Since the development of the first cryptocurrency, the number of cryptos available in the market has skyrocketed at a fast pace. Thanks to Bitcoin, there are hundreds to thousands of altcoins in the market that are ready for investors, traders, and crypto enthusiasts to utilise.
So, the birth of the big cryptos like Bitcoin and Ethereum is the reason why the crypto world millions of individuals and firms are enjoying the cryptos that exist today. In this article, you will learn more about crypto trading and which type of trader you are.
Introducing Crypto Trading
The crypto industry has established a stylish reputation and seems like an ideal means of investment, which led to many people all over the world expressing their curiosity and interest in this new trend. Crypto trading enticed millions with its ability to yield potential profits due to the quick value fluctuations characterising this market. Here is an example of how crypto traders start evaluating the market:
Crypto Update 01/09/23 – digital assets finally take the bullish cue, 24-hour market change +3.16%, BTC dominance 39.0%, Total market cap $850.47 billion #Bitcoin #cryptotrading #CryptoCurrencies #blockchain @gvalan @DrFerdowsi @mary_gambara @quasagroup @technicitymag pic.twitter.com/4E3niByzxp
— Faisal Khan (@fklivestolearn) January 9, 2023
These people share the same goal: Earn or increase their digital funds. Unfortunately, not all crypto trading platforms are as reliable as we want them to be. This is why even if you have the chances to become one of the best traders out there, you should always do your own research. What we mean by that is to look for other successful traders that have already used this platform and see their thoughts. Our records show that this past year Bitcoin loophole has gained quite the popularity in the crypto community so it might be a good starting point for your crypto career.
But before we can get into the different trading platforms out there, we need to talk about trading itself. Knowing what type of trader you might be would actually help you choose the right platform later on. Without further ado, let’s talk about cryptocurrency trading!
More About Crypto Trading
Crypto trading refers to the purchasing and selling of cryptocurrencies in the market for the chance of earning funds. Similar to how traditional currencies can be traded on the Forex (foreign exchange) market, there are digital platforms for crypto trading, which is where people can buy, sell, store, or speculate with the price of digital assets. What’s more, these exchanges are a 24/7 market, so you can utilise them anytime you want.
One thing to note in crypto trading is knowing how and where to store your hard-earned profits. So, crypto traders must have a crypto wallet to ensure the safety of their assets; there are two types of wallets that you can use:
- Hot Wallets: They are connected to the internet 24/7, making them vulnerable to hackers.
- Cold Wallets: They offer offline storage. Choosing a reliable wallet is essential for your crypto trading career.
Some thoughts about trading psychology in my latest newsletter.
Also mentioning some errors I find myseld doing over and over again, even if I know I shouldn't do them.
Human psychology at its finest.https://t.co/ZgrA8FrYL3
— Route 2 FI (@Route2FI) January 10, 2023
Advantages & Disadvantages of Cryptocurrency Trading
What’s great about crypto trading is you don’t have to camp in front of your computer for hours on end to trade in the market. As long as you have a smartphone and an internet connection, you can begin trading and access the market 24/7 wherever you may be.
Another advantage that comes with crypto trading are the low fees; since this field is not associated with third-party agents like banks and the government, the trading and transaction fees are much lower compared to traditional transactions.
On the other hand, one of the greatest disadvantages about cryptocurrencies is its highly volatile nature. Its volatility is caused by the limited supply of coins and rising demand. But as the years grow by, experts have learned how to handle this behaviour.
Firms and other businesses nowadays are slowly accepting cryptos. So, if, for instance, Bitcoin is accepted by more firms, commerce, and media, its value will become more volatile due to the greater demand for BTC. Anticipating these price fluctuations is a skill any trader can master in time.
Types of Crypto Traders
People follow different techniques and possess different skills when trading. It’s wise to assess your skills and knowledge and determine which type of trader you are. There are four main types of traders in the market; check out which type you belong to.
1. Day Traders
As the name suggests, day traders are those people who aim to complete transactions during the day and proceed to finish any open positions before nighttime. These traders do not maintain any overnight holdings and use a certain tool known as technical analysis.
This method requires traders to possess a high level of discipline and rationality. Deals done by day traders might take minutes to hours, and the price movements would constantly be tracked to derive profits from intraday pricing variation.
2. Swing Traders
Swing traders are people who place trades that can span from days to months to earn profit from a price movement that has been well-studied and forecasted.
Advantages & Disadvantages of Swing trading
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— IntradayScreener (@intradayscanner) November 6, 2022
These traders have one goal: to profit from a portion of a possible price change. This is done using technical and also fundamental analysis (optional) for identifying price trends and patterns. Swing traders commonly use risk/reward analysis, in which they make calculations and estimate when to exit with a profit by studying asset charts.
3. Momentum Traders
Momentum traders complete trades based on the status of the current market movements, with the assumption that this momentum will continue either upwards or downwards.
The goal of these traders to tackle the market’s volatility by searching for buying opportunities in short-term uptrends and selling when the stocks lose their momentum. To be able to succeed using this type of trading style, you must possess extensive knowledge about market circumstances and balance it with a keen sense of timing.
Out of all types of traders, scalpers are deemed to be the most active type. These traders buy and sell coins many times a day with the aim of scalping or earning a tiny profit on each completed deal which might take seconds to minutes.
Scalpers rely on modest, regular wins to establish a large profit margin. They might make dozens or hundreds of deals within the same day.
The scalping methods used by these traders are based on technical indicators like candlestick charts and MACD. These methods are considered high-risk trading techniques due to their significant usage of leverage.
Scalping involves buying and selling within a short duration for an assured profit.
Scalpers are some of the most impatient. pic.twitter.com/lyXtkG5Nd6
— CoinMarketCap (@CoinMarketCap) May 30, 2022
There you have it, the four types of traders in the market. No matter what trading technique or process you use, make sure to always carefully consider your every move before proceeding because the crypto market is a risky field.
Remember the golden rule: only invest a reasonable amount. To increase your knowledge about the market and how everything works, make sure to do some research before making a move in the crypto field.
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