Cryptocurrency is a digital asset that does not require a central monetary authority such as a bank to circulate. These are based on blockchain technology which comprises a decentralized and distributed ledger that stores data related to the transactions that take place among various users. One important aspect of blockchain technology is that the data cannot be altered and hence it keeps the transactions transparent. If you are planning to invest in Bitcoin, you may want to read more information about The Rise Of Bitcoin.
The rise of cryptocurrency has caught the attention of millions of enthusiastic financial investors from all around the world. The crypto investors choose to invest on which is the most chosen platform by newbie investors to start their investing journey.
Given below is a list of strategies with their explanations that can help you boost your profits in your trading journey.
Table of Contents
List of Helpful Bitcoin Trading Strategies
- Day trading
It is a short-term trading style that involves buying and selling on the same trading day. This strategy is commonly used to ensure booking profits amid intraday price movements in preferred cryptocurrency. Technical indicators are used by experienced traders for successful trading by predicting entry and exit points for particular cryptocurrency.
- Scalping
It is a short-term trading strategy that aims at small and frequent profits. It is mainly popular due to the fact that the crypto market is volatile and changes frequently. It involves using increased trading volumes to book profit. The major factors that are analysed by successful traders are crypto assets, past trends, volumes and entry and exit points.
- Range Trading
It involves analysing consistent high and low prices based on how the market fluctuates within a range. Resistance is a point to which the price may rise and Support is a point below which the price doesn’t fall. Range trading is often used as a day trading strategy, in which traders usually employ systems in which they can hold long or short positions for different times.
- Bot Trading
It uses algorithms and understanding of complex mathematics and computer science, to generate trading bots. These bots can execute a large number of trades but they require constant monitoring, testing and updates that need to be conducted by the traders. One needs to have extensive knowledge of programming and effective trading strategies. This is why only the advanced and experienced traders choose to implement the “Bot trading” strategy in one of their investment strategies.
- Dollar Cost Averaging
It involves investing a fixed amount at regular intervals to avoid timing the market to figure out the right entry and exit points. Timing the market can be next to impossible and hence this strategy is a safer option for long term profits. However, deciding the appropriate exit point requires studying market trends and reading technical charts of particular cryptos.
- Arbitrage
It is a strategy that involves buying a crypto from one exchange and selling it on another for a profit. The difference in buying price and selling price is referred to as Spread. To start trading using this strategy, one can open accounts on exchanges that show large differences in prices of cryptos they are interested in trading. It is a great option for investors that are looking for high frequency trades with low-risk returns.
- Technical Analysis
It involves mathematical indicators that predict future market trends based on past price action data. Investors try to buy crypto when the market is low and sell it when the market is rising to eventually make a profit, and technical indicators might help them achieve that. Technical Analysis can be done by indicators like relative strength index (RSI).
Conclusion
Cryptocurrency trading is evolving rapidly and investors are finding ways to multiply their profits with the help of various strategies. We made an attempt to cover some of these strategies briefly with the help of this article. These strategies can help investors in beating extreme volatility that the crypto market offers.
Other than relying completely on the strategies that we mentioned, one should also make sure to build a balanced portfolio by investing in various cryptocurrencies like Bitcoin, Dogecoin and Ethereum. Following up with these points also make sure the financial investors are able to reduce the common risk factors and make huge profits in the long run.
