Some terms tend to be closely related and end up being used interchangeably. Two are crypto trading strategies and principles, which seem very similar but refer to very different concepts. Let’s look at them individually to understand what each of them means.
What is a trading strategy?
Simply put, a trading strategy is a plan to maximize your performance when trading in crypto markets. For example, your trading strategy may be to buy Bitcoins when the Fed lowers interest rates, as this would reduce the value of the US dollar.
Trading strategies can be based on fundamental or technical analysis and tailored to one’s style and objectives. For example, one trader may choose higher leverage than another because they are willing to take more risks for potentially higher gains.
Therefore, trading strategies are not universal and can be constantly changed to ensure you achieve your trading goals.
What about negotiation principles?
Trading principles are a universal set of rules that all traders are encouraged to follow. They applied to all financial markets and were formulated after years of studying traders’ actions, successes and failures.
An example of a trading principle is not to trade under the influence of emotion but to be analytical. This principle was developed after finding that traders fail when they use their emotions to make decisions, hence the need for a standard principle.
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Which one to use?
Both strategies and principles are essential for success in crypto trading, as they complement each other. Principles are the fundamental steps every trader must follow to succeed, while strategies provide the actual results.
