Oct 23, · If you want to be successful in trading BTC, you need to grasp the hold of the best strategies there are. If you are a novice in this field, you must be wondering what these strategies are. Well, a Bitcoin trading strategy is what you’ll use to cover the price of the points you have once you enter the business and once you exit. Mar 24, · Trend trading is a strategy that relies on the current trends in the Bitcoin world. You’ll need to keep a close eye on what others are talking about and plan to do. For example, bitcoin became incredibly popular in , when the price rose to almost $20, per BTC. Jul 16, · A Bitcoin wallet allows a person to buy, hold, and sell Bitcoin straight away — usually through an exchange which can be linked to the wallet. Simply buying, holding and selling Bitcoin is an actual trading strategy, and one of the more popular ones at that.
Trading strategy for bitcoin4 Bitcoin Trading Strategies To Use in - NorseCorp
A third option is what would be called a future hedge. All you need to do is to make a contractual deal with a trader to trade your BTC on a future date at a presently established price. You could call this as the closest thing to gambling regarding cryptocurrencies trading. For this one to work, it must be executed without fault. If you managed to apply it correctly, it is going to be the best strategy there is for you. It revolves around small and quick trades that occur at quick intervals with minor profit.
When we say fast, we are talking about one hour or less. The aim is not to have massive profits, as you are not looking at market movements for this strategy to work. By using a tool, such is Multi HODL; you can open as many positions as you like and go short or long or mix it, all depending on your more in-depth strategy. If you are in for the immediate start of your trading adventure, you can do it on numerous platforms designed for it.
During those times, it was very well publicly covered. Many people started to ride the popularity train, which led to increased value, thanks to increased demand.
This cryptocurrency can be traded at all times of day, month, or year. The good time to start is always right now. The best way to do this is by using the available technology. There are a dozen tools, analysis websites, and even individuals that can help you with this. You can apply trend trading with success if you are equipped with enough knowledge. What you can do is to be careful, learn as much as you can, follow trends, and slowly enter the BTC trading world on the back of this strategy.
Save my name, email, and website in this browser for the next time I comment. HODLing img source: pexels. Img source: unsplash. Bitcoin cryptocurrency Strategies Trading. Bitcoin has never quite been used as a unit of account, but it has, however, managed to gain significant traction as a medium of exchange due to the increasing acceptance since its inception. There has been a steady increase in the number of confirmed transactions per day with transactions surging in with a steady rise to more than 7, transactions per day.
Despite the informative nature of such data, it is unfortunately not the best indicator when applying fundamental analysis. This is due to blockchain transactions which are generated by automated systems and therefore cannot represent actual economic activity.
Traders rather face having to figure out which transactions consist of an actual participant sending to or accepting Bitcoin from another person. When considering that the demand for Bitcoin is a complex study, supply appears to be a lot more straightforward as there is a set amount of Bitcoin; 21 million, and the rate of new supply is subsequently determined by Bitcoin protocol.
In weighing Bitcoin to conventional monetary systems, it contrasts sharply as central banks possess the ability to print money whenever they want or need. Despite this, it is, however, important to note that some caveats exist that affect the supply of Bitcoin.
The fact that the creator of Bitcoin, Satoshi Nakamoto, supposedly holds around 1. Traders need to leverage fundamental analysis on Bitcoin as it provides them with a better sense of the true value of the cryptocurrency and subsequently it allows them a better sense of when it is a good time to buy and when they should consider selling.
Fundamental analysis is strongly criticised as it reflects more what a security should be considered in its worth than what the actual market price for it is. There should not be too much reliance placed on fundamental analysis and technical analysis should be done alongside fundamental analysis. Technical Analysis in Bitcoin trading requires traders to read charts and it is an essential skill in trading Bitcoin successfully.
Although it may seem intimidating and daunting at first, with time and practice it begins to make a lot more sense. Bitcoin trading is like stock trading with the difference being the asset itself. Both use the same fundamentals and traders are advised to spend some time studying some of the greatest stock traders in the world to provide some edge.
The most important thing is to understand the psychology associated with the market and this requires research into existing strategies of established traders who have mastered their trading skill through the years. The biggest benefit with conducting a timely technical analysis in Bitcoin trading is that it aids both investors and traders in being able to predict the market. It also helps investors and traders determine when the best and most profitable entry and exit points may be.
When approaching a Bitcoin technical analysis, it is imperative to note that there are various groups of chart patterns with the most well-known patterns occurring on all timeframes. Bullish patterns on a chart indicate the likelihood of a trend going upwards while a bearish pattern indicate that the price is likely to move more downwards.
The third pattern involves reversal patterns which signal that the predominant trend is about to end and a price breakout in the opposite direction can be expected. Despite these distinctive patterns, they cannot fully guarantee certain market behaviour as they only show the likelihood of movements that can be expected. Technical analysis and chart analysis can be used by traders to create their trading plan in advance which can be based on the analysis on where orders should be set depending on what the trader expects the market to do.
Among an array of analysis tools, Fibonacci retracements are often used in conjunction with chart patterns as they indicate the likelihood for certain reversals and breakouts of price. There are numerous ways in which Bitcoin can be traded with two of the most predominant ways being the trading of Bitcoin and other cryptocurrencies on Forex and thus through a Forex broker , or by trading through a cryptocurrency exchange platform. There are numerous Forex brokers who allow traders to deposit, withdraw and trade on a Bitcoin-based account.
There are, however, some legal implications involved for some traders, such as Americans, as CFDs are not allowed in the United States. Bitcoin CFDs are traded on a variety of trading platforms that are designed for just the purpose, with the most popular being MetaTrader 4.
It is one of the best trading platforms which provides traders with an array of tools such as:. A lot of traders may prefer to make use of a Forex broker that offers cryptocurrency trading as a tradable financial instrument for various reasons, one of the main reasons being that regulation.
Bitcoin and cryptocurrency trading are, for the greater part, unregulated and this means that client funds cannot be secured. Forex brokers, through regulatory requirements, must keep client funds in segregated accounts. In doing so, the funds may only be used for trading activities and it must be withdrawable at any given time. Cryptocurrency exchange platforms do not keep client funds, although some make provision for proprietary hot and cold wallets. A hot wallet is a type of storage which is kept online while cold wallets can be kept and managed offline.
When considering that cryptocurrency platforms often fall prey to hacking attempts, traders are not advised to make use of hot wallets to store great amounts of funds, but rather to keep enough funds in these wallets for everyday purchases.
Cold wallets are recommended as they are more secure and traders are, in addition, not advised to easily make use of wallets provided by exchange platforms due to the level of security threats that they face frequently.
Numerous Forex brokers have started making provision for the trading of Bitcoin by offering cryptocurrencies as a financial instrument in their portfolios of assets offered. But before traders can start with selecting a broker, there are some key points that need to be considered in choosing the right broker namely:.
Both these ways in which Bitcoin can be traded have distinct differences such as:. When trading Bitcoin through a Forex broker, traders must not only pay attention to the price of Bitcoin, but to that of the fiat currency as well and this involves fundamental knowledge of how fiat currency prices are affected and by which factors.
Trading cryptocurrency and trading Bitcoin as a CFD does not mean that the trader owns the asset, and this is where there is a distinct difference between trading and investing. Trading only allows traders to benefit and profit from price movements. After selecting a Forex broker to facilitate the trade in Bitcoin and other cryptocurrencies, traders can follow the following steps to start trading Bitcoin:. Bitcoin and Cryptocurrency exchanges allow for the sale and purchase of Bitcoin.
It can either be bought or sold through regular, or fiat, currencies, or it can be done by using cryptocurrencies. To select a cryptocurrency exchange, a similar process has to be followed as with selecting a Forex broker and this involves key factors that must be considered such as safety, transparency, record, user experience, and the fees involved.
Cryptocurrency exchange platforms are not regulated by regulatory entities as Forex brokers may be and thus client funds are not held or secured by the exchange. It is imperative for traders to test and rate the level of security that the exchange platform offers along with seeing what their record is in terms of hacking attempts and how they mitigate and manage such attempts. It is important to gain insight into the experience of other users when considering a platform as it may highlight any issues that other traders have, or have had, with a platform.
The fees involved need to be considered and it is imperative for traders to first understand their own trading needs and any financial limitations that they have as they have to compensate of trading and non-trading fees along with any losses that they may suffer. Traders must know what their budgetary needs and requirements are before they start trading Bitcoin.
This needs to be laid out in their trading plan as it provides a good idea of how much can be put towards trading. In addition, it also helps traders avoid spending more than they can afford along with compensating for any losses which may occur.
Should traders put more on the line than they can afford to lose, they risk losing everything and there is always a chance that the trading account can go into a negative if the trader does not have negative balance protection. Learning to trade in small amounts and to control position sizes is a key element that beginners need to learn from the start. It would be detrimental for traders to start trading blindly as there is no framework provided for the needs and objectives of the trader and essentially traders also have no idea where their entry and exit parameters are.
Traders need to formulate a trading plan to ensure that they know when and were to buy, and when and where to sell, or exit a trade, to lock in profits and minimize losses. Earlier in this article, hot and cold wallets along with the issues surrounding security on exchanges was discussed. Traders are cautioned in never leaving funds on an exchange that they are not actively and currently trading with.
Should traders leave funds on exchanges, it takes away from the control that the trader has over it and should the exchange experience a successful hacking attempt or the exchange goes offline or out of business, traders may lose their funds. These are two emotions that tend to control and drive the actions of traders. Both emotions may be detrimental as traders may experience fear and prematurely close their trades when they hear disturbing news or a rumour which may affect their trade.
Greed may also be based on the fear of missing out when traders are informed of new trends, or new opportunities and it may lead to opening trades too soon, or a delay in closing existing trades. Traders need to be aware of the psychology involved with trading and they need to understand their own emotions and emotional triggers to avoid making mistakes that may lead to substantial losses.
Regardless of whether traders are successful or not, there are lessons to be learnt in trading. No trader will ever only experience profitable trades and in the art of making profits, traders will lose some along the way to becoming more profitable. Traders need to focus on the insights that can be gained while trading, not only on making profits as learning lessons can lead to improved skills, knowledge, and experience.
Firstly, traders need to learn the basics of Bitcoin trading followed by what both fundamental and technical analysis entails and how it must be done. This will allow traders to get to know the Bitcoin market and more proficiently analyse the trends as Bitcoin prices are extremely speculative and they do not agree with traditional financial theories. Traders will need to consider the factors which impact the price of bitcoin such as the demand, supply, news, and events.
By collaborating both fundamental and technical analysis, traders can more accurately learn when to buy and when to sell Bitcoin. Bitcoin trading needs to be done at a set pace as it is not a sprint to see who can make the most profit in the most efficient or fastest way. Traders need to map out their long-term goals and adapt their strategies to work for them especially where manual trading is concerned. Traders need to determine the time that they can put into trading along with what they want to achieve over a long period of time and whether they can sustain those goals as well.
Trading involves a lot of risks and it is imperative for traders to ensure that they have risk management protocols in place to minimize their losses. The Bitcoin and cryptocurrency market is extremely volatile and when trading, it is important to make use of stop loss orders to avoid substantial losses that may exceed the capital of the trader.
Leverage is a useful tool in trading, despite the financial instrument being traded, as it allows the trader to open larger positions despite their initial capital. Where there are great profits to be gained, there are also substantial losses which can be incurred. Leverage in itself has a lot of risks while cryptocurrency trading has its own as well and traders will find that Forex brokers do not offer a high level of leverage while most cryptocurrency exchange platforms do not offer any leverage at all.
When using too much leverage, traders run the risk of becoming reckless and losing more than their initial capital while too little leverage may hamper the trade performance as premium trades cannot provide traders with their expected returns.
This involves experience, skills, and knowledge in coding as it opens a new world for traders to refine their trading skills and to tailor their strategies to precisely what they need. By learning to create strategies from scratch, traders can make use of algorithms as they trade based on finite parameters and there are thousands of ways to incorporate various factors and parameters into conducting analysis and executing trades. There are various ways in which Bitcoin can be traded where strategies, utilities, and methods are concerned, and traders should take time in exploring different options to find ways which cater specifically to their needs and objectives.
While trading, traders are urged to put the correct amount of funds into a trade while keeping tabs on specific sizing methods to ensure that the risk and reward ratios are correct and to avoid putting too much funds at risk. Before selecting a Forex broker to facilitate trades or a cryptocurrency exchange platform through which to buy, sell, or trade, traders need to identify their trading needs and objectives.
This allows traders to refine and narrow down their search on finding a broker or exchange that caters more specifically for them. Before trading in a live environment or choosing a specific broker or an exchange, it is imperative for traders to make use of demo accounts to test the platform and offering of a broker or an exchange. These trading bots are able to open and close trades without the trader intervening and provide traders with peace of mind that they will not miss out on opportunities when they are not able to trade manually and look for trends or changes in the market.
This strategy forms part of the trend-following aspect of Scalping and features two moving averages which can be utilized in identifying the short-term trend of Bitcoin. The cross of a shorter period moving average is placed above the longer period moving average which signals an uptrend while the shorter moving average below that of the longer signals a downtrend.
The Stochastic oscillator is used by traders to identify market conditions where overbuying or overselling is present. This signals the trader of a turning point in the current trend. Should the faster period moving average cross over the lower period moving average, the trader is signalled of a short-term uptrend in bitcoin. Stochastic values above 80 signals the trader to overbought market conditions while anything below 20 signals oversold conditions.
A short signal is returned when the period moving average crosses below that of the period moving average. This signals the trader of a short-term downtrend.
When using this strategy on short timeframes such as 1M or 5M, it tends to return the best result. Traders should ensure that stop losses are placed just above the recent swing high in case of short positions. Stop losses can also be placed just below the recent swing low in case of long positions. The profit targets of the trader should be the approximate size of the Stop Loss so that the trader can at least have a return to risk. When using this strategy, the focus is on identifying breakouts around familiar price ranges and chart patterns such as:.
When a breakout occurs, it is often followed by a substantial buying or selling momentum in the direction of the breakout with traders attempting to catch the momentum to profit from it.
This day trading strategy is based on the trade of the underlying trend of Bitcoin. This used to be a profitable approach when the cryptocurrency market knew only an upward direction but with ranging cryptocurrencies, a breakout approach would be better. Although, should a new trend in Bitcoin be established and it is characterized by higher highs and higher lows in uptrends, or lower lows and lower highs in downtrends, this trading strategy may yet again become more viable.
This strategy refers to catching price corrections which may go against an established trend. This strategy is not recommended for beginners as it involves a substantial amount of risk associated with the level of volatility in the cryptocurrency market.
The name of the strategy is self-explanatory. Automated trading involves making use of AI technology such as trading robots, or Expert Advisors, to trade on behalf of the trader. There are numerous trading bots available with different parameters programmed which can be downloaded or purchased. A lot of Forex brokers and crypto exchanges also provide such robots to traders.
The trading bots are programmed according to different strategies and when choosing a bot, it depends on the traders trading needs, objectives, and parameters in deciding which one to use when trading. This strategy is, however, notoriously risky as the cryptocurrency market is volatile and in using this strategy, it may lead to substantial losses.