3 Ideas for Optimizing Your Cryptocurrency Trading Strategy

More than 21.2 million adults in the US are trading crypto right now.

But how many of them are doing it right? What’s the best trading cryptocurrency trading strategy?

The optimum strategy for you varies depending on about a dozen different variables. While we can’t predict how much money and time you have available for investing in cryptocurrency, how experienced you are, or your long-term financial goals, we can give you a quick roadmap of the most common trading strategies in general. Or, if crypto trading was music, a list of the most popular genres if you will.

Here are three of the most popular categories of cryptocurrency trading strategies.

1. Active Trading Strategies

To be an active trader, you need to have time to sit at your computer (or other devices) and be very hands-on with your portfolio.

You also have to be prepared to lose everything you invest just as quickly as you invest it! Active trading strategies are short-term and high-risk. But with high risk comes the potential for an equally high and fast reward.

Day trading is the most well-known trading style. In day trading cryptocurrency, you enter and exit trades within the same 24 hours.

Swing trading is only slightly longer term than day trading. Investors using a swing trading strategy enter and exit trades in a few weeks or less than a month at most.

Trend trading is following directional trends, which involves holding positions for at least a few months.

Scalping is by far the fastest form of trading. Scalping is taking advantage of big moves or drawn-out trends, which means getting in and out of positions within a matter of seconds sometimes.

Alright, what if you don’t have time to sit at a device and be hands-on with your trading?

2. Passive Investment Strategies

As the name implies, passive cryptocurrency trading strategies don’t require much maintenance. These trading strategies are about building wealth incrementally. They are much lower risk than active strategies.

Buy and hold is the passive investment strategy of buying in and holding for many years, regardless of market fluctuation. When you buy and hold, you don’t check on this trade very often.

Index investing hasn’t traditionally referred to cryptocurrency, but you definitely can create a basket of crypto assets and monitor their progress with a token.

Not sure what a lot of these trading terms mean? If you’re brand new to investing and not sure how to trade cryptocurrency, the next strategy may be better suited for you.

3. Focusing on One Favorite Cryptocurrency

When in doubt, keep it simple.

It may help to start by honing in on one favorite cryptocurrency to get into the swing of things. For example, you may decide to buy Dogecoin when it’s in a dip and try your hand at each of the active trading strategies to see which works best for you.

Use the Best Cryptocurrency Trading Strategy for You

The optimum trading strategy for you is the one that works with your long-term investment goals, how much free time you have, and how much money you are willing to lose. That’s why it’s important to understand the differences between active and passive strategies.

Still hungry for more info on how to build the best cryptocurrency trading strategy? Browse our blog for even more crypto trading tips.


Kathleen Zara

Kathleen Zara works as a freelancer and entrepreneur working from a start-up learning along the way about marketing, social and networking, creating web sites, and web content.

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