Bitcoin (BTC) trading is a relatively new market. However, it catapulted into mainstream popularity because of the potential for high profit. Plus, BTC is not a fiat currency. This means that its value doesn’t rely solely on the economy or policy changes of a single country, which is a significant benefit in today’s globalized world.
Bitcoin is also volatile, which means that its price is constantly fluctuating, often in one day. This can be a plus for traders, especially those delving into day trading because you can get huge profits in just a single day.
Both professionals and beginners can take advantage of this lucrative venture as long as they do their research and study the different strategies that they can apply to make this venture more lucrative.
Here are a few strategies for Bitcoin trading that you should know before you go into Bitcoin trading:
1. Find a Reliable Trading Platform
While there’s no official exchange platform of Bitcoin, you have several platforms to choose from. These include Binance, Kraken, Bittrex and Bitcoin Revolution. These are some of the popular trading channels today. It’s crucial that you look for an organization that’s trustworthy because they’re handling your money after all.
These are the factors you should consider when selecting a platform:
- Regulation – The exchange must have a set of rules in place that protect the users. The organization must have a reputation for being a credible financial handler.
- Location – Since most traders use fiat money instead of mining Bitcoins, you should find a platform that makes it easy for you to cash in and cash out from your BTC wallet. Often, exchanges accept payments through cash deposits, credit cards, and PayPal.
- Processing Fees – You must identify how much the exchange will take as their cut from your profits and evaluate whether you’re okay with that percentage.
- Liquidity – For high rollers, you’ll need a Bitcoin trading platform with high liquidity, which is the organization’s ability to buy or sell an asset without causing a severe change in its value or price.
For more helpful tips on how to choose a cryptocurrency exchange, check out Cryptowisser’s guide on how to do so here.
Various exchanges where you can trade Bitcoin
Here’s a brief overview of certain Bitcoin trading exchanges:
- Kraken – Kraken is a platform that puts the power to buy, sell, and trade digital currency at the hands of its users. It deems itself as the best and most secure cryptocurrency exchange through maintenance of full reserves, healthy banking relationships, and strict legal compliance.
- Bitcoin Revolution – The platform’s most significant benefit is its automated trading feature, which helps users get a high and consistent success rate. It’s ideal for beginners who need support as they learn the ropes. Nonetheless, experienced traders can also take advantage of its trading robot and apply security measures to reduce risks in the cryptocurrency market.
- Bitfinex – Calling itself a digital asset trading platform, Bitfinex was one of the pioneers of crypto-trading and has gained valuable experience through the years. It has advanced trading features and chart tools, as well as peer-to-peer financing and margin trading.
- Bittrex – Bittrex prides itself on its lightning-fast trade execution, reliable digital wallets, and top-of-the-line security practices. They advocate for the advancement of the blockchain industry by supporting emerging technology that can provide transformative change to the market.
- CEX.io – With CEX.io, you can trade through their website, mobile app, and WebSocket and REST API. They make Bitcoin buying and selling straightforward with their simplified bundle interface.
2. Determine the Type of Trading You Want
There are different types of trading strategies that you can employ for your Bitcoin venture. It all boils down to how much time you can allot per day to monitor the market. If you’re planning to trade full-time, you can opt for day trading. While others can benefit from automated trading and be a passive trader.
The four major types of Bitcoin trading and their benefits are:
- Day Trading – As mentioned above, this one rides with the rapid and frequent fluctuations of Bitcoin price. You monitor the short-term opportunities as they present themselves and take advantage of them. Typically, day traders buy BTC for the lowest possible price at the start of the day and sell for the highest value when trading day ends.
- Swing Trading – With this type, you’ll need to study the trends and have a strong intuition. It’s ideal for people who want to maximize opportunities for market momentum.
- Scalping – Scalping demands more of your time since it involves placing frequent trades on slight price movements. This means buying and selling two or more times in a day for small, continuous profits instead of waiting for one substantial breakthrough.
- Automated Trading – If you’re planning to do Bitcoin trading as a way to earn extra income on top of your 9-to-5, you’ll benefit more from automated trading. You just need to configure the settings and set limits to when the trading robot can buy or sell on your behalf.
3. Understand the Risks
Another important part when setting strategies for Bitcoin trading is to understand the risks. As with traditional stock trading, there isn’t a guarantee that you’ll get massive profits from your crypto-trading venture. You should remember that Bitcoin and altcoins are volatile, which means that prices can drop at any time. Inversely, there’s also the potential of a significant breakout.
It’s all up to you if you’re amenable to the risks that you’re making yourself vulnerable to. Always do your research before going ahead and investing your money on Bitcoin trading.
4. Read Up on Current Events
Bitcoin’s value may not be dependent on a single country’s economic or political climate. However, because of its global nature, its price actually goes up and down according to crucial world events.
In recent years, its value was influenced by India’s banknote demonetization, China’s devaluation of the Yuan, Donald Trump’s victory at the 2016 US elections, and Brexit. For Bitcoin traders, it’s crucial to be in the loop when it comes to current world events because it gives you insight on whether you should buy or sell.
Bitcoin is one of the many technologies that support the vision of a cashless society. While you can earn this cryptocurrency by mining, it’s far less complicated if you trade it. Just remember, you should look for a reliable exchange platform that gives you the flexibility to do scalping, day, swing, or automated trading. And remember the strategies for Bitcoin trading outlined in this article.