase selling (pushing price down as sellers dump their stock) while a bullish market is an upward movement of asset price (raising prices as a result of increased demand from buyers willing to purchase at any price and sellers raising their prices as they seek to profit more from the upward momentum).

Understanding and Analysing the Altcoin Market

The altcoin markets can be analysed using traditional trading theory to help forecast the future direction of price movements and therefore pick good investments. These techniques are called fundamental analysis (FA) and technical analysis (TA).

Fundamental analysis attempts to determine the real value of something in order to determine whether it is undervalued or overvalued. When it comes to trading altcoins this is more difficult, because these financial instruments are generally very early in their development – so their value reflects potential future success rather than their current position. You can still look at a coin’s level of adoption (e.g. if the altcoin currency is accepted online at multiple stores), the strength of the network, number of transactions and so on, but this will only take you so far. To a great extent you must rely on estimating the potential size of the market in the future and the chances that this potential will be fulfilled. Technical analysis uses price and volume data, and seeks to find patterns and indicators which can be used to forecast the future direction of price movement.

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