Crypto Investment Strategies: Part Three – The Active Trader
In the previous two articles, I talked about the top 2 most popular crypto investing strategies: 1) Buy and hold “blue chips” and 2) Playing Venture Capitalist. Here, I will talk about the third most popular crypto investing strategy: The Active Trader.
This educational series was brought to you by SIMETRI, our premium crypto investing product. If you haven’t done so already, do check it out here.
What does The Active Trader do to make profits?
As you can see by now, every strategy has pros and cons and each requires different levels of time commitment and skill sets. I’m a firm believer that the skill sets required for each can be learned over time, but one of the most important factors in choosing one strategy over the other is personal preference.
With strategy #3, The Active Trader, the time commitment is high and the risk level is also extremely high. This strategy is for more advanced traders. As an active trader, most of your day will be looking at chart patterns, placing orders and setting up for future trades.
Currently Bitcoin (BTC) is naturally the most popular coin for traders. Other popular coins for traders include: Ethereum (ETH), XRP (XRP), Bitcoin Cash (BCH), Litecoin (LTC), EOS (EOS), Tezos (XTZ), Cardano (ADA), and Chainlink (LINK).
Essentially you are trading in and out of these coins with the goal of making quick short-term gains—usually within a few days. If you believe the price of a coin will go up, then you place a buy order. And if you think the price will go down, you place a short-sell order.
Please note, “selling” and “short selling” are two very different things.
You can learn more about margin trading and short selling here and here.
In contrast to the investor who adopts strategy #2 (Playing VC) and targets 10X gains on an investment over the period of a year, the active trader is happy with a quick 10-20% gain in a few days.
Technical Analysis vs Fundamental Analysis
Every trader uses slightly different indicators to inform their decision-making process when deciding whether to buy or sell. Some focus purely on technical analysis.
Technical analysis is the discipline of analyzing statistical trends and charting patterns to identify opportunities. Two of the most important data points are price movements and the trading volume of a particular coin. There is a whole art and science behind technical analysis which we will save for another time.
Other traders look at more fundamental variables. Perhaps they are expecting big news to come out that will move the price, say, an upcoming fork or a halving event.
There are dozens of other fundamental factors: investor sentiment, # of wallets addresses, NVT (Network value to transactions) ratios, development activity, exchange inflows and outflows, and many others to which traders pay attention to inform their decisions.
At Crypto Briefing, our team looks at BOTH technical AND fundamental analyses. Oftentimes, technical and fundamental analysis signals don’t line up. For example, technical analysis may be indicating a BUY but fundamental analysis tells us to SELL.
For us, it’s important that both technical and fundamental analyses line up and give the same signal before we are ready to make a call on a trade.
How Pro BTC Trader can help
For active traders, our lead Bitcoin analyst, Nathan Batchelor, provides our members with daily trade recommendations on Bitcoin and other popular coins with exact price targets and stop losses.
- Daily fundamental market developments, technical analysis, sentiment analysis, and trends forecast.
- Clear signals on short/medium/long term price targets on Bitcoin and commentary on other popular coins.
- Step-by-step trade execution instructions and details on entry price, target price, and stop loss points, for order execution.
- LIVE Trading War Room, a live weekly webinar hosted by Nathan
Sign up now for Pro BTC Trader and get 10% off a one year subscription. But if you have not traded crypto before, consider starting with paper trades.
This concludes our series on the three most profitable crypto investing strategies. I really hope this information will help you figure out which strategy fits you best.Good luck and invest safely. I’ll see you at the finish line!