If you’re a beginner who is looking to get into the world of cryptocurrencies, it is crucial for you to know how to leverage this unique digital asset to earn money. And one way to make money is by trading cryptocurrency. And if you’re wondering how to make money in crypto trading, continue reading to find out a few ways through which you can accomplish that.
Many individuals getting into cryptocurrency for the first time seem to want to make money via crypto trading. However, what they’re not aware of is the kind of approach and method that they would have to follow to do the same. So, here’s how to make money trading crypto.
This is by far the easiest way to make money trading cryptocurrency. In this strategy, you purchase a cryptocurrency and basically hold it for long-periods of time. What this approach does is, it allows you to accumulate profits over a period of time and has the potential to generate high returns.
However, this approach can also generate losses if the price of the cryptocurrency falls after you purchase it. And so, this strategy requires constant monitoring of the price movements to ensure that it doesn’t go below your purchase price.
According to this strategy, you purchase a cryptocurrency and sell it within the same day. That’s why this approach has been named the ‘Intraday’ trading strategy. Although the potential for big gains is low, since you hold the cryptocurrency for less than a day, this strategy helps eliminate overnight risk.
Overnight risk is the risk of the cryptocurrency’s price falling overnight. Since this strategy involves small profits, you can initiate multiple positions or trades within the day to compensate.
If you’re wondering how to make money through crypto trading, this strategy may just be able to help you generate some profits. The news trading strategy involves thoroughly reading up on and monitoring the news related to a cryptocurrency. And as soon as any information related to the cryptocurrency comes up, it requires the trader to initiate a trade accordingly. For instance, if there’s a positive news item about Ethereum on the internet, you could purchase a few tokens of the crypto. And if there’s a negative news item about it, you could sell or initiate short positions on the crypto.
This is another great strategy to make money through crypto trading. Almost all market-linked assets, whether crypto or otherwise, generally go through swings, which are basically highs and lows.
And swing trading involves monitoring the trend of the cryptocurrency and placing trades accordingly. For instance, if a cryptocurrency is going through a high, you could wait till it drops to sell or initiate a short position. And similarly, if it is going through a low, you could wait till it rises to purchase it.
And the final strategy that we’re going to take a look at in this how to make money from crypto trading guide is the scalping strategy. In scalping, traders buy and hold the cryptocurrency for extremely short periods of time, not more than 10-20 minutes, before selling it off for a minor profit. Once the crypto is sold, the trader initiates another trade immediately. This continues on and on till the trader reaches their profit goal.
The primary aim behind scalping is to make small profits on multiple trades and allow it to accumulate. While it is an excellent strategy, it is very risky since one large loss can wipe out all of the small profits that you’ve painstakingly accumulated. Professional scalpers make as many as hundreds of trades in a single day in the hopes of generating small, but frequent profits.
The five strategies explained above are merely illustrative. There are many more such strategies that traders use to make money trading cryptocurrency. So, there you have it. Hope you now have the answer to ‘how can you make money trading crypto?’.
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