Exploring Medium-term Trading Strategies

Dubai, UAE, 12th July 2024, Medium-term trading is a good alternative for those traders who are too impatient to partake in long-term trading and too anxious to try themselves in short-term trading. When traders practice medium-term trading, they usually hold assets for several days, weeks, or rarely months, focusing on medium-scale market trends and consequent price movements. Let’s take a closer look at some of the most common medium-term crypto trading strategies and explore how traders can manage their risks while trying themselves in the unpredictable crypto waters.

Popular Medium-term Strategies 

One of the most popular medium-term strategies is trend following, also known as position trading. When traders manage to identify a trend gaining momentum, they place their positions in hopes that the trend will last long enough for a substantial profit. This technique is based on a thorough and regular analysis of market trends in search of occurring trends that can be used for gaining profit. Identifying various indicative patterns is challenging and requires a reasonable level of technical knowledge, which not all users possess, and a lot of time. Thus, many crypto traders use specialized software or bots to help them. 

Range trading, also known as swing trading, is another popular medium-term strategy. Instead of focusing on market directions, traders implementing this strategy would focus on price ranges. For example, traders may analyze changes in the asset price and observe that it has been trading between $350 and $470 for a couple of weeks. In such a case, the objective is to purchase at the lower end of that range and sell at the higher end, hoping that there will be no events causing the price to fall out of the range abruptly. It is important to note that sometimes, due to high volatility, such a strategy becomes relatively short-term.

The third widespread medium-term strategy is breakout trading. When traders identify a potential breakout, they take positions in its direction and set stop-loss orders to manage risk. This approach relies on analyzing specific patterns and price ranges to find signals of assets preparing to break out of established price levels. Such price changes generally occur after a long period of market indecisiveness and major events that cause significant market turbulence. 

Mitigating Risks

A dependable risk management plan is essential in trading, not only in the medium term. The first piece of advice is to use stop-loss orders. This way, your losses will be minimized if the asset’s price goes out of control. In addition, traders should familiarize themselves with hedging, another helpful method of mitigating losses. When a trader holds a position in one asset but is anxious that this position may turn unprofitable or even become loss-making, he can place another position that counteracts the first one. For example, if a trader holds Bitcoin and is concerned about a potential price drop, he may take a short position in altcoins. As a result, if Bitcoin’s price crashes, bringing the whole market down, the trader’s profits from shorting altcoins will cover some of the losses, if not all. 

Another critical aspect is checking the general mood of other market participants and their outlooks on current pricing and possible movements. By examining market sentiment, you can recognize potential trends that may arise, helping you make more informed trading decisions. You can start by reviewing social media channels, including comments from famous crypto influencers and industry professionals. 

Conclusion

Medium-term trading combines the benefits of both long-term and short-term trading. It allows for quicker rewards than long-term trading while being less fast-paced and stressful than short-term strategies. To succeed, traders need to have sufficient knowledge to analyze crypto charts and use effective risk-management tactics. Kinetex can be a powerful tool for traders, including those preferring medium-term strategies, enabling them to swap crypto assets quickly and at favorable rates.

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