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3 Best Bitcoin Trading Strategies- How to Trade Bitcoin Profitable

Cryptocurrency Trading
Thu, 05/21/2020 - 18:53
Alex Dovbnya
Trading strategies that will help you to improve your results, novice or professional
3 Best Bitcoin Trading Strategies- How to Trade Bitcoin Profitable
Cover image via U.Today
Contents

Hello, dear readers and subscribers. This is Andrew Strogoff again and I’m going to describe some interesting Bitcoin trading strategies in this article. The number of Bitcoin traders and investors has increased significantly in the past couple of years. They are trying to get profits in this volatile market. Traders and investors use different types of strategies in order to succeed.

Before I start describing the three of the best methods of trading Bitcoin, I would like to enlist them. Here they are:

  1. Fundamental Hodl strategy.

  2. Technical analysis of different timeframes strategy.

  3. Scalping.

Fundamental Hodl strategy

This is one of the easiest ways of trading Bitcoin. This Hodl strategy requires nor skills neither experience in trading. The only thing you need is money and patience. Long term Hodl strategy was a reliable one in the past and many investors think that this one will give good results in the future.

Why Hodl? This is a misspelling of the word Hold. The word appeared in 2013 when Bitcoin was falling and a drunk trader has posted his comment on Bitcointalk. Later, Hodl became popular and is used widely by many traders.

What is the main idea of this strategy and why do I like it more than the others? You need no technical analysis knowledge at all. The only thing that is important is to monitor the price of the digital asset (Bitcoin in this case).

To make it more fruitful, I use fundamental analysis as well, meaning I follow all the important news and make my own analysis thinking of how they can influence the crypto market. What are those events and why do they influence Bitcoin's price?

Bitcoin trading strategy, news and events

Well, every Bitcoin trading strategy is based on supply and demand principles meaning the price of the cryptocurrency relies on those two basic parameters. When the demand is higher than the supply, Bitcoin grows. Otherwise, the main cryptocurrency goes downwards. When the supply and demand are equal, the price stands at a place without significant changes.

The news is one of the main price drivers! They may be either positive or negative. Depending on their nature, Bitcoin's price may grow or decline. One of the most influential events was a fork. When it happened, the coin’s price decline and there is nothing strange here as the adepts and holders are also divided by the fork.

There are some other important events that I will describe here. Some data may be expected or unexpected. Being a professional FX trader, I know and understand that expected news in the cryptocurrency community is something very rare. There are no special events calendar that you may open on Monday, for example, and see that there is some important data on Thursday, e.g.

When I trade FX currency pairs, I use such calendars frequently as I want to know what events are likely to influence the market during the week. However, as for Bitcoin, there is no such a calendar at all meaning there are almost no events that may be expected or predicted in advance except those that are widely discussed by the community.

Another important group of events is related to policies towards cryptocurrencies and the whole Blockchain technology. To tell the truth, Blockchain adoption is far from being fast. However, I can see that we have huge progress in this field as compared to previous years. The situation with cryptocurrencies is much more difficult as they are forbidden in many countries where blockchain technologies are already adopted.

Let’s take China for example. Blockchain is considered to be a very promising technology by the local government, but they are fighting against ICOs, TGEs, and cryptos in general.

How to make profit trading news? This Bitcoin trading strategy is actual when important events take place. All you need is some experience and patience. This strategy is not a hodl one, but is close to it as you may buy Bitcoin, for example, and hold it for a long time period.

Technical analysis Bitcoin trading strategies

Bitcoin trading is very popular nowadays and many investors try their best in an attempt to earn money. Bitcoin is very volatile and allows gaining significant profits for everyone. However, before you start trading this cryptocurrency, you need to calculate your risks as well.

I, personally, prefer technical analysis trading as hodling is a very long-term strategy, which freezes money with undefined results. I am going to show you some interesting solutions that may help you earn money when trading Bitcoin.

a clear downtrend and a simple descending trend line

Let’s take a look at the first screenshot. Here you can see a clear downtrend and a simple descending trend line. The price reaches it at one point and here we have a clear signal to sell Bitcoin. This situation is good for those traders who prefer margin trading as they may sell the currency pair BTC/USD and get profit from such activities.

This is one of the easiest Bitcoin trading strategies, but you need to learn about trend lines and how to use them. They look pretty easy on my screenshot but I have great experience in using them. You need first to learn how to put them on charts and how to deal with them as well.

strong resistance area

Let me give you another example. On the second screenshot, you can see no trend at all, but we have a strong resistance area here. The currency pair tries to breach it several times without any chance to succeed.

This tells us that bulls re-unable to reverse the trend. This is the first signal that shows us that we will have some further downtrend in the nearest future. However, here we have some clear signal that predicts further price fluctuations.

BTC/USD forms a shooting star pattern which is a very strong candlestick model. BTC price goes downwards first but then retests the resistance area again. As you may see, bulls fail again and the price declines towards the red flag.

This strategy includes no indicators or other tools except resistance area and candlestick patterns. It seems very easy, but you need to have experience in graphic analysis before using it.

Bollinger Bands indicator in order

Another example of Bitcoin trading strategy is here. Take a look at the next screenshot. Here I have put Bollinger Bands indicator in order to show how it works. As you may see, I have highlighted some interesting points on the chart. Here there are signals that will help you to take profits.

Bollinger Bands indicator is a rather simple one. There are plenty of Bitcoin trading strategies that you may use when applying this algorithm. However, I would like to show you the easiest one. Here you can buy when the price is touching (or is close to) to the lowest border of the indicator and sell when Bitcoin reaches the upper one.

Pros and cons of technical analysis Bitcoin trading strategies

I prefer these strategies for the following reasons:

  1. They are illustrative. Every time you look at the chart you can see something that may give you an idea of what is happening with the price. No matter what kind of tools do you use, you always have something to look at.

  2. Wide range of tools. Bitcoin trading strategies of this type use different tools including technical indicators, graphics tools, etc. You don’t need to know all of them. You can just choose one or two in order to succeed.

  3. All data is available. Those who choose technical analysis, are able to use all data that is available for them meaning they have the current price and history of quotes that help to forecast future fluctuations.

  4. The price includes everything. This is one of my favorite advantages. No matter what type of asset do you trade all the news and events are already included in the price. The only thing you need is to understand the future direction of fluctuations.

As for the disadvantages, they are the following:

  1. Technical analysis is sometimes subjective. All the results that you have when analyzing the price using technical means may be subjective as they are coming from your head. All professional traders try to be objective, but sometimes it doesn’t work at all.

  2. Your forecasts may fail no matter what you do. Yes, it happens and I would say that such situations are frequent. You do your analysis, find signals but the price goes the opposite directions. As for me, I establish some limits for my personal trades meaning I know when to exit my positions if the forecast is wrong.

Scalping Bitcoin trading strategies

Those ones are part of technical analysis trading strategies. Scalping is also known as pips trading. The main idea of this method is that you open a huge number of positions within one single trading day. Scalping is not a new method as it was used already in Forex and stock trading for a long period of time. Those scalping traders sometimes are able to make significant gains due to the big number of positions they open.

When trading with this method, you use the very same analysis tools that you apply in technical analysis. Those are the indicators, the candlesticks and the others. This method is supposed to be the best for all traders, but I would like you to pay attention to its advantages and disadvantages before opening real trading positions using it.

The main advantages are:

  1. This method offers great opportunities for traders. You can open 10+ positions during one single trading day meaning you can win a huge amount in the end.

  2. Fast enter and fast exit. You don’t need to wait for much until the price “matures.” Once you have some 10+ pips profit, you can exit your position and look for another one.

  3. You don’t need to hold your positions for long so you don’t “freeze your money.”

  4. Bitcoin price volatility is huge, offering you many opportunities during the day.

Those are the pros of this method that are not numerous naturally. As for the disadvantages, they are the following:

  1. The main disadvantage of this method is that this one requires a full-time presence in front of the chart. This means that you are to monitor the price for several hours opening and exiting your trades. Otherwise, it makes no sense to use this strategy.

  2. You need to focus on the price. This is another great disadvantage of this method. You need to be focused on charts. Scalper traders are under significant pressure and they get tired 100-time faster than the others. They have to constantly follow the price as one mistake may lead to significant losses. Remember that scalping high volumes of your capital are involved.

  3. The next disadvantage is the exchange fees. The more positions you open, the more you have to pay. However, there is one great exception. The more volumes you do within one exchange, the more money you save as most trading platforms give discounts for high trading volumes.

Those disadvantages of scalping show that this method is not suitable for all traders’ categories. Those who use scalping are always very skilled and they know what to do in every situation.

Those are the three main trading strategies for Bitcoin. You can use them separately or even combine them as I do sometimes. I prefer to follow the news and events first, but to take the decision, I always get down to charts and look through them trying to find the best trading opportunities.

About the author

5 Reasons Why Cryptocurrency is a Good Investment

Cryptocurrency Trading
Thu, 05/21/2020 - 19:04
Vera Yurina
5 reasons for jumping on the bandwagon
5 Reasons Why Cryptocurrency is a Good Investment
Cover image via www.123rf.com
Contents

Cryptocurrency continues conquering the world of finances, and the number of cryptocurrency enthusiasts is growing. Should you join them? Consider these 5 reasons for becoming the next cryptocurrency investor.

In 2017, Bitcoin propelled into the spotlight and started growing in price at a remarkable rate. Trading cryptocurrency has become a widespread trend, and the number of people who invest in crypto has exceeded 500 mln. Crypto enthusiasts claim that Blockchain and altcoins are here to shake the modern economy to its core. Are we witnessing a major shift in the global economic system? Definitely. But should you invest in cryptocurrency? Here are at least five reasons for considering it.

1. Your money always stays yours

The lynchpin of Bitcoin's success is the technological supremacy of this Blockchain. Thanks to such innovation, electronic transactions can be made much faster and safer. Blockchain encrypts data preventing access to it from all internal sources at every stage of transaction processing. The blocks containing data are stored in a decentralized manner which means the information cannot be deleted or forged.

While banks, where we store our funds, can be robbed or simply closed after claiming bankruptcy, when you invest in cryptocurrency, your money stays yours forever. Make sure that you work with reliable exchange platforms only and use official crypto wallets with multi-layer protection. Ideally, you should use a hardware wallet to ensure 100% protection of your assets.

Crypto vs fiat: what’s the difference?
The differences between cryptocurrency and fiat currencies

2. No government involved

Bitcoin Blockchain offers a revolutionary approach to asset handling: from now on, no middlemen such as banks or governments are required for transactions and exchange. They simply have no control over the circulation of digital assets and cannot access the data related to financial operations done with Bitcoin. Therefore, it disrupts the system that's been around for centuries and brings the power back into the hands of ordinary people.

If you care about liberty, the nonaggression principle, or economic freedom in general, you should do everything you can to use Bitcoin as often as possible in your daily life Roger Ver aka “Bitcoin Jesus”

Integrity and safety of virtual money are one of the main reasons to invest in cryptocurrency. No matter what’s the official fiat currency in your country, and which fluctuations it is experiencing – cryptocurrency does not depend on it. While some countries practice fine withdrawal from citizen’s bank accounts, it cannot happen in the virtual environment – no third party can access your crypto wallet.

3. Blockchain plays a crucial role

Although it allows for anonymous transactions, Bitcoin is built on the principle of transparency. That means that the details of financial operations are stored in the Blockchain and can be viewed when necessary. This feature might be highly valuable for public transactions. The whole community can reap benefits from a crystal clear system of asset allocation. Here we tackle not the financial issue only — Blockchain allows us to handle all the other information as well.

Altcoins being widely adopted in a wide range of spheres: ICOs in different niches are being introduced every day, and usual businesses start implementing Bitcoin payments as well. This is a versatile currency that erases international borders. Thousands of Bitcoin ATMs are already installed in large cities around the world, and it's only the tip of the iceberg. BTC and altcoins provide us with umpteen possibilities replacing all existing fiat currencies both theoretically and practically. It becomes a more convenient, safer and faster way of payment and transfer.

Eric Schmidt’s quote about crypto
Eric Schmidt’s quote about the significance of Bitcoin and other cryptocurrencies

4. Investment is as simple as never before

Wonder “How do I invest in cryptocurrency?” Everything is easier than you think! Now, every person with access to the Internet and free funds can make an investment. Here’s a short scheme of how it works:

  1. You need to have a plastic card to purchase crypto online.

  2. Create a cryptocurrency wallet. It can be either the wallet for some certain coins or a multicurrency wallet.

  3. Find where to invest in cryptocurrency. As a rule, people make transactions in online exchange platforms.

  4. Create a purchase offer, or find ready requests to answer.

  5. As soon as you make a purchase and pay for the crypto, coins will be transferred to your wallet.

Now you only need to track cryptocurrency fluctuations and purchase and sell coins in a timely manner to make a profit. The golden rule of trading is NOT to invest what you can’t afford to lose. Invest the money that you can live without, and don’t panic after the first currency fall – it’s better to wait over.

“What cryptocurrency should I invest in?” Bitcoin is not the only option – if it was easy to mine a few years ago, now it’s impossible to obtain in any way except for buying. Don’t despair, there are hundreds of altcoins! They aren’t equally reliable, and you need to analyze them carefully. With boatloads of information online, you can make certain conclusions and make the right choice.

5. Forecasts are promising

As a potential or real investor, you focus on long-term viability and profitability. If you analyze every cryptocurrency shift, it can drive you crazy – you can be sure that you’ve made a wrong investment decision. Being in panic, you can sell the coin for a lower price than you purchased it for while holding would be a better idea.

Why invest in cryptocurrency for long terms? Cryptocurrency fluctuations are inevitable. They happen all the time, that’s why making short-term predictions is harder than long-term ones. Despite the major surge of cryptocurrencies which happened in January 2018, Bitcoin and other popular cryptocurrencies are likely to grow within 2-5 years. Most forecasts are optimistic. Therefore, if you’re looking for a serious investment with serious profit, opt for longer terms, at least 1-2 years.

Bottom line

Cryptocurrency creates a new era for the modern economy, a utopian system where everyone can stay confident in the privacy of their assets by transferring them around the globe without limitations. It provides us with new possibilities, and getting profit is one of them. Being among the first to buy crypto, you create history and help the world economy to make a serious switch.

“Should I invest in cryptocurrency?” The answer is resounding “Yes!” Choosing cryptocurrency as an investment is a wise solution if you place a bid for the right horse. Don’t hesitate to invest in technologically advanced Blockchains and popular coins – most of them will sooner or later gain momentum to grow in price, which can bring you considerable profits.

About the author

Crypto writer, blockchain geek & Bitcoin holder with a strong belief in the power of cryptocurrency. Veronika combines in-depth analytical approach with creative writing to deliver the texts that both inform and entertain. With hundreds of reviews, SEO articles and marketing texts under the belt, she has experience of working for blockchain Medium channels, Cryptodiffer site and ICOs. Part of U.Today team since 2018, she focuses on crypto price predictions and monitors the market to provide the most relevant info & opinions, can be contacted at vera.yurina@u.today