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Know Your Trading Type: A Guide To Understanding What Kind of Trader You Should Be
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[Image: candlestick-chart.jpg:resizeboxcropjpg?1580x888]
There are many types of traders out there in the world today. Some of them are the type of people that look at their screens all day long and never miss a candlestick. Then there are the types that don’t even need to look at charts and just buy at the market price with the intention to hold for longer periods. There's also traders that aren’t even human!

The type of trader you are does not matter because the majority of these trading types make money. It all depends on your personality and which type of trading style suits you best. Do you have the time to constantly looking at charts all day long? If not, you are likely to benefit from long-term trading styles. 

Below is a list of the most common trading types, starting from the long-term traders and finishing with the very short-term traders.


1. HODLing

We all know what HODLing is - "HODL <insert cryptocurrency>!" is a popular rallying cry in the cryptocurrency community, and it basically means what it sounds like, to HOLD your coin. These types of investors buy at any price and continue to hold for very long periods of time that can span multiple years. If you are hodling a coin, you'd better be super confident in its prospects over the long term!


2. Position trading

You may often hear the term position trading but it is pretty much like HODLING. However, position traders will build their “positions” over time at favorable prices. They will plan ahead and if the price hits their trigger level, they will load up their positions.

Position traders will often hold their coins for very long periods of time, much like hodlers will.


3. Swing trading

This is where the type of trading starts to get more technical, and requires active participation - you'll need to spend more time looking at charts. However, swing traders do not really need to look at the charts all day long. An hour here and there may suffice once a trader determines the direction of the trend and their entry price. 

Swing traders will often hold their trades from a few days to a few weeks - it all depends on how long the swing lasts. You can think of a swing like a short-term trend and the swing trader will stay with the trend until it shows signs of weakness. For an example of a swing, take a look at the chart below. 

[Image: swingtradingchar.png]

From July 30th to August 6th, there was a swing in which the price of Bitcoin BTC, -2.25% started at $9,500 and reached $12,320. The next swing started when the price started to fall from $12,320 all the way to $9,600 over the next 7 days.

As you can see, swings can last as little as a few days to sometimes over a few months. However long the swing is, the swing trader will remain in his position.

Swing traders will often use very wide stop-losses and aim for pretty high profit targets. Swing traders may only make a few trades a month, but when they do trade, they are aiming for some huge profits! Swing trading is a very good style of trading if you don’t have many hours per day to monitor the market. You simply identify the direction of the trend, find an entry price, exit price and stop-loss and put your orders in to let the market take care of the rest. 


4. Day trading

This type of trading is highly focused on short-term price movements. Day traders will often open and close their trades on the same day. The trade may last anything from 20 minutes up to a few hours, however, they will always manage to close their trade during the same day. This helps them to sleep at night as we all know the cryptocurrency market is very volatile. 

A day trader may make 4 losing trades and 1 winning trade per day and still finish on a profit. This is because day traders will typically use tight stop losses to mitigate their risk. If the trade goes against them, day traders are quick to cut their losses. On the flipside, day traders suffer from not being able to let their winning trades run as they close their trades by the end of the day and thus leave potential further profits in the market. 

This type of trading often requires a trader to be present at their desk for many hours during the day but the trader can always sleep easy knowing there is no risk on the table when they're away from the market.


5. Scalping

The last type of trading we're going to be discussing in this article is known as scalping and is often the quickest form of trading. But let me warn you right now that you should keep as far away from scalping as possible and leave it up to the bots.

A scalper will typically hunt for many trades per day and leave their trades open for very short periods of time, which are sometimes measured in seconds. As an example, a scalper might buy Bitcoin at $10,000, then sell it at $10,010, then buy it again at $10,008 and sell it again at $10,020. The scalper aims for small profit targets and uses very tight stop-losses. If the trade goes against the scalper, they will simply forget about it and move on to the next trade.

This type of trading requires a very high degree of focus and skill. It is not for the amateurs and is often dominated by trading bots. To make scalping in the cryptocurrency market viable, you will likely need to use high leverage - trading on BitMEX, for example. This will allow you to make more profit from small price movements but at the same time, you greatly increase your risk of losing just as much as you can gain. Scalping is certainly not for everyone!




by Yaz Sheikh
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