Are you ready to enter the world of crypto trading? Start by learning trading strategies for beginners before making investment decisions. Everyone knows that the crypto market is constantly volatile. However, when it comes to trading, there is significant potential for both profit and risk.
The notable factor that sets different trading methods apart is the duration for which a trader holds their investments before selling them for money. These trading methods differ based on the time frame between buying and selling assets.
In short-term trading, the duration can range from less than a minute to up to a week. Become a master in the crypto market by unlearning strategy trading and enhancing your navigation skills in the financial market.
What is Short-term Trading in Crypto?
Short-term trading is often referred to as active trading. It involves opening and closing positions within a relatively short period, typically days or weeks, and sometimes even shorter.
While short-term trading can be lucrative, it is also risky. Therefore, if you are a beginner trader seeking to generate passive income from crypto, you must delve into advanced trading strategies.
Short-term crypto trading is sometimes referred to as “aggressive” trading because, although there is hope for greater profits, there is also a higher risk of losing your investments. Fortunately, short-term crypto trading is classified based on time frames, ranging from hours to days or even weeks. As the time frame shortens, the risk increases in the pursuit of making substantial profits quickly.
Short vs Long-term Crypto Trading: Exploring the Difference
In short-term crypto trading, traders have the potential to quickly profit from fluctuating prices. However, this profitability is highly dependent on proper execution. On the other hand, long-term traders hold their cryptocurrencies for a longer period, typically a year or more. Kickstart your trading journey by understanding the difference between short-term and long-term trading strategies for beginners.
|Short-term Trading||Long-term Trading|
|Refers to Day trading||Refers to the Holding strategy|
|Aims to make a profit quickly by fluctuating price action.||Aims to make solid returns for a longer period by considering essential factors.|
|Speculative investment method||Traditional buy-and-hold method|
|Leverage and margin come with many risks, but sometimes they are extremely high||Numerous investors desire a long-term trading strategy. In this method, they can have full ownership of the assets and need full upfront payment.|
Types of Short-term Crypto Trading Strategies
There are different types of short-term strategies available to crypto traders, which they can choose based on their time frames and risk appetite. Get insightful trading strategies for beginners here:
2. Day traders
3. Swing traders
Scalping in Crypto
Scalping is a lucrative and easy way to make money in a very short period with low risk. Scalpers open and close their crypto assets within five minutes or even a few seconds. They can open ten or hundreds of positions per day and do not hold their trades overnight. Scalpers do not necessarily have to conduct fundamental analysis to earn money quickly. Instead, they aim to generate numerous small profits within a short time frame.
For beginners, a one-minute scalp trade is suggested to implement their knowledge in crypto and make a profit as well. Most scalpers prefer to use “High-Frequency Trading” (HFT) to execute numerous orders within a second.
Day Trading in Crypto
Day trading is one of the most profitable and straightforward methods to make money from the crypto market in a short period of time.
In crypto, a day trader is an individual who opens and closes all of their assets on the same day. They close all of their open positions overnight.
Nowadays, beginners in the crypto market are learning how to move in and out of the market within a day, aiming to utilize the fluctuations in crypto to profit greatly in a short time. Also, day trading involves making fast decisions, such as entering and exiting trades proficiently.
Swing Trading in Crypto
Swing trading is referred to as a short-to-medium-term method. In this method, swing traders can hold their crypto assets for several days or up to a month. They aim to leverage short-to-medium-term crypto price fluctuations.
Traders use advanced foresight and prediction to anticipate future price movements. They strategically enter positions based on their projections and navigate the fluctuations of the crypto asset. Swing traders are aware of economic indicators and events that could impact the crypto markets, potentially causing their positions to change during the trade. Additionally, these short-term traders should focus on both technical and fundamental analysis.
Effective Short-Term Crypto Trading Strategies for Beginners
If you are a new trader and are willing to invest in crypto with small amounts, first learn how to start trading and where to begin.
The most popular short-term best trading strategy for beginners are scalping, day trading, and swing trading. In addition to these, other significant trading strategies include:
- Momentum trading
- Range trading
- Breakout trading
- Reversal trading
Momentum Trading in Crypto
This type of trading in crypto aims to capitalize on market volatility. Traders buy and sell their crypto assets based on upward market movements. The main objective of momentum trading is to buy assets when the price is rising and sell them at the highest price.
Momentum trading follows the mantra “Buy high, sell high.” It is also utilized by day traders and scalpers. It is suitable for both short-term and long-term traders. Cryptocurrencies, due to their notable price fluctuations, are well-suited for momentum trading. This profitable trading strategy relies on three factors:
However, momentum trading offers more advantages compared to scalping and day trading. It is only profitable when the market is bullish.
Range trading, also known as active trading, involves determining the range between the high and low prices of an asset for a short period of time. For instance, if a crypto asset is currently trading at $100 and you anticipate it will reach $150 over the next few weeks, your trading will stay within the range of $100 to $150.
Range trading occurs when the market experiences constant fluctuations between two specific prices or levels for an extended period.
Breakout trading is one of the profitable short-term trading strategies for beginners. It occurs when the price of a cryptocurrency crosses a resistance level or breaks below a support level. However, perceiving breakout trading can be subjective as traders may differ in identifying and utilizing these levels.
An upward breakout prompts traders to take long positions or sell short positions. On the other hand, a downward breakout suggests that traders should consider going short or closing long positions.
In reversal trading, traders capitalize on changes in the price trend direction, whether from upwards to downwards or vice versa.
Typically, this strategy involves trading against the current price trend, with the expectation that the crypto asset will eventually reverse its course.
Best Technical Indicators for Short-Term Crypto Trading
There are various technical indicators available for short-term crypto trading. Here are some helpful indicators for beginners engaging in short-term trading:
- Moving Averages
- Relative Strength Index (RSI)
- Stochastic Oscillator
Moving Averages (MA)
A Simple Moving Average (MA) helps traders determine whether the crypto price is moving upward or downward within a specific timeframe. It is a commonly used technical indicator for short-term price movements.
The moving average can act as “support” when the price is in an uptrend, such as the 50-day, 100-day, or 200-day moving averages. Conversely, it may act as “resistance” when the price is in a downtrend.
However, moving averages can have different lengths, so one moving average may indicate an uptrend while another may indicate a downtrend. This is determined by two factors:
- Simple Moving Average (SMA)
- Exponential Moving Average (EMA).
Relative Strength Index (RSI)
The Relative Strength Index is a technical analysis indicator and one of the effective trading strategies for beginners used in short-term crypto trading to assess market momentum. It evaluates whether the price of a crypto asset is overvalued or undervalued based on recent fluctuations in the market’s speed and magnitude.
The RSI indicator commonly measures momentum and oscillates on a scale from 0 to 100. It is typically used to determine whether an asset is “overbought” or “oversold”. Generally, an asset is considered overbought when the RSI goes above 70, and it is considered oversold when it falls below 30.
The Stochastic Oscillator is another momentum indicator used to measure momentum by comparing the closing price of a security to a range over a given time period.
Similar to the RSI, it also measures recent prices on a scale from 0 to 100. An asset is considered overbought when the Stochastic Oscillator indicates a value above 80, and it is considered oversold when the value falls below 20.
Specifically, the Stochastic Oscillator focuses on the speed of price movement and is typically set to a default period of 14. It is used to gauge the intensity of the close price in relation to the range between the high and low prices over a certain period. The Stochastic Oscillator acts on trends and predicts reversals in the asset’s price momentum.
Trading Strategies for Beginners – What to Bear in Mind Before you start
If you are a beginner and want to start crypto trading, then consider practicing crypto trading with Coinfantasy‘s decentralized invest-gaming platform. Here are the key factors to be aware of before you begin short-term crypto trading:
- Keep learning: Stay updated with the day-to-day trends in the crypto market and establish connections with successful crypto traders.
- Planning, execution, and pricing technology: There are various types of short-term crypto trading methods. Therefore, plan your strategy based on your budget and determine where to start. Due to the need for quick execution, these methods have specific technology requirements for entering and exiting positions swiftly.
- Keep your losses under control: Improve your risk management rules to ensure effective loss control.
- Maintain consistent practice: Learn from your mistakes and observe the strategies of others.
Conclusion: Is Short-term Trading Profitable?
Ultimately, the profitability of short-term trading depends on an individual’s trading strategy, risk tolerance, and market knowledge. Short-term crypto trading can be profitable if executed with a well-organized approach and effective risk analysis techniques.
However, it is important to note that short-term trading can also be volatile and unpredictable. It requires a significant amount of time and effort to stay updated with market trends and news. Traders must conduct thorough research and develop a solid strategy before engaging in this type of trading.
We hope you found the trading strategies for beginners mentioned above helpful. There are various tools and strategies available to generate profits in a short period. By effectively utilizing these tools and strategies, you can become a master in crypto trading.