As you know, it takes a lot of time to constantly monitor changes in the market, that’s why some traders use crypto bots that help them cope with such tasks as placing orders, exiting markets and listening to technical analysis indicators. However, even while using crypto bots, you make a lot of decisions on your own, and one of those decisions is your choice of trading style.
It’s necessary to learn more about these styles in case you want to turn trading into a smooth part of your daily routine and... quite frankly, personality.
Day trading
If you’re here because of crypto, you should be wondering, does this trading style even make sense because crypto markets operate 24/7? What does it mean to day trade cryptocurrencies?
Well, you’re right, this term originates from traditional exchanges where operating hours equal to business hours.
But in crypto, we also have day trading due to the same approach. In short, with day trading, you take action during a one day and this one day only. The objective here is to find the most profitable buying or selling opportunities and close no more than one or two deals.
While day trading, you need to be patient and keep your emotions under control since the market might move hectically with and against the position multiple times per day, and that is scary to observe.
That’s why algorithms, or bots, are particularly good with this trading style. They “observe” market fluctuations in cold blood and choose their modus operandi based on indicators not emotions.
Scalping
This strategy is probably one of the most suitable for crypto markets with their volatility levels.
The main goal behind it is to make a profit at the expense of the slightest price fluctuations, that’s why as a scalper you have to close as many deals as possible. The more deals you close, the more profits you make.
Scalpers might want to utilize trading bots as well. Technical indicators help them find the best access points, and take-profit levels can be set to a minimum amount so that the bot closes the deal quickly.
However, scalpers need to make sure that their bot supports stop-loss since the strategy implies that the position will be exited within short timeframes.
Swing trading
Swing trading is an approach commonly used by novice crypto traders. While using this style, you trade on a higher time frame holding positions for as little as overnight and for as long as several weeks, but usually for between 1 and 7 days.
Swing traders are trying to trade the swing of a chart, hoping to catch a big move. They normally perform technical and fundamental analysis to predict the future behavior of a cryptocurrency’s price. Here, as with day trading, you should have patience to wait for the right moment.
Swing trading can also use trading bots to determine the optimal entry points based on technical indicators. Of course, they will monitor the market around the clock and execute more trades than can be done manually.
Position trading
This strategy is the longest time-frame trading strategy of all the others. Often, positions can be open for several months, according to market trends. Crypto investors use fundamental analysis and long-term charts to understand how the price of a cryptocurrency will change. The position trader is the most patient of all other traders because he does not get depressed with every price fluctuation.
Position traders may benefit from averaging the cost per dollar. You may take advantage of the price fluctuations and increase the position when the price is going in the opposite direction. Thus, the profit price you’d like to take will decrease and the take-profit percentage will stay the same. You’ll exit the position earlier since the price doesn’t have to reach the initial take profit price. A trading bot will help you manage the risks and allow you to have a planned entry and exit from the market.
To sum up
We have reviewed different trading styles. Now, to determine the appropriate strategy for you, pay attention to your skills, experience and risk tolerance. Once you have decided on the style, you can use the services of TradeSanta and set up automated trading bots in accordance with your strategy.