Top Trading Patterns in Cryptocurrency

Cryptocurrency trading deals with deducing the price movement of crypto by using a contract for differences (CFD) trading account or by buying and selling the crypto coins via Gate.io.

Any movement in the price of crypto is measured in a unit called "pip."

Cryptocurrency is usually traded in the short-term or long term.

The best trading patterns are day, trend, scalping, range, high-frequency, etc.

Many people delve into the world of crypto for different reasons. Some want to HODL their coins and see how the market develops, while others engage in crypto trading.

What is Cryptocurrency Trading?

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Cryptocurrency trading means inferring cryptocurrency price movements via a CFD trading account or buying and selling the crypto coins via an exchange, say Gate.io.

A CFD (contract for differences) trading account lets you trade in the price movement of assets. You can predict the assets over the short term whether they will make an upward (rise) movement or downward (fall) movement. Such movements are measured in the unit “pip.”

To be a crypto trader, you must possess a varied understanding of crypto and all the nuances involved in the trade market. This is because the nature of cryptocurrency heavily revolves around some critical factors.

Factors That Determine Crypto Trading

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These characteristics determine how any crypto trade goes or if it even goes on at all.

Supply & demand
Elevated demand for a particular coin increases its price. Contrarily, when there is a low demand for it, the cost of the currency goes down.

Media coverage
The portrayal of cryptocurrency by the media can impact its value. If the media covers negative crypto news, for example, its instability or lack of security, it will plummet in the market. Likewise, if crypto receives positive reviews from the media, the public is more likely to be interested in buying it.

Legislations
If the government passes laws that make life difficult for crypto vendors and traders, such as excessive taxing on buying coins, it will be hard to trade.

Furthermore, cryptocurrency networks are known to adopt new rules from time to time. Ethereum, for example, is making moves to update its network from a proof-of-work system to a proof-of-stake system. This spells bad news for people who already have data mining equipment. And this change will affect the value of its coin, Ether.

Competition
About 8,000 cryptocurrencies are circulating on the trade market today. Unsurprisingly there are still more coins primed to join them, partly because the entry barrier for these coins is low.

When a new coin launches, it gathers steam quickly, knocking other coins out of the park. Knowing how to manipulate this common occurrence is invaluable for a trader.

As a crypto trader, you should understand these factors' role in the trade market. In addition, it would help if you learned how to utilize them for your gain, as they severely improve your chances of successful trading.

After understanding the outliers of crypto trading, the next essential step of learning as a trader or trade enthusiast is the trading plans to utilize.

Top Crypto Trading Plans To Use

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Like any form of trading, crypto trading is filled with sweet spots and potholes. To benefit immensely from it, you need to understand it and master the strategies.

They are;

Day trading
This form of trading involves opening and closing a position within one solitary trading day to avoid any overnight exposure. This means you will steer clear of any night funding.

Day trading is one of the most commonly used techniques by traders. It is used best to take advantage of short-term spikes in daily price.

This strategy requires focus and dedication as it involves quick and spontaneous reactions.

Range trading
This trading strategy is an active type of trading. Here, you identify a range in prices and trade. In this type of market, there is no clear long-term trend in view because the market constantly moves between two prices.

It can be done in short-term (four-minute) charts to long-term (daily or monthly) charts based on the price position within the range.

Trend trading
This involves positioning your trade to match the current trend in the market early enough and exit it before the trend overturns. By evaluating historical trends and price movements, you can predict future occurrences.

Trend trading can be regarded as a mid to long-term trading plan, depending on the time frame of the trend.

You can adopt a position trading or swing trading technique. With position trading, you can hold a trade for as long as it lasts, overlooking any fluctuations, while swing trading involves recognizing a trend and staying with it from the beginning to the end.

Scalping
Scalping is a short-term trading strategy wherein you can rapidly open and close a position to benefit from small price movements.

The rationale behind this technique is that slight price movements can be quickly predicted instead of significant price movements.

People who engage in this trading plan are usually day traders, as they don't hold trade positions overnight. The high-frequency traders also adopt it as they frequently trade to acquire dividends.

High-frequency trading
High-frequency trading refers to large-scale trading with the aid of progressive computing technology.

This computing technology refers to high-level algorithms and trading bots that quickly enter and exit different trades almost in a second. The bots analyze other trade markets and implement orders accordingly.

As high-frequency trading is an advanced form of trading, experienced traders majorly use it.

Conclusion

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Even with the near-global adoption of cryptocurrency, it remains a volatile investment. The implication is that you are likely to lose funds to earn them, and this is even exacerbated more when you trade.

To stay ahead of this curve and benefit from cryptocurrency trading, you need to have a deep understanding of trading patterns. And as time goes on, your experience with crypto trading will become more positive.


Author: Valentine A., Gate.io Researcher
This article represents only the researcher's views and does not constitute any investment suggestions.
Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.