Once again, bitcoin is on the rise. You’ve probably been hearing that cryptocurrency is the currency for the future. Just like any other currency, you can also trade bitcoin in the market, and there are many strategies for this. Here, smart strategies for trading bitcoin will be discussed to enlighten you.
1. Invest In The Top
Those are just the top ones at the moment so you need to keep yourself regularly updated on which cryptocurrencies take the top spot at a certain period. Distribute the remaining 50% evenly among the rest of the 9 top cryptocurrencies. You just need to check up on them every quarter or month. Once a cryptocurrency drops out of the top 10, you need to sell those and buy cryptocurrency of the ones that have replaced it.
The advantage of this strategy is that you are betting on those that have grown faster. By spreading the risk among the 10, you don’t need to give it a lot of attention. However, with this conservative strategy, you are also aiming for lower profits with lower risk. If you want to learn more, read the Review of James Walker about a bitcoin trading platform.
2. Play On The Company
For this strategy, you need to research on the companies and see which business model works the best. Select the companies that you believe will be a success. After that, buy it when the price is low, then sell when the price is high. Once it dips again, buy it once again, and sell at the top. This is one of the most secure ways to do speculative trading.
3. Utilize The Graphs
Moreover, there have been algorithms developed to allow traders to make hypotheses about the prices of bitcoin. Some indicators are the following: MACD (moving average convergence divergence), RSI (relative strength index), and the Bollinger Band. If it’s your first time to look at it, it might all seem very confusing. So, before you do this, you must perform your own research and learn the meaning of the graph.
4. Day Trading
From the name itself, this strategy entails that you never hold any type of cryptocurrency for longer than a day. By doing this strategy, you will be abandoning the core values of investing and purely go into 100% speculation. Day traders use graphs to plan their moves. By using this strategy, you’ll be utilizing short-term fluctuations in the market. Good traders usually profit 1% to 2% daily.
5. Accumulate At The Lowest Prices
6. Cost Averaging
By using the cost averaging strategy, this requires you to purchase a fixed amount of bitcoin at the same intervals whether or not the prices are moving down or up. By doing this, you will average out those prices within the set intervals you make. The price will end up being lower than the price point at which you were willing to buy it at a lump sum. This will also spread out your risk. In a longer period of time, you will notice how cost averaging your bitcoin will protect you from price risks.
7. Patience Is Key
With all strategies, patience is key. With trading, you must be able to stomach fluctuating prices in the market. Ignore the noise in your head and move strategically. Here are some rules you must abide by to trade smart in bitcoin:
8. Invest The Money You Can Lose
During financial crises, many investors’ money were lost. Since a lot of people were putting their savings into the stock market or real estate, they all got burned when both markets crashed. Taking a lesson from history, don’t invest money that you are not prepared to lose. Not only is this a smart strategy on bitcoin that you must always follow in all your trades, but it is the most important strategy of them all. As soon as you use your money to buy cryptocurrency, consider it lost already. There will be no guarantee that you’ll get it back. So, as a rule, only invest money that you are willing and can afford to lose. Re-evaluate your financial situation to see if you can stomach this kind of loss.
Whether or not you know much about bitcoin, you can always apply these smart strategies to trade this cryptocurrency. Just do your own research as well and pick one strategy listed above that suits you, and you will be well on your way to make the big bucks by trading bitcoin or any kind of cryptocurrency in the market.
Disclaimer: the article is for informational purposes only and does not guarantee a return on investment. Readers invest at their own risk. Bitnewstoday authors and editors are not responsible for the readers’ actions.