Best Bitcoin Trading Strategies and Tips

Bitcoin Trading Strategies

Bitcoin strategy is a method of trading the market, which covers the price points at which you enter and exit. Explore the best Bitcoin Trading Strategies and some getting started tips.

Top Bitcoin trading strategies

The best Bitcoin (BTC) Trading Strategy is a trading strategy that fully meets your own personal goals, risk appetite, and available capital. However, some strategies have become popular among Bitcoin traders. These include:

  1. Holding
  2. Hedging
  3. Trend trading
  4. Breakout transaction


Perhaps the most famous Bitcoin strategy is what is commonly referred to as “Holding” or “keep life precious”.

This term was first proposed in 2013 when the price of Bitcoin was falling, and the user mistakenly typed “holding” instead of “holding” to indicate that he would not exit his position. Since then, it has evolved into a strategy around maintaining a long-term Bitcoin position, hoping that it will increase the price in the long-term and return to its peak in 2018.

However, it is well known that Bitcoin is volatile, which means that this strategy can lead to losses. This is why this strategy is rarely recommended without a strict risk management plan.

Hedging Bitcoin

If individuals who already own BTC believe that their market prices will fall short-term, they can consider hedging their Bitcoin risks. Hedging is an approach to open strategic transactions to reduce or eliminate the risk of existing positions.

In this case, you can hedge your existing assets by opening a short position in Bitcoin, which involves selling the asset at the current market price in the hope that the asset will fall. If the market price does fall, you will buy it back at a lower price and profit from the difference. This means that any loss in your original Bitcoin holdings will be offset by the profit of your short Bitcoin transaction.

Traders can use several financial instruments to hedge their Bitcoin exposure, but the vast majority of traders choose to use CFDs for hedging. As a derivative product, there is no obligation to own the underlying assets for trading. So, will you ever have a short industry where you sell your bitcoins, unlike traditional short selling, which will involve borrowing bitcoin to sell?

Want to practice hedging Bitcoin? Use the IG demo account to start developing strategies in a risk-free environment.

It is important to remember that if you decide to hedge Bitcoin with a short-selling strategy, there is a great deal of risk. This is mainly because there is unlimited downside risk-when you sell Bitcoin, the market has no limits on your volatility and the possible losses that may result from it. Therefore, it is essential to develop risk management measures.

Trend trading Bitcoin

Trending markets are markets that always reach higher highs or lower lows. This strategy is suitable for different time frames, because essentially, as long as you believe that the trend will continue (whether it is a few hours, days, weeks, or months), you can maintain a position.

For many people, Bitcoin itself is a trend. Its popularity surged in 2017, bringing it to a high of $19,763.50 in December of that year. The reason for this trend is that people do not want to miss new major events, experience the so-called FOMO, or are afraid to miss it. In such a popular market, it is vital that trend traders must keep abreast of any news and events that may affect their prices.

Trend following strategies uses technical analysis to predict the direction of market momentum. When you think that the price of a digital currency will continue to move in its current direction or is about to form a new trend, trend trading Bitcoin involves opening a position.

Traders can determine the direction of market trends and their momentum in many ways, usually involving the use of technical analysis indicators. A popular trend and momentum indicators that follow the trend include moving averages, relative strength index (RSI), and stochastic oscillators.

Research your chosen trading strategy

Each of the four trading strategies covers more than this guide. Before conducting any research, make sure that you have conducted the appropriate research.

Fortunately, there are many resources online, including e-books, e-courses, and videos, which will teach you how to trade Bitcoin.

Just remember that no matter how popular these strategies are, there are no risks.

Bitcoin breakthrough strategy

Breakthrough trading involves entering the market as early as possible in the trend and preparing for the “breakthrough” of the Bitcoin price from the previous range. The strategy is based on the idea that once the market breaks through a key support or resistance level, it will begin to fluctuate sharply.

Therefore, Bitcoin traders hope to enter the market at these key points in order to grasp the trend from beginning to end.

In order to determine support and resistance levels, Bitcoin traders will often use trading volume levels as confirmation signals and technical indicators, such as RSI or moving average convergence divergence (MACD).

Once these levels are determined, positions can be opened. Assume that the current trading price of Bitcoin is between $11,000 and $11,050. Your technical analysis shows that once the price breaks $11,050, it will break the uptrend. Therefore, if the market rises to $11,051, you decide to place a pending order to establish a long CFD position. If the price does rise to this level, your CFD will be executed and you can follow the trend of Bitcoin until your analysis indicates that the price will reverse.

If the market price never exceeds $11,051, your Bitcoin position will never be executed.

Bitcoin trading Strategies guidelines: what you want to understand earlier than trading

  • Understanding the Bitcoin market
  • Create a Bitcoin trading Strategies plan
  • Choose the transaction method
  • Develop a transaction plan
  • Manage risk

Understanding the Bitcoin market

The Bitcoin market is turbulent, so it is absolutely crucial to understand the market before implementing a strategy. There are many factors that affect the price of Bitcoin, including:

supply. The supply of Bitcoin is capped at 21 million coins, but not all of these coins are currently tradable. New coins are released through a process called mining, and the speed of their creation has changed due to the Bitcoin halving

news. The public is critical to the price of Bitcoin, and any negative news may seriously damage the market value of Bitcoin

activity. Any regulatory changes, security breaches, and macroeconomic releases may have an impact on the price of Bitcoin

Create a Bitcoin trading Strategies plan

Once you know the strategy to be adopted, you should develop a trading plan. As with any other business, it is important to establish standards for success and failure.

Without a plan, you may become a victim of your own greed because of greed or fear of failure. The plan should include realistic goals about how much money you want to make and a risk profile that includes how much you are willing to invest or lose.

Choose the transaction method

However, if you decide to trade Bitcoin (whether you are buying coins directly or using derivatives to guess its price), it is important to understand the method you choose.

If you decide to buy Bitcoin, you can do it through a cryptocurrency exchange. You very own the ownership of the coins and hold them in a virtual wallet, hoping that they may upload value and may be offered for income. It is important to realize that opening an exchange account can be a lengthy process.

If you decide to switch to using derivative products (such as CFDs) for trading, you will never own the ownership of Bitcoin itself. When you open a position to trade a cryptocurrency, you are guessing its price, which means you can take advantage of a market that is rising and falling in value. You only need to open an account with us, and you can complete a digital wallet in a few minutes.

Develop a transaction plan

Before starting to develop a strategy, you should create a trading plan. Through discipline and adherence to clear plans, you are less likely to fall into emotions such as fear and greed.

aims. These should be achievable goals, which will be your motivation for trading. They don’t need to hype about the money you want to make but can make measurable and measurable statements about what you want to achieve

the style. There are many ways to trade, depending on how often you want to trade and how long you want to keep trading time. Discover the most popular trading styles

Risky attitude. Your plan should include your risk profile, including how much capital you have available for trading and how much risk you are willing to take for each transaction

Manage risk

Volatility is a key part of the Bitcoin market, but with volatility comes risks. This is why it is important to learn how to manage risk before you start trading. Risk management strategies should include stopping losses and limits to set trading parameters.

Once the market is in your favour, the limit order will be closed, allowing you to lock in profits. When the market goes against you, the stop loss order will automatically close the position, allowing you to define acceptable losses.

Moreover, if you are using derivative products, you can attach a guaranteed stop loss to your Bitcoin position, which will protect your transaction when the market is not good for you. If your guaranteed stop loss is triggered, you will need to pay a certain fee.

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