Top 4 Altcoin Trading Strategies Anyone Can Use

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Altcoin trading has proven to be a lucrative source of income for many individuals. Now, you might be wondering, how do successful traders manage to do what they do?

In this article, we explore four of the most popular altcoin trading strategies you can use in order to jump-start your trading career in the digital asset markets.

Swing Trading

Swing trading is a trading strategy where an asset is held over a period of a few days or weeks in order to gain from its price swings.

Rather than targeting large gains, swing trading focuses on taking smaller gains in a short time and cutting losses quicker. Despite the relatively low rewards, this strategy can compound into sizable annual profits if executed consistently over time.

The key to successful swing trading in the digital asset market is to identify the next price movement of a coin, enter a position, watch it move, then exit and profit. It goes without saying that there may be losses if you make the wrong moves. Therefore, a swing trader must assess a risk/reward basis on each trade.

Day Trading

Day trading is the technique of buying and selling an asset several times within a single trading day. The goal of day trading is to make small gains on each trade and then compound them over time.

The most successful traders treat day trading like a full-time job, not just a side gig. Therefore, it may be worth your while to master this altcoin trading strategy.

Volatility is your friend in day trading. Digital currency traders take advantage of the short-term price fluctuations (in hours and minutes) of the market. They love coins that bounce a lot during the day.

Day traders rely heavily on technical analysis, as well market news or announcements that can trigger short-term price movements.

Position Trading

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A position trader is the kind of trader who holds a position over a long period of time, from several several weeks to months, or even years. It is similar to the popular crypto term HODLing. The only difference is that HODLing is simply a crude form of the “buy and hold” strategy in traditional markets, while position trading is a sophisticated strategy that requires carefully analyzing trends.

You could say that this altcoin trading strategy is like swing trading, but held for longer periods.

Position traders usually trade less than ten times a year. They are less interested about the short-term price movement of digital currencies, and usually don’t attempt to profit from market corrections either. This type of trader is more focused on the long-term performance of an asset. Their goal is to identify long-term trends.

Position traders may gain immense returns in one fell swoop that will not be affected by high transaction costs.

Momentum Trading

Momentum trading is a strategy in which traders buy and sell in relation to the upwards or downwards movement of an asset. They basically bet that an altcoin that is moving strongly in either direction will continue to do so until it loses strength. This altcoin trading strategy is like a reflex reaction to the market.

Momentum trading has no specific time frame. It could be determined over long periods like several weeks or months, but may also last as quick as minutes or hours.

This type of trading strategy can generate returns, but be warned that technical analysis-based momentum projections are calculated using past data. Actual price and momentum is dynamic and could suddenly reverse based on future events.

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