Lately, Bitcoin has hit the banner headlines all over the world because of its ever-growing value. Multiple individuals and companies are researching the best method to use to get a bite of this crypto. The good news is that there are tons of techniques that you can use to make money through Bitcoin. From writing about digital currency to performing simple tasks on Bitcoin faucet websites, numerous methods are available for you to make money. A critical technique that you can use to earn Bitcoin dollars is trading. Although many people view Bitcoin trading as the riskiest method, some individuals have become millionaires by using this technique. If you’re looking for the best tips and tricks on how to make money via Bitcoin trading, please stay tuned.
Overview of Bitcoin trading
Although Bitcoin trading is riskier than investing in digital currency, one can easily succeed if one arm themselves with the right information. Before you start your Bitcoin trading journey, it’s critical to arm yourself with the right knowledge about cryptocurrency. In the world of digital currency, information is power. So, you must take your time to read authoritative blogs, articles, eBooks, whitepapers, etc., about Bitcoin. As an intelligent trader, always buy Bitcoin when its value is low and sell it once the price spikes. And if you lack time to learn about Bitcoin trading, you can still invest via https://the-newsspy.io/, sit back and wait for good news about your profits. Some of the techniques you can use to trade BTC are explored below.
Methods of trading Bitcoin
Are you looking for the best techniques to use when trading Bitcoin? Please keep reading to enlighten yourself.
Day trading Bitcoin
Day trading is a short-term Bitcoin trading strategy that entails entering and moving out of a position within the same trading day. This concept is also referred to as intraday trading and involves holding the asset for a short time. You aim to sell the digital currency within the same day for a profit. Day traders, normally, take advantage of Bitcoin’s price swings. Traders who succeed in this technique use various strategies, including scalping, range trading, playing Bitcoin fluctuations, and arbitrage.
- Range trading: many day traders use this strategy to take advantage of small price changes within short periods. Digital currencies trade within specific ranges for a long time. For example, Bitcoin may trade between $8601 and $10209, and there are many swings within this time. You can, therefore, take advantage of these fluctuations to sell Bitcoin for a profit. Traders who use range trading strategy must understand how to read and analyze a candlestick chart together with support and resistance levels.
- Scalping: scalp trading is a short-term Bitcoin strategy that involves quick decision-making. Scalp traders use various tools to carry out technical analysis, which assist them in making informed decisions. The main aim of scalp traders is to gain from small Bitcoin price changes. If your objective is to make massive prices from a single trade, then scalping isn’t your best strategy. Scalpers evaluate multiple technical factors, such as price action, candlestick chart trends, trading volume, etc., before making decisions. Scalpers also use various technical indicators, such as moving averages and Relative Strength Index, to make informed decisions. This range of tactics enables the traders to scan minor opportunities in the market and take advantage of them.
- Bitcoin Arbitrage: Traders that use this strategy take advantage of Bitcoin price differences in different exchanges. You can buy Bitcoin from a business where the price is low and sell it at another dealer at a higher rate through the tactic. Your work is to scan around and discover price differences in various exchanges.
Trend trade Bitcoin
Trend trading is an investment tactic where traders take a position that is the same as the current momentum. Such traders must analyze an asset’s rate to evaluate whether its value is moving up or down. In this connection, if the value of Bitcoin is moving up, you should go long. But if the trend begins to slow or move the opposite way, you should close your position and open a new one matching the prevailing direction.
Perks of trend trading
Crypto traders can reap multiple advantages that come with trend trading. Some of the perks of this form of trading include:
- Enhanced chances of improving your win rate: through this technique, you can make more profits from Bitcoin trading.
- Higher risk to benefit ratio: because you’re using scientific tools to analyze the asset’s trends and histories, you’re likely to select the right time to purchase or sell Bitcoin. This is arguably the best method than other strategies, like FOMO (fear of missing out) and FUD (Fear, uncertainty, and doubt).
- You can discover strong trends: Although no method is 100% correct, you can use this trend trading technique to overcome the imperfections of buying and selling rules.
Bitcoin hedging tactic
If you own Bitcoin, you may consider protecting your investment if you think there will be a fall in the market value. Hedging enables you to open strategic settlements to minimize or eliminate any risks to the current positions. You may decide to sell your assets at the current price through the hedging strategy because you anticipate a price fall soon. In case of the value nosedives, you can still buy the crypto at a lower price and make a profit. Some of the tactics you can apply in hedging include:
- Short-selling of Bitcoin: through a short-selling strategy, you sell an asset when you predict that its value will fall soon. Once the price drops, you can buy the asset at a much lower cost, hence making a killing. Short-selling enables you to hedge your Bitcoin holding against an extended exposure. Shorting enables you to borrow Bitcoin and trade it at its current value. Afterward, you buy the BTC to repay the lender. By the time for repurchasing the asset, prices would have fallen. So you’ll cheaply buy the asset that you’ll pay back.
- Hedging Bitcoin with CFDs: CFDs are derivative products that help traders open Bitcoin positions without owning the asset. CFDs are based on a contract between a trader and a broker, allowing traders to speculate whether CBD will rise in value or decline. As a trader using this strategy, you don’t need to open an exchange account or an e-wallet. This tactic enables you to benefit from declining or growing markets without the need to borrow the assets. CFDs have multiple perks for daytime traders. The main one is the ability to gain from both the growing and falling value of Bitcoin. For example, a trader can go ‘long’ if they think that the worth of BTC will go up. Conversely, the trader goes ‘short’ if they feel that the value will decline.
- Hedging with futures: Futures contracts are agreements to purchase or trade Bitcoin at predetermined intervals. Traders use this technique to hedge their crypto holdings or close in gains when operating in unstable markets. For instance, if you own a single Bitcoin whose current value is $50,000, you can sell 50,000 futures and ensure that you sell your BTC for $50,000 irrespective of market changes. Bitcoin futures contracts have multiple advantages, including hedging against falling prices, stabilizing value swings, and guessing the market direction.
HODL Bitcoin tactic
Do you want to participate in Bitcoin but lack the time and knowledge to be fully involved? If yes, then you should consider using the HOLD strategy. The HODL strategy entails purchasing and holding BTC. HODL is a corrupted form of the term ‘hold.’ Optimistic traders who think that Bitcoin value will rise will use this tactic. HODL strategy is the best for beginners in the Bitcoin industry who want to take their time to learn about other trading strategies. It’s multiple advantages like participating in the crypto market with much effort and time, and it comes with minimal stress. This strategy’s main downsides include: it takes a long time before you get profit, and chances of losing your funds are high.
Traders who want to use the HODL strategy must study the market keenly and analyze the future price trends of BTC. Such traders should also exercise patience to realize the anticipated profits.
You can also lend Bitcoin in return for interest. The main downside of this strategy is that it’s extremely risky because borrowers don’t guarantee their loans. However, if your risk appetite is high, this is the best method for you because of high-interest rates. Your loan can attract an interest of 15% and above.
As you can see, there are multiple tactics that you can use to make money through Bitcoin trading. From daytime trading techniques to HODL, various methods are available for you. As each of the explored techniques has its perks and downsides, it’s upon you to determine the best approach to use. It’s critical to evaluate each plan carefully before picking the best.
The above information does not constitute any form of advice or recommendation by London Loves Business and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Appropriate independent advice should be obtained before making any such decision.