The Understanding Of Cryptocurrency Position Trading

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Good day fam,

It is your humble friend again @mato445 and I hope everyone is doing fine.

I am happy to be here in this great community to make post and interact with members of this community.

Today, we will leave arbitrage trading and speak about a different type of trading technique, and we shall be learning about position trading, please follow along on this Interesting topic.

Position Trading

Position trading can be explained to be a long term trading strategy that has to do with the holding of a cryptocurrency pair for an extended period of time.

Position trading does not focus on short term market flunctuation like day trading, rather it capitalizes on a broader market trend.

This strategy has a more relaxed approach to trading and it involves holding a position for weeks, months and some times years.

Key Principles Of Position Trading

There are several principles of position trading that helps in holding profitable position and we shall be learning about some of them now.

• Fundamental Analysis

One of the key principles of position trading is fundamental analysis, the analysis of fundamental factors that has the potential to influence the price of a given cryptocurrency pair.

Fundamental analysis has to do with the evaluation of an industry's trend, company financial health and other economic indicators and factors that could influence the future performance of a cryptocurrency pair.

Traders that make use of position trading often prioritize a well established crypto company with strong fundamentals as they have the potential to weather market volatility over a long period of time.

• Technical Analysis:

Just like fundamental analysis, technical analysis also play a huge role in position trading.

Technical analysis has to do with the study of historical price chart, trading volumes and chart patterns in order to identify potential exit and entry positions.

Chart patterns such as double top, double bottom, head and shoulder, support and resistance and other technical indicators are mostly used by position traders to make profitable trading decisions.

• Risk Management:

Another key principle of position trading is risk management.

And here, traders smartly set their stop loss in a way that it mitigate their losses and protect their capital incase the market goes against them.

Inorder to manage their risks effectively, position traders take note of their overall portfolio as they set their position.

The lower the overall portfolio, the lower the position set per trade, and this is done to maintain a balance investment approach.

• Patience:

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Patience is another key principle in position trading.

Since this strategy focuses on long term market trend, it's traders must be able to withstand short time market movement and not get carried away by the market price in short term.

To be able to do this, the trader must be able to withstand short term market noise, and this requires discipline.

Conclusion

Position trading is a very effective trading strategy and it requires patience for its users to be profitable, as it is a long term trading market strategy.