Bitcoin is a new and exciting cryptocurrency that has seen tremendous growth in value over the past year. While this provides opportunities for investment and profit, it also attracts scammers and fraudsters. Many people are still learning how to trade bitcoin, and as a result, they fall victim to these scams.
There are a number of different Bitcoin trading strategies that you can use. In this article, we will discuss the 5 best and worst strategies.
Five Best Strategies
There are a lot of different ways to trade Bitcoin. The 5 best Bitcoin trading strategies are:
1. Fundamental Analysis
Researching how the fundamentals of a market will affect it’s price is a good way to create a bitcoin trading strategy that is sure to be profitable.
Crypto trading has been on the rise, and there are many different strategies for trading successfully in this new marketplace. When it comes to making trades using fundamental analysis, one of the most effective strategies is to research how the fundamentals of a market will affect its price. For example, if you believe that China will ban cryptocurrency exchanges or stop their citizens from participating in ICOs then you would find it beneficial to sell cryptocurrencies that are likely affected by these events like Bitcoin or Ethereum.
2. Technical Analysis
Technical analysis is the process of looking at historical prices and past trends in an asset. It has two main objectives. The first objective is to identify patterns that indicate how the asset will perform in the future. The second objective is to forecast where it may be headed, usually accompanied by a signal that informs when a trade should be made with respect to the forecasted trend.
In order for technical analysis to work, one must make a compelling argument for why it should work for their particular situation. Technical analysis needs to be able to predict where bitcoin will go next; and if it can, then following this strategy will increase your odds of making money on bitcoin trading using bots like Bitcoin Evolution.
3. Swing Trading
Bitcoin is a high risk asset with the potential to deliver significant gains. Swing trading is one of the best bitcoin trading strategies in this volatile market.
The trader is riding momentum or natural price swings that are inherent in trading. Swing traders typically look for reversals in trends, chart patterns, and other technical indicators to enter and exit trades. They hold their positions for several days or weeks at a time, potentially earning many times more than those who trade daily or intraday periods.
4. Day Trading
Day trading is a popular bitcoin trading strategy where traders buy and sell cryptocurrencies frequently within a day. It is seen as the best bitcoin trading strategy for those who want to invest in bitcoins but don’t want to spend too much time on it.
5. Position Trading
Position Trading is an investment strategy predominantly used in stocks and commodities. The trader opens a position with the hope that the market will go in their favor, as well as to lock-in some profits, even if the market has not moved in their favour. It’s based on the principle of buying an investment on one exchange, and then selling it on another in order to make profit.
Five Worst Strategies
Many people have lost money by trading bitcoins, and many more will do so in the future. To maximise your chances of success, it is important to avoid the following five worst bitcoin trading strategies.
1. Trading Based on Emotions:
With the current boom in cryptocurrencies, more people are getting into investing and trading for profit.
The emotional aspect of bitcoin trading is often overlooked. We may think that emotional trading is not rational, but this is not true. People get emotional about cryptocurrencies because it’s new and exciting.
The problem with emotional trading is that it leads to a loss of rationality. It’s hard to make an objective decision when we’re feeling strong emotions about something one way or another.
2. Trading without a plan
When trading, you should have a trading plan. Why? A trading plan will tell you how to use your strategy and how to trade bitcoin. Without a plan, your bitcoin trading will be inconsistent and inefficient. Lack of consistency is the worst for any trader, so it’s important that you create a well-thought-out strategy and execute it accordingly.
3. Trading based on news
Trading based on news is the worst bitcoin trading strategy because it involves a lot of speculation. Bitcoin is notorious for its volatility and sudden changes in prices. It’s not a good idea to trade when you have no clue what’s going on and whether or not the price will be affected.
Another reason why trading based on news is the worst bitcoin trading strategy is that the person might get carried away with all of their emotions during the financial crisis. They may be jumping from one cryptocurrency to another and losing their sanity in the process. Hence, they might want to avoid doing this kind of trading at all costs.
4. Trading without analysis
Traders must understand that trading without analysis is not a good bitcoin trading strategy. It has been seen that even experienced traders are succumbing to this temptation and they lose a lot of money in the long run because they don’t have any risk management plan in place.
5. Trading Too Much
Trading too much is a risky strategy. It causes many people to buy high and sell low which is a bad trading strategy in general. The more trades you make the higher your commissions are going to be on each trade as well as the lower your portfolio’s value will be after making so many trades.
There are a variety of bitcoin trading strategies out there, and some are better than others. In this article, we looked at the best and worst bitcoin trading strategies. By understanding the different strategies, you can choose the one that is right for you.