6 Crypto Strategies For Holding Trades  (2024)

When Trading cryptocurrencies, it can be easy to enter a trade, but holding the trade until you hit Take Profit is the hard part.
So, in this article, we are going to be looking at 6 strategies that can be used when holding a trade

Crypto traders can focus on only one coin and pairing, like the infamous Bitcoin pairings – BTCUSD (or BTCEUR), etc. Or, they may focus on multiple major coins and hence pairings, as Bitcoin and Ethereum paired with either USD or EUR.

You may have heard the terms ‘alts’, which means alternative cryptocurrencies and are usually considered smaller, with a market capitalization to represent that.

Some crypto traders may focus only on alts, and not bother to trade the main cryptocurrencies at all.

None of the above scenarios are ‘wrong’ – however, it is a matter of determining what is the right strategy for you, your risk tolerance, and your overall goals.

What is Trading?

Trading is the buying and selling of financial instruments to make a profit.

These instruments range from a variety of assets that are assigned a financial value that goes up and down – and you can trade on the direction they take.

You may have heard about crypto trades.

But there are thousands of financial markets you can trade, and a variety of platforms you can use to trade them.

How Does Trading Work?

When you trade, you make a profit if the market price of your position moves in the right direction, and you lose money if the price of your position moves in the wrong direction.

Like any type of trading, it involves buying and selling an asset to make a profit.

The basic premise to remember is supply and demand. When there are more buyers than sellers in the market, demand is greater, and the price goes up.

If there are more sellers than buyers in the market, demand is reduced, and the price goes down.

Here is a breakdown of the key categories of financial market trading:

• Day Trading
• Delivery Trading
• Swing Trading
• Positional Trading
• Fundamental Trading
• Technical Trading

Day trading

Day trading also known as intraday trades, also known as day trading, involve buying and selling a stock within a trading session, i.e. on the same day.

If you do not square off your position by the end of the day, your stock can be sold automatically at the day’s closing price under certain brokerage plans.

It is exploiting the inevitable up-and-down price movements that occur during a trading session.

Day trading is most common in the financial markets and on the foreign exchange (forex) where currencies are traded.

Day traders are typically well-educated in the minutia of trading and tend to be well-funded. Many of them add a level of risk by using leverage to increase the size of their stakes.

Day traders are attuned to events that cause short-term market moves.

Trading based on the news is one popular technique.

Scheduled announcements such as the release of economic statistics, corporate earnings, or interest rate announcements are subject to market expectations and market psychology.

That is, markets react when those expectations are not met or are exceeded—usually with sudden, significant moves which can greatly benefit day traders.

Delivery trading

Some involve actual buying and selling of shares, while others are simply monetary settlements based on share prices.

Delivery trading is a very common type of trading. It is associated more with investing than trading. This is because investors look to hold on to their stockholdings for a longer time.

This is not often the case with other types of trading, especially intraday trading.

Delivery trading is a system of trading that provides an opportunity to invest in stocks over the short term (more than 1 day) or long term. Delivery trading essentially implies that you take ‘delivery’ of the ‘trades’ you make.

Swing trading

Swing trading is a way of trading that tries to make short- to medium-term gains in a stock (or any other financial instrument) over a few days to a few weeks. It primarily uses technical analysis to look for trading opportunities.

Swing trading involves taking trades that last a couple of days up to several months to profit from an anticipated price move.

the following session at a substantially different price. It usually puts a trader at risk over the night and the weekend, when the price could gap and start the next session at a very different price.

Swing traders can take profits utilizing an established risk/reward ratio based on a stop loss and profit target, or they can take profits or losses based on a technical indicator or price action movement

Positional trading

Positional trading buys an investment for the long term in the expectation that it will appreciate. This type of trader is less concerned with short-term fluctuations in price and the news of the day unless they alter the trader’s long-term view of the position.

Position traders might be seen as the opposite of day traders. They do not trade actively, with most placing fewer than 10 trades in a year.

Position traders are trend followers, known for their buying and holding trades. They identify a trend and an investment that will benefit from it, then buy and hold the investment until the trend peaks.

The successful position trader knows ahead of time the right entry and exit prices and uses stop-loss orders to control risk.

Fundamental trading

Fundamental trading is a method where a trader focuses on company-specific events to determine which stock to buy and when to buy it.

Trading on fundamentals is more closely associated with a buy-and-hold strategy rather than short-term trading. There are, however, specific instances where trading on fundamentals can generate substantial profits in a short period. Fundamentalists trade companies based on fundamental analysis, which examines corporate events, particularly actual or anticipated earnings reports, stock splits, reorganizations, or acquisitions.

Technical trading

Technical trading is a broader style that is not necessarily limited to trading. Generally, a technician uses historical patterns of trading data to predict what might happen to stocks in the future. This is the same method practiced by economists and meteorologists: looking to the past for insight into the future.

The challenge of technical analysis is that there are hundreds of technical indicators available, and there is no single indicator that is considered universally better than each particular indicator or group of indicators, that may apply only to specific circ*mstances.

Some technical indicators may be useful for certain industries, others only for stocks of a certain classification (for example, stocks within a certain range of liquidity or market capitalization).

Because of the unique patterns that highly traded stocks might exhibit throughout history, some indicators may be relevant only to certain individual stocks. Technical traders focus on charts and graphs.

They watch lines on stock or index graphs for signs of convergence or divergence that might indicate buy or sell signals.

In Conclusion

Active trading is a strategy that differs for everyone which involves ‘beating the market’ through identifying and timing profitable trades, often for short holding periods.

Day trading entails opening and closing positions within the same trading day and is among the most exciting strategies. Position trading requires investors to hold securities slightly longer, requiring patience as the trade develops.

Swing trading relies heavily on technical analysis to identify when to enter and exit a position. Everybody’s strategies differ from one another in this case, you must find what works best for you and build on that.