5 Strategies to Trade Bitcoin Like a Pro
Unlike fiat currencies, Bitcoin or other crypto coins do not have a central bank controlling them.
This automatically implies that the cryptocurrency can be sent from one user to another directly without banks acting as an intermediary.
Since crypto coins cannot be printed like regular currencies, user transactions remain anonymous, and there is no threat of inflation. There is barely a short amount of Bitcoins, and this number will not change; this makes Bitcoin less vulnerable to the effects of inflation.
Bitcoin trading refers to the act of buying Bitcoins at low prices and then selling them for high rates. Unlike investments where you hold the Bitcoin for the long term, trading involves predicting price movements.
This demands a study of the entire industry and price graphs. Many investors are also adopting the automated trading of bitcoin, and the buzzes like bitcoin era estafa or fraud in the market don’t affect their trade.
1. Best Bitcoin Trading Strategies:
OBV: The majority of the trading strategy is action-based, while 15% uses an indicator. This indicator is the OBV or On Balance Volume, and is the best indicator for Bitcoin day trading. It is necessary for analyzing total money flowing out or into the market. You have to learn how to read data from this indicator. Theoretically, when the OBV is trading down, and Bitcoin is trading upwards, it means people are selling.
HODLing: is by far the most popular Bitcoin trading strategy. This acronym stands for “holding on for dear life” and was coined in 2013 at a time when Bitcoin prices plunged, and some users by mistake typed “holding” instead of holding to declare his exit. This strategy refers to keeping a long-term position on the Bitcoin, hoping that its prices will increase over time. But since Bitcoin is known for its volatility, this strategy may not pay off in the end, and you could make significant losses.
Hedging: a strategy that may be used by people already owning Bitcoins. These people feel there will be a short-term fall in prices, and they open trades to eliminate risks to their current position. So, you can hedge a holding and sell off the asset for current market prices hoping that these will fall. When prices do fall, you can buy it back at the low prices and then enjoy profits from this difference. Most traders will do hedging using CFDs or contracts for difference.
Trend trading: A market is trending when it consistently attains higher highs and lower lows. So, you can hold a position for as long as you think this trend will last, whether weeks or months. For instance, in 2017, Bitcoin witnessed a surge, and the driver of this trend has been a FOMO or the fear of missing out on something new and big.
But trend traders have to be well-informed about the latest news or events to know how these are affecting Bitcoin prices. Trend-following strategies will need to use technical analysis to forecast the direction of the market. So, trend trading entails opening a position if you think that the currency price is going to move in its current path or about to start a new trend.
Breakout strategy: involves entering the cryptocurrency market as soon as possible during a trend and staying prepared for Bitcoin prices to “break out” from an earlier range. It believed that if the market breaks through a resistance level, it will cause significant volatility. So, Bitcoin traders using this strategy will enter a market only at this juncture to ride this trend.