What is the best strategy for Bitcoins? While there can be no one answer to this question there are quite a few tips and tricks that can guarantee you good profits. Without a proper trading plan in place and strategies that have worked well over time, you cannot expect to make money through Bitcoin trading:
- To begin with, you have to make an effort to understand the crypto market, specifically how the Bitcoin works. The Bitcoin is known to be notoriously volatile so much so that you could end up making huge gains or losses at any time. So, before implementing any strategy like HODLing, hedging, or breakout strategies, you have to see which factors influence Bitcoin prices. One factor is that of supply; Bitcoin has a finite supply and not all 21 million coins are available for trading. New coins are released only through mining. Prices are also impacted by whatever is happening around you; negative news can affect a coin’s price.
- You have to decide which method to use for trading. You can either buy Bitcoins directly from exchanges or you could speculate on Bitcoin prices with derivatives. To buy the Bitcoin you have to seek a cryptocurrency exchange. You can store these coins in digital wallets. When you decide to trade through derivatives like CFDs you cannot own the coins. You can open a trade position and speculate on the price; so, you can take advantage of prices as they rise and fall.
- You need a trading plan in place. If you can stick to one you are less likely to incur huge losses or let emotions get in the way. This plan will highlight your trading goals and ways to trade. It will assess your risks and decide how much you are prepared to risk in a trade. Since prices of Bitcoins are volatile, this plan will also include risk-management measures, like stop-loss orders.
- Once you have made substantial profits using tried-and-tested trade strategies you can have your wallet filled with shiny crypto nuggets. This is the time when you choose other assets to invest in simultaneously. This is needed to leverage your investments, to get more returns via a diversified portfolio.
- When you start out, it is best to stick to a single crypto asset, for instance, the Bitcoin. You must accumulate it at the lowest prices when it is falling in value. Often investors or traders withdraw some part of their investments to drive prices down. Then they buy the coins at the low price and hold onto them.
- To trade Bitcoin for profits, you have to know how to do technical analysis. This means studying Bitcoin trading charts or graphs over time to be able to rightly predict future price movements.
- Scalping is another easy way to make profit through Bitcoin trading; here, you can open multiple trade positions during a single day. Traders engaged in scalping have a better chance of making profits simply because of the higher number of trade positions they have opened. Here also, traders use technical analysis tools. Entry and exits are faster and you do not have to wait around for prices to “mature”.