You may have decided to enter the cryptocurrency market but don’t know a thing about trading. Once you’ve learned a bit about cryptocurrency as an asset and understand the risks and tools you need to succeed, you’ll need to adopt a strategy to make profits.
As for the types of cryptocurrency strategies you can try, there are two- the short term and long term methods. Here’s an explainer on each of them.
The Quick Fix Short Term Trading
In this type of trading you think of cryptocurrency as immediately expendable and to be traded for profit. You don’t become too attached or hold them for longer than a month or two, because the moment the price jacks up you’re at the crypto exchange, turning it into cash.
Short term can mean as short as minutes to as long as a week or so. The advantage of this type of trading is that you can potentially get high percentage gains as long as you play your cards right. To know when to buy and sell Bitcoin for example, you can turn to established platforms such as the bitcoin bonanza website for help.
Ideally, you’ll be spreading your capital to half a dozen or so cryptocurrencies that you think will be profitable in the near future. Consider also the trading volume since you’ll be moving a lot the moment you see its value rise to your preferred numbers.
Short term cryptocurrency trading is a high reward scenario, but then you’ll need to be constantly on your toes and staring at your computer screen or smartphone for any signs of movement. Suffice to say, it’s a hands-on approach that requires focus and a lot of time.
Holding for Maximum Value Long Term Trading
At the other end of the spectrum you have long term trading. It may sound a bit boring but it has several advantages, mainly that it’s a passive form of investment and it doesn’t require too much of your attention.
You’ll often hear the phrase HODL when you’re planning to invest in a cryptocurrency for the long term. It’s short for ‘holding on for dear life’, which means whatever the movement a cryptocurrency experiences, you’ll be keeping it for at least a year before even thinking of trading it in.
The idea for long term investment is that it’s assumed that the cryptocurrency will slowly grow to unprecedented heights in a given number of years. Plus, you won’t need to look at analytics charts and a computer screen for longer than a few minutes a day. There’s basically a low learning curve involved and less stress in the end.
Once the forecasts are favorable and the value of the crypto exceeds twice or thrice the price you paid it with then you can cash in and gain a huge profit.
As with all investments you shouldn’t spend more than what you’re comfortable losing. Even when you’ve lost a fair amount of capital you shouldn’t try to get that back by pouring more money into cryptocurrency. Learn from the mistakes you make and you’ll become a better trader in the end.