Best Instruments for the Short Term Trading

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Best Instruments for the Short Term Trading

Short-term trading stands out among the many methods of trading on the international cryptocurrency market. On the one hand, it is hazardous, and on the other — quite profitable. At the same time, the transaction can be made in a few minutes or in a few days. Suitable strategies can be chosen depending on your own preferences, trading conditions, the crypto asset used, and its features.

Scalping

The market situation changes regularly and has a certain cyclicity. Scalping involves many short-term transactions that usually take a few minutes. As a result, the trader receives a small profit, but because of the large number of such operations, you can achieve good overall performance. Its advantage is independence from the market phases and the possibility of closing several losing orders. High volatility of all cryptocurrencies provides extensive opportunities for such operations. Different signals can be used to identify the key points.

News trading

This is a fairly simple and effective method that doesn’t require prior technical analysis. It is based on price “faceoff” before the important news about cryptocurrencies. For example, we don’t know in advance how the bitcoin rate will behave after the new hard fork. Therefore, shortly before the next division, the same orders are opened in two directions. Immediately after the confirmation of the information about the exact movement, loss-making transactions are closed, while the successful ones subsequently compensate for the initial losses and continue to make a profit.

Arbitration

It assumes a good knowledge base and experience in the world of cryptocurrency. The strategy is aimed at generating income from trading the same instruments on different platforms. Quotes and rates of one cryptocurrency may differ in different brokers due to the delay of trading or other reasons. At the same time, you can make money on the simultaneous opening of opposite transactions on these platforms.

For example, on one exchange, the BTC is traded at $10,000 per coin, and on the other, the rate is already over $10,050 (due to growing demand). Therefore, if you buy coins in the first exchange and sell on the second, all transactions will become profitable until the value is equalized. However, you should take into account the level of spread and Commission to determine the trade boundaries, as they are the main factors for success.

Autotrading

The use of special trading robots is available to those who are just studying the intricacies of the exchange cryptocurrency or don’t have enough time. Some programs produce actions depending on the specified parameters and conditions independently. They may employ different strategies. There is specialized software for digital currencies created that takes into account their features.

This style of trading can bring quick profits due to the frequent opening of positions, compared to long-term trading. However, it is also associated with high risks. Another disadvantage of short-term trading is limited profit potential because by closing the transaction very quickly, the trader doesn’t let the profit to grow. In addition, the already small profit for each transaction is cut by another spread.

Short-term trading is popular with newbies, probably due to the fear factor that makes it too long to stay in the market. Unlike long-term trading, which implies opening positions for months, short-term trading is a phenomenon of the modern era of stock markets and advanced communication technologies. Centralized stock exchanges made short-term trading possible a few centuries ago, but even then, the time period has been much longer than what scalpers or intraday forex traders need today.

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