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What type of trader are you?

 

It is essential to know about yourself before diving into crypto trading. An important question to ask is that what type of trader you are? Because as it seems, making money in cryptocurrency may be an easy job at times. But to make your crypto earnings sustainable and be a successful trader, it is crucial to explore your potential and act as per your type of personality. This blog is about the kinds of traders and the way they make trades.

Image by Gerd Altmann  from Pixabay

In general, we can categorize cryptocurrency traders into the following four types of traders. Every kind of trader needs its skillset and approach for being successful.

Long-term traders  

These traders aim to invest in those projects/currencies that are newly launched or about to lunch. The aim is to put money into such projects and hold it for a more extended period. These traders make money because all currencies at the beginning have the lowest prices. However, if the project is good and had practical implications, the price rises significantly over time, and thus the investor made money. But, such trading needs risk lovers, who have substantial financial resources. The traders must have a vision, strategic thinking and patience. Mostly, such traders are all those who were early adopters of Bitcoin, Ethereum and other stable currencies.

Swing traders

These traders are the ones who aim for making money through the moments of cryptocurrencies prices. These traders mostly do traders in days and weeks, sometimes in months. But their main objectives are to enter the market, hold their position for a while to ensure a profit and then exist. Such traders need knowledge about cryptocurrencies market moments, trends, and moments of currency prices. These traders also need considerable patience and must have a certain level of holding powers of currencies because otherwise, they would not be able to carry trade for a more extended period. These trading need a different mindset compared to long-term traders, day-traders or scalpers.

Day traders

Day-traders aim to work daily and make money every day. This model is similar to the 9 to 5 job model. In this model, traders aim to start their day by entering the market and then try to exist it by the end of the day while seeking a profit. Unlike long-term and swing traders, these traders have to be more tentative and spend more time on screen to check for all market moments.  These traders need more money, risk agility and patience. The day-traders need deep knowledge of moments of the market. They must be aware of day-to-day happening around the world that may influence the cryptocurrency market directly or indirectly.

 Scalping

Scalping is an exciting model. In this model, the traders aim to get profit in the market in a brief period. The scalper set a short-term strategy. They enter the market, strive to achieve their objective, and exit the market as soon as things go in their favour (or in the opposite direction) within a short time, irrespective of the profit/loss. The objective here is to make money in the shortest time. Scalping needs steel nerves and high risk-taking behaviour with super in-depth knowledge of the market moments. It is the trade of minutes and seconds. So it needs high nerves and emotional controls.  At the same time, it's very risky, with a high probability of losses specially for new traders.

 Which trading approach is suitable for You?

Every person has a different mentality, and no trader needs to become an expert in all kinds of trading. But a trader can make money in any trading model (or the combination of it) depending upon the skill set he had, the risk-taking capacity, the financial resources, the level of penitence and most importantly, the knowledge about the market trends, indicators and levels. 

Image of yogesh more  from Pixabay

 In general, I would suggest for new traders to start with day trading based on paper trades. In which you make daily trading using real market data and making trades with artificial money. Several platforms offer such paper trading. You can practice paper trading on Tradingview (Check the video for how to use Tradingview).  Day traders can move to swing trading after becoming successful day traders. Swing trading can be combined with long-term trading and scalping depending upon the financial resources available and the future goals of the traders.  


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