Trading styles – What kind of trader are you?
There are no right or wrong ways of trading. It’s all psychology. Let’s look at different styles of trading that might be right for you.
The reason why trading cryptocurrency is so fascinating is simply because there are no set rules and standards. Depending on your time frame, the following trading styles might be what you’re looking for. From the timid occasional traders to full-scale scalpers, many styles suit many different characters of people. Let’s take a look at the most common ones and analyse what would fit your strategy and character best. Let’s dig deep into your own mind and personality to finally discover what kind of trader you might be.
Short term trading – Scalping
If you like to live fast, then perhaps scalping would be for you. A scalper is a short term trader that specialises in lightning-fast trades lasting only minutes. Like a ravenous centipede, this trader will generally make several trades per day and will take small morsels of profit along the way. A scalper usually has an 80/20 to 90/10 trading position, meaning:
- Large HODL position (80 to 90%)
- Small trading position (10 to 20%)
Scalpers are generally lonely predators. Since they are on the lookout for opportunities, they’re usually glued to the screen, having their red hot phone dangling from their ear. The endless cans of energy drinks and a full ashtray of smouldering cigarette butts on their desk keep them company throughout the day. Finding perfect scalping trades takes great skills and discipline; therefore, a good scalper will always follow a strict set of rules and strategies to maximise those fast profits.
Scalpers follow Twitter, Telegram and other social media platforms religiously, and they always hang out in multiple shitcoin discussion groups, actively participating in the crypto madness.
If you are an outgoing person with excellent communication skills, you would definitely appreciate the scalper’s lifestyle. You have no issues having multiple exchange accounts and following several price action screens at the same time.
Before you go out and order your ultimate trading infrastructure with screens and a comfy office chair, please keep in mind that scalping can become too fun, too fast. It’s not uncommon to see how these traders become alienated from the real world and even start to neglect important relationships. That is why it’s important to alternate lightning-fast trading with periods of rest and relaxation.
With time, scalping will become a thing of the past, simply because the trading bots and high-frequency trading algorithms will be taking over (just like in traditional markets). For now, there are still fantastic scalping opportunities in crypto. What if scalping is not your thing? Let’s explore the day trader’s domain.
Short term – Day trading
If you have the freedom to let go of the reins of your open trading positions, then day trading would probably be your thing. A day trader is usually a cheery and optimistic person. As this type of trader, you love to hold your positions for a few hours per day, and usually, you stick to your own system when it comes to risk management.
For example, you would wake up, have breakfast and start hunting for opportunities right then and there. Then, you would place just 1 or 2 trades, set your stop-loss to limit the risk and head out to the shop or a lovely dog walk.
In the afternoon (or even in the evening), you would check your position and see if either your stop-loss has been triggered or your profit level has been reached. In the case of the latter, you don’t hesitate to sell your position and take your profit. After all, you’re not married to the asset you’re trading, right?
As you can see, a day trader structures their trading activities around their life. Not the other way around. Make no mistake, and however trading is still considered a full-time job, hence it needs to be treated with utmost professionalism and respect. More often than not, day traders indulge in occasional scalping if they see this opportunity fly by.
Also, it’s essential to keep in mind that it’s perfectly normal to have several open positions running simultaneously. The key difference between scalping and day trading is simply the time frame you would hold an open position. Here the technical analysis, fundamental analysis, and general market news are extremely important.
You don’t want to be diving through the red hot news. You need just the news that would move the markets.
In this case, as a day trader, you would be interested in the social media updates from relevant cryptocurrency projects, their upcoming events, such as partnerships, platform launches, and even airdrops. The news arrives fast, and when it circles the globe, many day trading opportunities can be exploited.
As you can see, day trading is much different from scalping. Here we are actively participating in the market and keeping a vigilant eye on all of our positions. What if babysitting your positions is just not your thing? Enter swing trading.
Long term – Swing Trading
Do you like the crackling fire in a traditional fireplace? Perhaps a nice brandy and a novel to go along with a relaxing winter evening? Do you have the patience to tinker in your garage or even tend to those plump tomatoes in your garden?
Good news! You are the perfect material for a swing trader. A swing trader has patience and zen-like peace of mind. You can find these people everywhere, mostly because they don’t see trading as a full-time occupation.
As a swing trader, you most likely have a steady job, a bunch of kids filling your home with trickling laughter, and perhaps a hobby that brings joy to your spirit animal. You don’t take trading too seriously, and it’s certainly not your full-time occupation.
You are perfectly fine with holding an open trade position for days and even weeks. Technical analysis, although useful, does not make the entirety of your analytical tools. You can trade on sentiment and market events.
Macro analysis and a keen nose for processes that influence the markets are your beloved tools. It’s not uncommon for you to dive into a position and just let it ride the waves of the market. You don’t follow “hot tips” and the next “Moon-Elon-Shiba-Doge” shitcoin trends. Like a prehistoric hunter, you let your dog (your open position) follow the deer (the market) until eventually, the price goes your way.
Swing traders can be found in all walks of life, and they all have their preferred systems. But most importantly, a swing trader is patient and logical. You don’t follow the hype, but you follow the narrative. Again the occupation of trading is tailored to your lifestyle and not the other way around. That is why we won’t see the caffeine-infused, hot-headed personality types in swing traders. So before you run out the door and start the analysis of your next long term trade, let’s talk about the last type of trader that lives deep in the crypto jungle.
Long term – Hodler
What?! How does a hodler count as a trader? It might sound a bit strange, but yes! Hodling for the long term is also trading.
At some point, you buy, and at some point, you’ll have to push that red “sell” button. So how exactly do you know if hodling would be something for you?
The chances are that you were instantly “bitten” by the whole concept of an immutable and decentralised financial ecosystem from the moment you have heard about Bitcoin and cryptocurrency in general. You had sleepless nights, didn’t you? You were thinking about the future with Jetsons-like flying cars, robots and permissionless, borderless payment systems that would pull billions of people out of poverty.
In that case, you are definitely a hodler material. You firmly believe that cryptocurrency and blockchain tech will improve the world in the same way nuclear energy, personal computers, and the internet did. You don’t think in months but in years and even decades.
That is why you have no issue holding on to your cryptocurrency for years to come. You most likely have multiple wallets and countless paper backups of your seed phrases and private keys. You spread the gospel of Satoshi far and wide, and probably your significant other is tired of your crypto ramblings.
Yes, you are definitely a hodler. No amount of news media propaganda, yapping pseudo-journalist clowns, and prehistoric government regulators can dissuade you from giving up your coins even in the darkest days of the bear market. You KNOW deep down that every 4-year cycle, the good quality crypto project will survive, thrive and empower the world in ways we cannot even imagine.
As we can see, a hodler is categorised by an insanely large amount of patience. A hodler lives and breathes “crypto”. Suppose you think you might be the perfect “hodler material”. In that case, it’s definitely advisable to alternate your passion for crypto with the well needed period of rest and “to unplug from the Matrix” once in a while for the sake of your sanity and the well being of the people around you.
Now you know about all the trading styles out there, we can tackle the ever so important question.
Who is the best trader?
If in case you haven’t guessed it yet, the answer is, of course, ALL of them.
You see, in the untamed Wild West of the crypto market, life and trading never stop. There’s an ocean of news and information to drown in. Every day something exciting happens, and it’s difficult to keep up. That is why the best trader uses the combination of different trading styles mentioned above.
It’s perfectly fine to be a lightning-fast scalper, taking small bits of profit every day in order to build your long term hodling portfolio while at the same time babysitting a few swing trades.
It’s also perfectly fine to make short-term day trades and longer swing trades, only to add morsels of Satoshis to those sweet long term gains.
Every good and disciplined trader uses a combination of trading styles, strategies and favourite indicators to form their unique system for navigating the treacherous oceans of the crypto market.
Always remember that your strategy is based entirely on your own personality. Your human flaws will be amplified 1000 fold by your trading activity. People say that trading is the ultimate form of self-expression and self-analysis. You genuinely know yourself by the way you trade, so definitely form your strategy accordingly. Don’t ever lie to yourself. Stand in front of a mirror, ask yourself the difficult (but necessary) questions, and formulate your trading strategy accordingly. This is so vital! Not only your profits but your sanity and well being depend on it.
If for any reason trading is not for you, but you still want to dip your toes into this amazing bull market, join Tycoon today and copy the strategy of professional traders in real-time. Since the platform has just launched, you can try it out for free, check this link.
Risk Note: Trading cryptocurrencies is subject to high risks and may result in the loss of your capital. Please make sure you fully understand the risks associated with trading cryptocurrencies and only invest as much as you can afford to lose. Be clear about your investment objectives and experience, and seek advice from an independent financial advisor if necessary. It is your responsibility to determine whether you are permitted to use Tycoons’s services under the laws of your country of residence. Investments in cryptocurrencies are not protected by a Financial Services Compensation Scheme.