How to Short-Term Trading in Crypto? 3 Techniques & Tools
12 mei 2022 
10 min. read

How to Short-Term Trading in Crypto? 3 Techniques & Tools

Dear Happy Investor, would you like to learn how short-term trading in crypto works? Although we are not in favor of short-term trading, and certainly not for day trading, it is more appropriate for crypto. As far as we are concerned, long-term investing in stocks is much better. Anyway, everyone has her own preferences and wishes. And to get you started, this article will explain some techniques for short-term crypto trading.

Let's us begin!

What is meant by short-term crypto trading?

Short-term crypto trading refers to the practice of buying and selling cryptocurrencies over a short period of time. Typically within the same day, or within a few weeks or months. This type of trading generally relies on technical analysis, which is a method of predicting price movements by looking at past market data. If you want to learn how short-term crypto trading works, you should practice these techniques. 

Some common indicators used in technical analysis include price patterns, moving averages, and support and resistance levels. Many short-term traders use these indicators to try to identify when to buy or sell cryptocurrencies. While there is no guaranteed way to make money through short-term crypto trading, it can be a lucrative option for those who are able to identify profitable trading opportunities.

Short-term trading techniques are well known in the stock- and forex markets. It is not easy to begin with forex trading, but short-term trading techniques will improve your odds. As for stocks, you can either choose short-term vs. long-term investing. We prefer long-term investing in the best stocks. In some cases, we do use the technique of swing trading as explained below. This is most suitable for value stocks of “decent” companies that can be bought low and sell high within a 6 – 24 month timeframe. However, we prefer to buy strong companies and hold on to them for at least 5 years or more. 

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3 Short-term crypto trading techniques

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There are a variety of different short-term crypto trading techniques that can be used in order to profit from the market. Some of these techniques are very active, while others are a bit less active. Techniques can be applied within different day trading strategies. It is important to define your strategy first, because some short-term trading techniques will be more useful for that strategy. 

Want to learn how short-term crypto trading works? Below we explain 3 tactics to learn more about. 

1. Scalping for short-term trading in crypto

Scalping is a crypto short-term trading technique that involves buying and selling digital currencies in quick succession in order to make small profits. It is a high-frequency trading strategy that takes advantage of the volatility of the market to generate profits. Scalping is a very active short-term trading technique for crypto investing. It is not for beginners and should be practiced a lot. 

The main goal of scalping is to buy low and sell high, or sell high and buy low. In order to do this, traders use a variety of technical indicators to spot opportunities in the market. They then enter and exit trades quickly, trying to make small profits each time.

The biggest challenge with scalping is finding enough liquidity in the market to execute your trades. This is because you will be buying and selling very quickly, and you need to be sure that there are buyers and sellers available to take the other side of your trade.

Another challenge is managing your risk. Since you will be making a lot of trades, it is important to have a strict risk management strategy in place. This will help you avoid losing money on trades that don't go your way. In addition, you should choose one of the cheap day trading brokers because transaction costs add up quickly.

If you are interested in trying out scalping, it is important to test it out on a free demo account first. This will allow you to get a feel for the strategy and see if it is something that you are comfortable with. Once you have mastered the technique on a demo account, you can then start trading with real money.

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2. Swing Trading for short-term trading in cryptocurrency

Swing trading is a short-term crypto trading technique that involves taking advantage of price swings in the market. It is a form of day trading that tries to capture gains in a stock or cryptocurrency within one day. However, you could also use swing trading to trade stocks within a longer timeframe of a few months. 

While swing trading requires less time commitment than long-term investing, it also comes with more risk. This is because you are trying to make profits from shorter-term price movements, which can be more volatile. For example, you could buy a shitty company based on price movement. But if you are wrong, you will be left with stocks of a shitty company. 

There are different ways to swing trade as a short-term trading technique for crypto. The most common approach is to buy when prices are low and sell when they rise. You can also short-sell, or bet on the price going down. 

The key to successful swing trading is finding the right stocks or cryptocurrencies, and then timing your trades correctly. You need to be able to identify trends in the market, and then act quickly when you see an opportunity. 

Swing trading can be a great way to make money in the cryptocurrency market. We believe it is a better way for crypto investing than long-term investing. This is because we can’t really determine the real intrinsic value of crypto based on fundamental analysis. Thus, it is important to approach it with caution and do your research first. If you are not careful, you could end up losing money.

3. Arbitrage for short-term trading in cryptocurrency

Arbitrage trading is a short-term technique that takes advantage of differences in prices between different markets or exchanges. For example, if you see that the price of Bitcoin on one exchange is $100 and, on another exchange, it is $105, you can buy Bitcoin on the first exchange and immediately sell it on the second exchange for a 5% profit.

Arbitrage trading can be a very profitable way to make money in the cryptocurrency market, but it does come with risks. First of all, you need to have enough capital to take advantage of arbitrage opportunities when they arise. If you don't have enough capital, you may miss out on profitable trades. 

Secondly, arbitrage trading requires you to move quickly and execute trades immediately. If you're not fast enough, the price difference may disappear before you can take advantage of it. Finally, arbitrage trading requires you to have accounts on multiple exchanges, which can be a pain to set up and maintain.

Despite the risks, arbitrage trading is a way to make money in the cryptocurrency market if you're quick and have enough capital. If you're interested in trying it out, make sure you do your research and only trade with money you can afford to lose.

These are just some of the most popular short-term trading strategies that traders use for crypto. There are many others, and new ones are being developed all the time. The best way to find out which strategy works best for you is to experiment and see what works for you. Remember, there is no one perfect strategy for everyone, so don't be afraid to try out different techniques until you find something that suits your style and personality.

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How to do technical analysis for short-term crypto trading?

 

There are a variety of methods that crypto traders use to do "technical analysis" or T.A. Some common methods include using trend lines, support and resistance levels, chart patterns, candlestick analysis, and Fibonacci retracements. If you want to learn how short term crypto trading works, you should understand these tools. 

One of the most important things to remember when doing technical analysis is that past performance is not necessarily indicative of future results. In other words, just because a crypto coin went up or down in the past does not mean it will do the same in the future. This is especially true for small crypto coins. However, technical analysis can be a helpful tool in predicting which direction a coin might move in the future. Use T.A. to learn how short-term crypto trading works.  

Here is a brief overview of some of the most common technical analysis techniques that crypto traders can use.  

Trend Lines 

A trend line is a straight line that connects two or more price points on a chart. Traders use trend lines to identify the overall direction of the market and to try to predict when the market might change directions. Learn how trend lines works for short-term crypto trading. It is most suitable for the bigger, more popular coins like Bitcoin and Ethereum. 

Support and Resistance Levels

Support and resistance levels are price points on a chart where the market has historically had difficulty breaking through. These levels can act as either support (a level where the price tends to find support and bounce back up) or resistance (a level where the price tends to find resistance and fall back down). These levels are found on all trading markets. Short-term traders use them to trade crypto, but they may also use it to invest in stocks. 

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Chart Patterns

Chart patterns are recurring patterns that tend to occur in the price charts of certain coins. Some common chart patterns include head and shoulders, triangles, and Flags. Traders often use chart patterns to try to predict future price movements. 

Candlestick Analysis

If you want to learn how short-term trading in crypto works, then learn to read candlesticks. Candlestick analysis is a method of technical analysis that uses candlestick charts to try to predict future price movements. Candlestick charts are a type of financial chart that shows the open, high, low, and close prices for a particular coin over a period of time. 

Fibonacci Retracements

Fibonacci retracements are levels that tend to occur at certain percentages after a coin has had a large price movement. These levels are based on the Fibonacci sequence, which is a series of numbers where each number is the sum of the two previous numbers. Some common Fibonacci retracement levels are 23.6%, 38.2%, and 61.8%. Traders often use Fibonacci retracements to try to predict where the price might find support or resistance after a large price movement. This technique is often used to trade in stock markets as well. For example, you could use it to decide to buy or hold your ETFs. Learn more about the best eToro ETFs and the best dividend ETFs. 

Remember, technical analysis is just one tool that traders can use to try to predict future price movements. It is important to use multiple methods in order to get a well-rounded view of the market. In addition, it is important to always do your own research and make sure you are comfortable with the risks involved before investing money.

Read more about crypto day trading tips for beginners here.

We hope you have an understanding about how short-term crypto trading works. Feel free to ask questions and leave your comments below. 

About the author
Happy Investors is all about your long-term growth, both financially and in personal development. We write about long-term investing: stocks, real estate, crypto, and alternative investments. Grow your life. Become a Happy Investor!
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