05/11/2021
What is a trading strategy?
It is a tactical and extensive process to strategize your trading activity! It is the Blueprint that you based your trading process on!
This Blueprint helps you minimize financial risk because it eliminates unnecessary decisions. No law says that you should follow a trading strategy, but It can simplify the process. The market is volatile and unexpected things would happen; your trading plan would avoid you entering into fear, uncertainty, and doubt (FUD) and avoid acting emotionally in volatile situations. Once you are prepared for the possible results, you would prevent trading on precipitate and impulsive actions that often lead to considerable financial loss.
Your trading strategy would also contain petty details that would make a big difference. For instance, you can establish that you would never trade on weekends since the market tends to slow down. Or avoid trading when you are in a sentimental state of mind, so you avoid rushing your decisions and losing your capital because of feelings!
And always backtest your strategy. You can do this by doing everything manually without purchasing any coin; a good tool is https://coinmarketcap.com/portfolio-tracker/. This way, you double-check if your system would work without risking any capital.
There is no foolproof strategy; all of them have their actual pros and cons, but if you know the basics, you would be able to succeed, protect your capital, and earn good earnings from the market.
There are two main classes of trading strategies; active and passive:
Active trading strategies
Active strategies demand more of your participation. They are called active because you need to constantly review them and keep a close eye on your portfolio management.
Active strategies require more time and attention. We call them active because they involve constant monitoring and frequent portfolio management.
Examples
Day trading, Swing Trading, Trend Trading, Scalping
Passive investment strategies
The name speaks for itself; you would not need to be on top of your portfolio. Wait for your position so you can decide when to sell without the hands-on approach. examples: Buy and hold, Index investing
Observations
Creating a crypto strategy that complements your economic intentions and temperament style is not an easy matter. We reviewed some of the basics of the process; To find out which system fits you remember to conduct your research, educate yourself, always backtest your methods and maintain strict data management.
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About the author:
Jonathan Lawrence is the head coach of MRKT options with 5 years of experience on the crypto market; he is a growth marketer with a love for cryptocurrency!
