The constant monitoring of the market takes a lot of time, but automated crypto bots are a convenient solution for this issue. Crypto trading bots allow you to place orders 24/7 and provide the customization needed to make the bot trade anyway you like. They offer many features to keep your automated trading profitable, but to achieve maximum success you should still take part in the process as it is up to you to decide what pairs to trade, when to launch the bots and what trading strategy to choose. You should also make decisions according to your trading style. And this is what we want to cover in this article.
Day trading is a short-term trading strategy that consists of opening a few positions at the beginning of the day and closing them at the end. Day traders sometimes open one or not more than a couple of trades per day. Their goal is to find the most profitable buying and selling spot. Day traders need to always stick to the plan and be patient as the price moves up and down, with and against the position multiple times per day.
Day trading strategy requires crypto investors to regularly monitor the market. It is one of the reasons why many day traders prefer to use trading bots. A trading bot uses various filters and signals to determine the best time to enter the market according to the strategy.
Scalping is a very short-term trading strategy. The target of scalping is to take profits out of the smallest price movements. Scalping is very effective on cryptocurrency market due to its extreme volatility. The main advantage of scalping strategy is the ability of gaining profit from small price changes within the shortest time frame possible. Scalping strategy is based on buying and selling almost instantly, the positions are closed even within a few seconds. Traders (known as scalpers) need to always be precise with their timing and with their limits of Take-Profit. They must also have a high overall percentage of trades with profit to be successful. Scalping is an exciting, but a very risky trading strategy. Traders need to keep costs in mind and don’t get emotional to be a successful scalper.
Scalpers can benefit from trading bots as well. Trading robots use technical indicators to help find some good trading opportunities and doesn’t hesitate a moment when it comes to making quick decisions. The take profit levels can be set to minimum amount so that the bot closes the deal quickly. However, scalpers need to make sure that the trading platform they’re using supports Stop Loss since the strategy implicates that the position will be exited within short timeframes.
Swing trading is probably the most common type of trading on the crypto market. It is a great way to take advantage of the market fluctuations, trading on a higher time frame holding positions for as little as overnight and for as long as several weeks, but usually for between 1 and 7 days. Swing trading is a good strategy for beginners, it captures larger gains over longer time frames than day and scalping trading. Swing strategy doesn’t require constant monitoring because the price movements on smaller time frames don’t play a significant role in it.
Swing traders are trying to trade the swing of a chart, hoping to catch a big move. They use technical and fundamental analysis to determine whether a cryptocurrency will experience a significant price change. They tend to stay up to date with new developments that may affect the price action of their picks. Traders use chart patterns to obtain the information about the coin and when to enter or exit a position. Swing trading is suitable for patient traders as it will be necessary to wait for the right trading opportunity, such as a price movement sufficient enough to generate a reasonable profit.
If we are talking about using bots for swing trading, there is the option of using automated trading bots for your swing strategy. Trading bots can spot the optimal entry points based on technical indicators. They also execute far more trades than you could do manually since it’s monitoring the market 24/7. Trading bot indicators can be really helpful when used for longer time frames.
Position trading, which is considered to be a buy-and-hold strategy, is the longest time-frame trading strategy of all. Open positions are held for several days to several weeks, or even through an entire year, depending on the market trend. Position traders are more interested in long-term investment than in short-term price changes. They are using longer-term charts and a combination of fundamental analysis to determine the direction of the market. Position Traders don’t need to be at the computer when their trade enters or exits, they often use pending orders to enter the market. This trading strategy is only suitable for the most patient traders, who don’t easily get excited by short-term price fluctuations on the market. As a position trader, first you will need to do some research, but once a trade is placed, it doesn’t require a lot of time to monitor or manage.
Position traders may benefit from averaging the cost per dollar. If you’re certain that the price will go up to the certain price level, you may take advantage of the price fluctuations and increase the position when the price is going in the opposite direction. Thus, the profit price you’d like to take will decrease and take profit percentage will stay the same. You’ll exit the position earlier since the price doesn’t have to reach the initial take profit price. A trading bot with proper settings will allow you to have a planned entry and exit from the market, and will help you manage the risks.
Which trading strategy is better? There is no answer. The trading style varies from trader to trader. It all depends on your knowledge, experience, your tolerance to risk and even your personality. We hoped today we’ve helped you to gain insight into differences between the trading styles and automation opportunities. Once you find a style that suits you best and make yourself comfortable with it, you’re welcome to join TradeSanta and try out trading automation of your particular trading strategy. TradeSanta bots are free for now, so you can you can start automating your trading routine any time.