More retail investors and prominent financial entities are including cryptocurrency as a part of their investment positions. The rise of digital asset inclusion is present and will continue to accelerate at a rapid pace.
Digital assets are becoming more of a tried and true part of more portfolios of investment managers at various firms. As a matter of fact, these are said to be the first digital native assets present in these traditional 60/40 portfolios. Whereas in the past we had 60/40 portfolios with a heavy weight to stocks and lower one to bonds.
Of course the fact is that digital native investments have some characteristics that are in line with equities and bonds. Still, they have distinct features that make them uncorrelated with traditional markets. Clearly, they exist in the cyber world and are still enigmas. The markets are still trying to discover and price these assets based on their unique properties.
Market participants are very enthusiastic about getting involved and figuring out the price of these assets together. That is why you are seeing an increase in bitcoin accounts and other digital wallets. Further, you are also seeing an increase in exchange activity at places such as Coinbase, Kraken, and Binance.
The community is growing and that is why you are seeing vast interest in short term crypto trading, signals, compilation of information, and the mitigation of risk. Enthusiasts in this realm are participating in bubbles and bursts and are still sticking around as they trade during the short term. They ride the volatility and seek substantial returns.
What is cryptocurrency short term trading strategy and how can you join the digital asset revolution? Let’s find out.
The Desire Behind Cryptocurrency Speculation
People love this sector because it has something that other sectors do not have, volatility and significant gains regularly. See, bitcoin and other leading cryptocurrencies only came out in 2009 and later. That means that they are still very new in the grand scheme of things. Novelty brings about the opportunity for massive gains and provides a strong incentive for people to get involved.
Traders in this sector also know that this area offers 24/7 trading capacity, a factor that many have come to respect and appreciate. They don’t have to wait for a while to acquire and divest assets, they can do so whenever they please. Always on trading also allows for the opportunity to create value at all times by making the right trades.
Professionals and even novices can take advantage of this opportunity to create gains. Indeed, professionals who have been in the traditional markets might have more ability to produce outsized returns over those that recently gained interest in speculation.
If you are interested in cryptocurrency trading in the short term, you will need to have a plan of action. The markets can swim with you and against you, be prepared. What are you to do first?
Understand Yourself
To be a successful trade you must understand who you are and what you intend to accomplish in the short term. If you want to make short term trades you must understand the risks involved and capture the opportunity in the best way possible. If you comprehend your ability, your time, and your constraints, you can focus on what matters the most and stick with that.
Make a list of your current obligations, your income goals, your time constraints and the costs of short term trading such as fees and taxes.
Now that you understand the possibilities and what you can commit to in this trading journey, you can choose your trading style.
Trading Mechanisms
The first is that of swing trading and the latter is that of day trading. Remember when you took the time to review what you can do and how much time you have to spare for your speculative activities? That comes into play right now.
Swing trading requires you to invest a more substantial sum upfront and sit on it for a week, two weeks, or a month or three.
Day trading requires less capital as you are investing today and slowly increasing your value each day. You close out your positions at the end of each daily speculation session. Experts suggest that those who are new to the sector should begin their journey with the former option first.
The first option lets you to comfortably allocate capital and patiently watch and wait. This lets you continue with your current lifestyle and only asking you to make minor modifications overall. Experts understand that those who are thinking about speculation will have families, school, other tasks to worry about in their lives. It is better for them to practice simple action and modify behavior and lifestyle gradually as opposed to trying to do it all at once.
Day trading would require you to be on the ball every single day and close out your positions no matter what happens. That means that you will have to be active throughout the day and alert in the markets. Of course, this is easier said than done. But if you are able to become a day trader in the cryptocurrency markets, then you can go places. But you must develop the proper skills.
For instance, one who chooses the day asset acquisition and divestment option will likely increase their earnings regularly and in quicker fashion. The reason is because if they are doing it well, they will build on top of their previous day’s gains. The more they allocate and capture, the more they can gain and so on it goes.
Think about it like this, if you start with five dollars and trade up to ten in one day, the next day you start with ten. If you have ten, then you can have a strong foundation to increase your earnings to fifteen or twenty and on and on. But this is very difficult to do due to time and money constraints.
That is why from a risk standpoint many speculators choose to swing their trading actions. At the end of the day it is up to you to decide which one you think will work out best for you. Professionals and general experts find that most respond well to swing.
Now that you know about your overall style and mechanism, let us discuss how to analyze the markets and make your moves.
Market Analysis
The reason why you want to conduct market analysis is because you do not want to lose your capital. A few enthusiasts in the community would state that you do not want to get wrecked. The truth is that they are right. Many people work hard to increase their capital and create opportunity for their families and those around them. It is hard to build wealth when you are destroying it at every chance that you get.
The market is a vicious siren or a pleasant goddess as it can eat you whole or it can bless you with abundance. It can destroy your value with one massive downward trend or it can double it with a bullish increase.
Remember that you want to stay in the game as long as possible and want to make sure that you are around to see great gains over time. That is why many people who are hurt by the market can swear off it and vow to never return again.
Learn to minimize your risk and live your best life with market analysis.
There are two ways to conduct this analysis, the first way is to do it in a technical manner. You have one more option, fundamental due diligence. But what is technical due diligence? It is where you look at the patterns present in the charts.
You will look at the indicators that are in the charts to make your buying and selling decisions. Fundamental due diligence is different in that you will study the prospects, the narrative, and other critical points surrounding the digital asset or network.
For instance, bitcoin resembles similar characteristics with gold with its mining operation and other components. Traders would look at the inflation present in bitcoin, miner activity, holding activity, and other aspects to determine possible moves.
Take another currency like Ethereum, they will look at the rate of transactions, the number of decentralized exchanges locking up ethereum, interest payments, debt, and other aspects. The idea here is to look at events, news, and other aspects that make a difference to the participants in the crypto network and how they will react to it.
The latter might take more work but it is surely worth it in the short term and long run. The technical manner is one that is interesting to learn and can provide more information on future potential. Remember that you can look at the different indicators in the technical realm and make decisions. It is essential to only follow a few of these indicators as all of them might be confusing.
There are several patterns to watch in this arena and others when utilizing a technical analysis approach.
These are bullish, when the market is going up, negative or where the market is trending in a declining fashion and finally in a range pattern. The last pattern is where it does not go up or down but moves in a sideways manner.
One should not exercise the habit of naked speculation on a regular basis.
What else should you account for with this short term strategy?
Regulation and Transparency
You will want one broker that is interested in staying honest, reliable, and transparent. A regulated trustworthy broker will be there to alleviate problems and concerns that may arise. The truth is that in this world issues are bound to be present because of the activity that continues to occur. In bull markets activity will occur in a rapid fashion and that means there is opportunity for potential platform issues.
Regulated and respectable institutions will do what they can to respect your capital and improve your situation. Always do the right research when searching for places to use to allocate your capital. The cryptocurrency market can reward you with the right fruits if you are careful and work with more trusted parties.
There are a variety of brokers such as the native crypto ones and then those that are CFD brokers. Latter options will give the ability to trade many financial instruments as well digital assets.
You might not care about regulation as much in great times but there are times when the market will dip in a significant manner. It is in these times of trouble and issues that you must seize the opportunity to see the value of your chosen operator. It is best to not increase your chances of risk in these times and prepare far in advance to minimize potential issues.
Preserve capital by working hard early on to do the right research and invest in the right manner. One rule here is to not fall for potential offers that might lure you to trade with a specific entity. It is not about the offers but about other aspects that are present with the entity.
Customer services, professionalism, and other components are necessary and essential in your journey.
What Else Must You Optimize In Short Term Crypto Trading?
Competent Service
Competent service is quite essential is something that many people may overlook. Further, remember to think about the right analysis feedback, tools, and services that an exchange might provide to help you reach your goals. Of course it is essential from them to have options that cater to augmented automation.
Account Tiers
Do they offer extra services and accounts that differentiate between regular traders and those in the professional camp? Do these different tiers have features that provide more information and let traders augment their underlying skillsets?
These are all questions to ask as you prepare your set up.
Mindset
The idea here is to be a consistently successful speculator. Those who are not able to repeat a system will not find success. It is not about making one big win, although, if you are able to do so, it would be nice. Instead, it is essential for you to continue to increase your wins gradually today and tomorrow while visualizing your goals.
Stay focused on your goals, continue to improve, and figure out how you can gain and edge by increasing your opportunities and learning more each day.
Professionals appreciate the large wins but they understand the importance of showing up every day. Do not have unrealistic expectations as this might lead to your downfall. Set goals and gradually make progress every day. Short term cryptocurrency trading can be a value add but you must learn how to improve regularly.