Which is the Best Trading Strategy for You?

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There are a number of different crypto trading styles out there, each unique in some way from the rest, with each one also appealing to different personality types. In this article we look at some of the most popular types of digital currency trading strategies and what kind of character traits are best suited to them.

Fundamental Analysis Traders

A fundamentals cryptocurrency trader relies more on the underlying value of the asset and the economy surrounding it than price action. They are traditionally more long-term thinkers who see the potential in the company behind the stock and are happy to hold for a long period to realize gains, unless the fundamental values of the company or the economy change. They will likely not sell into sudden dips if nothing has fundamentally changed with the asset.

Suitable character traits: Patient, unreactive, strong convictions

Technical Analysis Traders

Technical digital currency traders place more emphasis on an asset’s chart rather than what’s going on with the company behind the asset. They will use various tools to track and predict the next moves an asset might make and as a result will tend to think much more short term to make quick wins. Technical analysis is considered a much more scientific and mathematical form of trading, which is why algorithmic bots are often used to indicate when to enter and exit positions.

Suitable character traits: Focused, quick learner, decisive, reactive

Trend Traders

Trend trading involves identifying an upward or downward trend in a cryptocurrency’s price movement, basing entry and exit points on the positioning of the asset’s price within the trend. Trend traders use a mixture of tools to evaluate trends, including moving averages (MA), relative strength indicators (RSI), volume measurements and directional indices.

Suitable character traits: Able to quickly predict a trend based on technicals and fundamentals, decisive, keeps an ear to the ground for news/developments

Swing Trading

Swing trading is a type of technical crypto trading that brings in elements of trend trading and technical trading. It traditionally involves being in trades lasting between a day and a week, putting it somewhere between trend and technical analysis trading as it incorporates elements of both. This length of time is good for filtering out the kind of erratic price movements seen in shorter-term trading and also helps to avoid being “stopped-out” of trades during volatile periods.

Suitable character traits: Able to quickly see the ‘bigger picture’, calm under pressure, can ignore “noise”

Scratching the Surface

There are a number of other digital asset trading types, including range trading, momentum range, breakout trading, and retracement trading, all of which utilize varying amounts of fundamental and technical analysis. No type of trading is better than the other as it depends what your personality is suited to. Of course, if trading isn’t for you at all then there’s another fairly simple strategy you could employ – HODL.

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