Before you even think about opening a position, you should put careful thought into the type of trader you want to be. This will depend largely on the amount of time you have to commit to trading activity and market analysis, and how quickly you’re looking to turn a profit.
Bitcoin traders typically fall into one of four categories:
- Scalpers are the most active, making multiple trades per day for small profits.
- Day traders enter and exit the market within 24 hours, taking advantage of short term market movements.
- Another technique is swing trading, which is based on in-depth technical analysis to capture trends in the market.
- Finally, you may want to be a passive trader, holding on to your positions with a focus on long term profit.
The benefits of this last approach are discussed in number eight of our bitcoin trading tips.