3 Common Trading Strategies For Cryptocurrency Investors

Trading strategies for cryptocurrency investors
Image Credits: The Balance

Cryptocurrency has been one of the most popular sources of investment in the past decade. This feat is largely as a result of its independence from government and regulatory clutches. Similarly, Bitcoin’s recent price surge, also increased investors’ thirst for cryptocurrencies. In late 2017, a Bitcoin reached as high as over $19,000, thereby, recording a rise of about 1,270% compared to its price at the beginning of the year.

Just as it is with basic laws of demand and supply, where the demand for cryptocurrencies exceed the rate at which they can be produced, the prices of such cryptocurrencies would increase; and vice versa. This gives potential investors the opportunity to make substantial profits in the cryptocurrency market, depending on their risk tolerance and ability to seize an opportunity for investment.

Before evaluating the investment options in cryptocurrency, it is pertinent to keep a number of factors in mind:

  1. Perform an in-depth research on the cryptocurrency you decide to invest in.
  2. Try to understand the risks and dangers of your chosen investment option.
  3. Study the market trends and follow experts’ opinions before investing.

There are different strategies an investor may apply whilst investing in cryptocurrency. These strategies may range from day-to-day currency trading to a long-term, hands-off approach to cryptocurrency— that is, buying coins and holding on to them for months or years, in the hopes of gaining returns. These strategies are basically classified into three:

  1. Day Trading.
  2. Swing Trading
  3. Long Term Holding

Day Trading

Day trading is short-term trading, and it could connote holding an asset for just a few seconds or even a couple of hours. It often involves trying to take advantage of the cryptocurrency price volatility which typically occurs everyday. The main idea is selling your asset as quickly as possible, whenever there is a chance to make a quick profit.

This strategy holds potentials for huge returns (often by accumulating small profits over time). However, it involves a lot of work, the most prominent being the need to constantly watch the markets. This strategy also carries its own risks. A bad prediction on a cryptocurrency’s price, could trigger a huge loss on a significant investment.

To effectively conduct day trading, investors need to be able to keep track of the relative values of different cryptocurrencies, and how each of these values may change over time.  One useful resource for this is coinmarketcap.com, which provides a price history for various cryptocurrencies.


  • Hold potentials for huge profits.
  • Could effectively function as a viable income stream.
  • More exciting than a long-term holding.


  • Carries higher risks than a long-term holding.
  • You could end up holding a useless coin when it dumps.
  • Abundance of inexperienced traders participating in the markets.
  • Exchanges being staffed by largely ignorant or unreliable personnel.

Swing Trading

Swing trading is an extended form of day trading. It involves the practice of buying and selling (often in stages), after a certain degree of movement in the charts, over a period of several hours, days, or even weeks.

The main idea here is to exit the trade with profits, before the market makes a reverse move and wipes out your gains. This strategy is ideal for people who do not have hours to spend on day trading. These people often fall into the category of persons with full-time jobs.

Swing trading often requires a basic understanding of technical and fundamental analysis. This can help in setting up additional options such as a stop-loss, a service that automatically helps stop your losses before they become astronomical.


  • Easy to learn and execute.
  • Less stressful than day trading.
  • Unlimited options in trading multiple coins.
  • Ability to minimize risks due to lower number of trades within a fixed time frame.
  • Similar to a stock market, hence, knowledge about stock market operations is an added advantage.


  • Markets can make dramatic moves overnight.
  • When trading stocks, swing trading rarely provides the same amount of leverage as day trading.
  • Swing trading involves holding trades overnight. With this, margin requirements tend to be higher.

Long-term Hodl

Long-term hodl is another option for cryptocurrency investment. It involves believing in the eventual appreciation of a cryptocurrency, over a particular period— usually a year or more.

Generally, most cryptocurrencies start with low values until they either prove to be legitimate, or function to offer value to potential holders or investors. This limits their adoption rates and user base, especially during the early stages. However, where widespread adoption persists, successful cryptocurrencies can overtime, increase by several hundred times in value. This presents an opportunity for long-term investors willing to take some risk with their investments.


  • Gives room for cost averaging.
  • More hands-off than short-term trading.


  • You may miss out on large gains.
  • Not as exciting as day trading.
  • More difficult to make daily profits.

There are also several measures that people often apply whenever they trade. These measures may include speculation or chart analysis. Speculation occurs when a trader believes that a price would either increase or reduce as a result of a certain event, whilst chart analysis connotes a situation where traders study the price movement of a particular cryptocurrency and try to guess what way it would go, based on historical price movements.

Just as it is with every other form of investment, investing in cryptocurrency carries risks; and there is really no accurate way to guarantee that your investment would be profitable.

About J05h4c3 3 Articles
Moses Joshua is a cyber security enthusiast.A passionate and highly motivated resource person.He also loves to research and train organizations and individuals on how to stay safe online.

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