What Is Day Trading?

Day trading is a strategy that involves entering and exiting positions within the same day. The term comes from legacy markets, referencing the fact that they’re only open for set periods during the day. Outside of those periods, day traders are not expected to keep any of their positions open.

Cryptocurrency markets, as you probably know, are not subject to opening or closing times. You can trade around the clock every day of the year. Still, day trading in the context of cryptocurrency tends to refer to a trading style where the trader enters and exits positions within 24 hours.

In day trading, you’ll often rely on technical analysis to determine which assets to trade. Because profits in such a short period can
be minimal, you may opt to trade across a wide range of assets to try and maximize your returns. That said, some might exclusively
trade the same pair for years.

This style is obviously a very active trading strategy. It can be highly profitable, but it carries with it a significant amount of risk.
As such, day trading is generally better suited to experienced traders.

What is swing trading?
In swing trading, you’re still trying to profit off market trends, but the time horizon is longer — positions are typically held anywhere from a couple of days to a couple of months.

Often, your goal will be to identify an asset that looks undervalued and is likely to increase in value. You would purchase this asset, then sell it when the price rises to generate a profit. Or you can try to find overvalued assets that are likely to decrease in value. Then, you could sell some of them at a high price, hoping to buy them back for a lower price.

As with day trading, many swing traders use technical analysis. However, because their strategy plays out across a longer period,
fundamental analysis may also be a valuable tool.

Swing trading tends to be a more beginner-friendly strategy. Mainly because it doesn’t come with the stress of fast-paced day trading.

Where the latter is characterized by rapid decision-making and a
lot of screen time, swing trading allows you to take your time.

What is position trading?
Position (or trend) trading is a long-term strategy. Traders purchase assets to hold for extended periods (generally measured
in months). Their goal is to make a profit by selling those assets at a higher price in the future.

What distinguishes position trades from long-term swing trades is the rationale behind placing the trade. Position traders are
concerned with trends that can be observed over extended periods — they’ll try to profit from the overall market direction. Swing traders, on the other hand, typically seek to predict “swings” in the market that don’t necessarily correlate with the broader trend.

It’s not uncommon to see position traders favor fundamental analysis, purely because their time preference allows them to watch fundamental events materialize. That’s not to say technical
analysis isn’t used. While position traders work on the assumption that the trend will continue, the use of technical indicators can alert them to the possibility of a trend reversal.

Like swing trading, position trading is an ideal strategy for beginners. Once again, the long time horizon gives them ample opportunity to deliberate on their decisions.