Trading Styles
Active Traders
Day Trading
· With this strategy, traders buy and sell an asset in the same day in order to profit off of inter-day volatility, without holding onto the risk overnight.
Scalp Trading
· This strategy targets minor changes in intra-day stock price movement, frequently entering and exiting throughout the trading session, to build profits. Scalping is a popular trading method implemented through algorithms and high-frequency trading.
Swing Trading
· This strategy attempts to capture short- to medium-term price movement over a period of a few days to several weeks. Swing traders primarily use technical analysis to look for the initiation of a trend change. This style will put traders at greater risk by holding the asset overnight and potential for volatile swings while you sleep.
Long Term Investors
Dollar Cost Averaging
· The process of buying an asset on a recurring schedule in order to capture the average moving price opposed to the extreme highs or lows. It’s difficult to time the market lows, and when prices run higher you may be tempted to FOMO into an investment - with a DCA strategy you don’t fall victim to this. You simply accumulate a cryptocurrency on a weekly / bi weekly / monthly / or quarterly schedule. Many exchanges allow investors to do this automatically by linking a bank account or digital fiat wallet.
‘Hodling’
· Buying a digital asset with the intention of holding the asset for a long period of time (usually multiple years) with the expectations that the price will increase dramatically with time - despite short term market volatility. Investors can either put a lump some into the market at one period, or dollar cost average the investment over a set period of time. Click here to read more about the history behind the mispelling of ‘Hodl’.
Sources: Investopedia.com
