There are ever-increasing numbers of Bitcoin adoptions and subsequent trading. Although many are into Bitcoin, they are not well versed with Bitcoin Trading Strategies.
As people are relying on additional sources of income, they are also exploring the possibilities for a quick and massive amount of money by exposing themselves to crypto trading. Many have been influenced and attracted to it due to news regarding crypto on mainstream media or through their friends and family.
Since many treat crypto trading as gambling, they forget there is a difference between them. One is driven by pure luck, while the other is backed by research. These people will gamble, parting off substantial amounts of funds in the process.
Since Bitcoin or Cryptos fall under financial assets, they react to the market sentiments like any other financial assets like equities or commodities. However, a crypto trade still needs to develop and employ strategies to maximize their profit potential. This can be very rewarding as you understand and enjoy Bitcoins Trading Strategies and execute them in the crypto market.
This article will help you develop a winning strategy based on your style of trading cryptos or Bitcoins in the crypto market. So let’s get cracking and explore the different strategies that are quite common with processional and successful crypto traders.
Day trading strategy is based on the opening and closing of the position on the same day. The trader aims to profit substantially by observing and executing the Bitcoin trade when the opportunity arises. Traders usually rely on technical indicators while entering and exiting the crypto market based on the price trend of Bitcoin.
An experienced trader will execute the trade based on support and resistance levels daily. Since “Resistance” refers to the upper limit where the price may rise, a resistance level is a price that is higher than the current price. Contrarily, a “Support” level is one below which the price of Bitcoin is not supposed to fall; as a result, a support level is always lower than the current price.
One of the most common Bitcoin Trading Strategies with crypto traders is Scalping. These traders make a huge profit daily. Traders here will enter and exit the market with small price changes in Bitcoin. The volumes are huge; thus, the profit potential is more. Traders will indulge in Scalping daily, so no trade is left open for the next day; the positions are settled on the same day. Based on historical performance, traders will choose to enter and exit the market.
High-Frequency Trading (HFT)
Very popular with the Quantitative traders or quant traders using algorithm trading strategy in High-Frequency Trading or HFT. Developing algorithms and, based on it, the trading bots utilize the past performance of Bitcoin to assist in the execution of trades. Making such a bot who executes a transaction on your behalf is challenging, for this one should be well versed in solving and creating mathematical algorithms and computer science. However, it is quite popular with advanced traders compared to beginners as some human element is still required while running the bot.
When looking for the best entry and exit opportunities in the crypto market, it is crucial to remember that timing the market is very impossible. Therefore, Dollar Cost Averaging is a sensible strategy for investing in cryptocurrencies (DCA). DCA refers to investments with fixed, recurrent payments. Investors can achieve long-term wealth with this strategy without having to spend their time laboriously timing the market.
However, using the DCA approach, exit strategy can be difficult. It demands studying market trends and grasping market cycles. Observing technical charts may also help in timing your departure. Cryptocurrency investors should monitor oversold and overbought regions before making a decision. You can consult the live charts on cryptocurrency exchanges to have a better knowledge of the technical charts for Bitcoin.
Build balanced portfolio
Bitcoin as a financial asset is pretty new compared to other financial assets. As a result, some countries are still skeptical concerning Bitcoin and cryptocurrency trading. Across the globe, central banks are in a quest to regulate these digital currencies since cryptocurrency carries inherent risks. However, some methods can assist investors in avoiding high volatility.
By building a balanced portfolio out of different cryptocurrencies, such as Bitcoin, Dogecoin, and Ethereum, the volatility may be significantly decreased.
Additionally, investors can keep a certain amount of regular investments in various cryptocurrencies. In doing so, you’ll gradually build your level of risk tolerance, which will benefit your portfolio’s long-term results.
Avoid making trading calls based on hype.
It is a mistake to strategies trading based on social media hype; you are more likely to lose your funds. Furthermore, since the subject of digital currency is so popular, erroneous information tends to spread quickly.
Based on your research, it is always advisable to strategize your entry and exit of Bitcoin in the crypto market. You should hone your skill, and the best way to carry out them is on a demo account. You don’t have to be an expert, your skill and understanding of the factors affecting the price fluctuation of Bitcoin can be developed over time.
Several platforms are available online, and not all are accurate with the currency developments regarding Bitcoin and cryptocurrencies in the market. Therefore, follow those who are professional or whose market analysis is reliable.
These are several other cryptocurrency exchanges or brokers who educate and impart the knowledge required for crypto traders. Ensure that the crypto broker or the exchange is registered and regulated and that your state or country allows them to run their business.
It would be best to have your financial goals and aspirations aligned while strategizing and entering the market.
Arbitrage is the trading tactic whereby a trader purchases Cryptocurrency in one market and sells it in another. Spread refers to the price gap between the buy and sell prices. Due to the liquidity and trading volume disparity, traders can discover a way to make money. However, you must create accounts on exchanges that display a significant price differential for the Cryptocurrency you are trading at if you want to take advantage of this opportunity.
Betting on Bitcoin Volatility
One of the most volatile asset groups is Cryptocurrency currently traded, which is not breaking news. In the most recent period, one session’s price changes for Bitcoin were approximately 30%. Trading Bitcoin futures enables you to wager on volatility. It can be done by simultaneously purchasing a call and put option. Also required are similarities between the strike price and expiration date. Finally, you must sell the call and put options simultaneously to get out when Cryptocurrency values fall or climb sharply.
To ensure that Bitcoin Trading Strategies can be carried out successfully, you must keep your emotions in check and stick to your entry and exit position. Never deviate from your plan. It would help if you did not attempt to improvise no matter the market conditions.
By sticking to your plan, you will learn a lot and gain confidence in your research rather than relying on others.