If you want to leverage cryptocurrency investment, then the first thing to determine is whether you desire an active or passive approach. Cryptocurrency investment strategies differ, so your approach will rely on your financial goals, situation, and risk tolerance. Below are some common investing strategies crypto investors use.
Long-term approach – Buy & Hold trading
It is a passive investing approach that suits many investors. A few promising crypto assets are chosen to invest in. The investment type is low stress and suitable for serious and casual investors believing in crypto assets’ potential and who are willing to hold for long. They are unconcerned about short-term market fluctuations.
For veteran and beginner traders, HOLDing is an appealing strategy. You can learn more about cryptocurrency investment on bitcoinbasis.de. It is a blog dedicated to offering detailed information about the dos and don’ts of crypto assets investment.
Short-medium term approach – Swing trading
Swing trading allows leveraging price movements occurring within a few days to a couple of months. When there is a potent trend for a long time, framework swing strategies work great. During a massive bullish environment, there is plenty of volatility. Even in the overall up trend, there is a huge price swing offering swing traders great opportunities to predict the direction and earn profits in a short time.
It is a strategy for an investor who has little market understanding and the ability to identify short-medium term movements. Swing traders have decent risk tolerance capabilities and can deal with market volatility.
Short-term approach – Day trading
Day trading comprises sitting all day before the computer screen and watching the market without a wink to exploit as many market movements as you can. It is a high-risk, high-stress, yet highly rewarding strategy. It involves several trades within one day. However, the day trader needs to have in-depth knowledge about the crypto market and technical analysis.
Swing traders are willing to accept the high stress because they are focused on making profits. It is a time-intensive trading style, which is unsuitable for newbies. Many investors are attracted to making the most of the short-term volatility without understanding and end up losing. Therefore, only choose day trading if you are serious because the mantra is ‘knowledge and practice’.
Some investors don’t just choose to be swing or day traders. They blend the above strategies to gain stability and short-term excitement.
How to blend trading strategies?
Some people desire the best from both worlds. They are prepared for the long-term approach of buy & hold as well as play around and make short-term profits during a bullish market.
For example, you possess an 80% portfolio of established crypto assets like BTC, ETH, etc. You desire to use the remaining 20% to bet on a few low to mid-caps showing potential. You can even take the 5 to 10% profit made from BTC or ETH spikes and use it to try day or swing trades.
You possess the stability as well as the possibility to make short-term profits. Blend a few strategies and learn how different approaches work. You get an idea of the kind of crypto investor you desire to become in the future.