After its initial debut in 2009, Bitcoin sparked a modern-day “gold rush” in cryptocurrencies. A few years went by before the public realized what an incredible thing it was. It is safe to say that Bitcoin stands head and shoulders above the others regarding current cryptocurrencies. And now designated as a cryptocurrency market giant, making some traders wonder how to trade with it.
Nonetheless, investors and traders can make money by investing and trading in altcoins or cryptocurrencies other than Bitcoin. It resembles trade in precious metals like gold and silver in many aspects. It allows traders to devise a trading strategy for altcoins even though the market is still in its infancy. Is this your first time trading, and do you need guidance with your cryptocurrency strategy? Visit BitConnect to learn more about how to get started with cryptocurrencies. But in the meantime, you can go through the following trading strategies and see the one that best fits your demand and trading pattern.
Specific strategies and tactics for trading with these cryptocurrencies
Scalping, automated trading, and other strategies have advantages and disadvantages. Short-term strategies can be pretty lucrative if you have your eye on a few unique tokens or coins and follow relevant news. In any case, what are these tactics?
Day Trading strategy
Most other types of trading, such as FX and commodities trading, have a similar day-trading model. Day trading is the practice of taking advantage of price fluctuations throughout a single day, hour, or even minute by opening and closing positions rapidly.
Swift gains and losses characterize day trading but are rarely significant. However, in some cases, they are certain exceptions to this rule. Markets such as bitcoin altcoins are attractive to traders today because substantial price movements can occur anytime, as in traditional equity markets.
It is possible to trade for far more extended periods with swing trading than you can with day trading. Swing traders work with slightly longer timeframes than day traders, who aim to enter and exit a position within a day. The time frame for swing trading might range from a single day to a week or more. This trading method takes advantage of price “swings” in the mid-term market.
Trading in swings is a popular way for swing traders to profit from projected price moves in specific BitQH cryptocurrencies.
When two or one brokers’ ask and bid spreads are inefficient, scalping is a method of trading that exploits this inefficiency. Arbitrage, sometimes known as spread scalping, is prohibited by several brokers. In a way, it’s like day trading, but with a lot more control over the outcome.
There are many moving parts, which necessitate the adoption of automated trading strategies. To scalp, you will need a basic understanding of how automated trading works. Experienced traders should only attempt automated trading.
Long-Term Investing or HODLING
When the market for Altcoins, in general, is so volatile, long-term holding might be challenging. But this technique can be pretty rewarding, but it also takes less time than more active ones. As with any other asset class, the value of cryptos can fluctuate dramatically in a matter of hours or even minutes. Long-term investors who keep tabs on their holdings regularly may find it taxing.
You will have to decide whether or not a stop-loss is proper for you in this case. As long as you remain convinced that the current slump will not take you below your stop-loss level before shooting higher, you may want to pause the position. However, nothing is certain or a safe bet in markets like today.
Account Dominance and Ratios
It can be beneficial to shift the majority of the value of one asset to another while without totally consolidating your portfolio of altcoins. It is known as a value shift. In contrast to other cryptocurrencies, checking Bitcoin’s market dominance is a handy tool that traders frequently use to discover patterns in the market.
However, when Bitcoin or other cryptocurrencies are experiencing low dominance, Altcoins can gain value more quickly relative to Bitcoin or other cryptocurrencies, which is especially beneficial for short-term traders.
Diversification of Altcoins
The idea of diversifying your portfolio has been around for a long time. And it is widely accepted by experienced investors. It involves investing in multiple altcoins rather than just one or two. And this increases the possibility that at least one will dramatically outperform the rest and lead to higher net returns.
Choosing the Best Altcoin Trading Strategy
We sincerely hope that this guide on cryptocurrency trading strategy has helped point you in the right way. Every trader has a unique trading strategy. It is crucial to select a trading technique that works well for you and stick to it.