If you think you are a good trader, think again. Have you consistently profited from the market regardless if it is rocketing or crashing? If you can say that you did at least 80% of the time in the last 10 years, then give yourself a pat in the back. You belong to the revered 0.01% of traders with an impeccable track record. In fact, you deserve the award “Trading Guru”.
To be a good trader, you first need to know what kind of trader you are. In this article, we will examine the various type of traders and what type of crypto trading bots are well suited for your trading style.
I. The Multi-Bagger
Traders who are seeking multiple returns (at least 10x) on their investments are considered the multi-bagger seekers. These traders often collect the assets during sustained period of range trading. In the securities market, a sustained period can lasts from few weeks to even years. However, in the fast moving crypto market, it usually spans from few days to weeks. These kind of traders will often buy at every dips and continue to collect the assets with the aim to bring down their average cost price. Patience is their game. Quite often, multi-bagger seekers yield the best returns from their investments. However, during a year, there can be bad periods of drawdowns. But, almost certainly, these investors will come out as winners. Of course, the basic assumption is that their investments are good quality.
Favourite crypto trading bot type for Multi-Bagger: DCA Bot
II. The Scalpers
Scalpers are traders who seek few basis points above the transaction rates. Most scalp trading has an upper range profit of 1.5%. Scalpers profit from the short trading amplitude with the aim to generate many small returns. Scalp trading strategy is definitely not as lucrative as the multi-bagger types, but tends to be consistent in delivering weekly and monthly returns. In a rapidly rising market, scalp trading would lose out as the strategy will not be able to capture the uptrend. They will re-enter the market after the market enters a consolidation phase following an uptrend.
Favourite crypto trading bot type for Scalpers: Advanced Bot
III. Day Traders
Day traders abide by one rule – to close off their position at the end of the day. In the crypto market where trading occurs 24/7, crypto day traders often have a cut-off time for their plays. Day traders often rely on indicators for their trading decisions. Day trading can be both rewarding as well as “painful” during moments of extreme market turmoil. Day traders hate to wait and are often seeking quick returns for their trades. Some day traders may enter and exit a position within minutes of each other.
Favourite crypto trading bot type for Scalpers: Simple, Price and Advanced Bot
IV. Short to Mid Term (SMT) Trader
SMT traders tend to buy assets at the “cheap” and hold them till they have achieved at least 10% returns. Several conditions govern the SMT traders’ decision to buy. Many would have done a fair amount of research into a particular asset and then rely on news or technical indicators to enter. Some would even be partaker of the project and experience it firsthand on its features and unique selling points. For example, a crypto trader looking at what game tokens to invest in would play those games just to see which ones are most fun. SMT traders often have a hodler mentality and are prepared to ride the wild crypto market volatility as they are “convinced” that their investments into the assets are of good quality and backed by their research.
Favourite crypto trading bot type for SMT traders: Price and Advanced Bot
An experienced trader will rarely exhibit a single trading style. It is good practice to have a few trading styles in order to profit the most from the market.