When you are planning to dive into crypto trading, mastering the basic fundamentals in terms of trading strategies is what a newbie has to do. There are a few important points to keep in mind before deciding to invest in crypto. This informative article highlights the same; read on to know more in detail. If you are interested in crypto trading, you may consider using a reputable platform like BITCODE-PRIME.CLOUD.
Profitable Cryptocurrency Trading Strategies- Points To Note
In the list of helpful Bitcoin trading strategies, first comes the concept of day trading. Now, what is this day trading process and how does it work? In simple words, in simple words, buying and selling securities on the same day of the week is known as day trading. Intraday trading is another term for this. An asset or financial instrument’s price movement can be exploited by day traders using intraday trading tactics.
The stock market phrase “day trader” refers to a person who trades during regular business hours (weekdays) exclusively. Unlike traditional stock exchanges, which are only open during regular business hours, cryptocurrency marketplaces are available every day of the week for day trading.
The investors should keep in mind that Bitcoin and other cryptocurrencies carry a high level of risk, but also huge potential return. There is no guarantee that an investment will continue to increase just because it has done so in the past.
Now, when it comes to day trading bitcoin, here are five methods that the Bitcoin traders can implement. Read on to know more in detail.
1. Technical Analysis
To anticipate the direction of price movements, technical analysis (TA) employs mathematical indicators and chart patterns. RSI is an indicator that must be recognized by humans. Others, on the other hand, could be generated by a computer program like Trading View, for instance (the cup-and-handle pattern, for example).
2. News and Sentiment Analysis
Even if it’s less popular, Bitcoin day-trading may take advantage of headlines and the general market mood. The cryptocurrency market may be moved swiftly by significant news events on occasion.
On the day this article was published in mid-April 2021, Turkey declared that it would prohibit Bitcoin and other cryptocurrencies as payment choices within its borders. An immediate 3.2 percent drop in Bitcoin’s value was followed by more than a 10 percent drop afterward.
Other websites use Twitter conversations to gauge investor sentiment toward the most prominent cryptocurrencies. According to the hypothesis, the more favorable tweets about a cryptocurrency, the more optimistic the emotion.
3. Range Trading
Assuming prices tend to stay inside a particular range, range trading works the best in such cases. Observing candlestick charts and support and resistance levels is vital for this method.
When prices of Bitcoins reach a support or resistance level, traders may purchase, and vice versa. When prices hit resistance, they might go short and finish fast when they strike support.
Small price movements over short periods are the focus of this technique. Market inefficiencies, such as gaps in the bid-ask spread or lack of liquidity, are often to blame. To maximize their profits, “scalpers” typically employ leverage like margin or futures contracts to magnify their little price swings. This method, however, increases the possibility of losses.
There are a variety of techniques that scalpers may use to discover the best entry and exit points for their trades. Now, most importantly, the experienced traders should avoid scalping because of its high-speed and high-risk nature.
5. Bot Trading
High-frequency trading refers to the use of algorithms and trading bots that can be programmed to make a large number of transactions in a short period of time (HFT). Programming skills and an understanding of complex trading methods are required for this strategy.
Even though high-frequency traders rely on automated trading bots, they don’t simply sit back and let a computer program take care of everything. Developing a trading strategy, creating a program to carry out that plan, and then monitoring, back testing, and upgrading the algorithms are all part of building a trading bot.
At the end of the day, there is no assurance of success in day trading. Thus, every Bitcoin investor needs to ensure following up with the aforementioned points to stay on the right track of investment.