Andrew Cook, a founder of Cook Investment Firm and a user of Reddit, determines 5 common types of trading in the market now:
Moving Average Crossover Trading
When a fast moving average crosses slow moving average from below, it means that a trader has to buy and vice versa. The MACD will allow the trader to see the trend sooner than the MA or EMA show.
“Momentum trading is probably the simplest here, but the least effective in making profits. The basic idea is you wait for a trend to have some momentum behind it and jump on or off.
Technical traders rely on math, triangles, history and a plethora of other things. There are both good and bad sides to this type of trading. The bad side is there is no relaxing, we constantly need to make a new chart that fits in with what the price is doing. We always need to find a reason behind what the price is doing, which can create massive headaches and an addiction to coffee, but there are benefits. Believe or not 70% of the time, markets really do follow trends and technical traders are normally the first to profit from it. However, that other 30% of the time, that markets do not follow trends, we lose, massively in most cases. If you don’t like math nor geometry technical trading is probably not for you.
Fundamental trading is based on expectations of an investor over specific coin’s news in the future (normally from 2 weeks to 1-2 year investing). Hardforks, partnerships with large companies, adoption of a cryptocurrency by a specific government might send the price of a coin to the moon and fundamental traders are trying to follow these opportunities.
Chinese News Trading
Partly a joke, but a joke that brings profit! Every time there are bans of severe comments from Chinese government, most currencies’ prices drop and sellers win. So, if you follow Chinese news websites carefully, you can make some money implying this strategy.