Every investor needs to have many strategies for trading crypto assets ready in case the market enters a bullish or bearish trend, depending on the circumstances. So what should investors do if the market is rising? Here are three suggestions. If you want to learn more about how bitcoin functions, follow this link.
What is trading in crypto?
The practice of betting on price fluctuations of cryptocurrencies via a contract for difference (CFD) trading account or buying and reselling the underlying coins on an exchange is referred to as “crypto trading” or “cryptocurrency.” CFD trading is a type of derivative that enables you to bet on changes in the price of Bitcoin without holding the underlying currency (BTC).
For instance, if you think a cryptocurrency’s value will increase, you can buy it, or you can sell it if you think it will decrease. Both are leveraged instruments, which implies that you only need a small deposit to gain full exposure to the underlying market (margin trading cryptocurrency). Leveraging your trades with cryptocurrency, however, increases both profits and losses because your overall investment size still determines your profit or loss.
Use a tool like Coinrule if you’re seeking an automated bitcoin trading strategy. The method employes by bitcoin trading bots is designed to provide you with the highest profits in line with your investment objective.
With the help of automatic trading for cryptocurrencies, you may quickly make money, keep your coins, or diversify your portfolio in a conservative, neutral, or aggressive manner. You might even consider actively trading cryptocurrencies on some websites while using trading automation on others.
Beginner’s guide to trading cryptocurrencies
There are numerous ways to trade cryptocurrencies. Before starting to trade cryptocurrencies, one must have enough understanding of them. Before making judgments, it’s also important to be aware of the risks involved and any applicable local laws.
Form of a cryptocurrency transaction
A buyer and a seller participate in a cryptocurrency transaction. Someone will always benefit more from trade as there are two competing sides a purchase and a sale. As a result, trading is by its very nature a zero-sum game in which both winners and losers exist. Basic knowledge of how the bitcoin markets function can use to reduce potential losses and maximize gains.
When a buyer and seller agree on a price, the trade is carried out (via an exchange), and the asset’s market value is established. Buyers typically set their orders at a lower price than sellers. The two sides of an order book are thus created.
Cryptocurrency prices often increase when there are more buy orders than sell orders since there is greater demand for the asset. On the other hand, when there are more sellers than buyers, the price drops. Buys and sales are typically represented in distinct colors in exchange interfaces. This is done to quickly inform the trader about the market’s condition at any particular time.
You may be familiar with the trading maxim “Buy low, sell high.” The adage does provide a fundamental illustration of the incentives of buyers and sellers in a marketplace, but it can be challenging to navigate because high and low prices might be relative.
Simply, you want to spend as little money as you can while making a transaction. If you want to sell anything, you want to get the biggest return on your investment. Although this is typically sound advice to abide by, there is the additional consideration of desiring versus shorting assets.
1. Hold Your Resources
Passive investors typically choose this method when they do not intend to sell Bitcoin in the long run. They are investors who prefer not to constantly monitor their assets; the benefit of this strategy is that it doesn’t require technical knowledge or experience.
You only need to purchase Bitcoin when it is cheap; for instance, it is supporting, which predicts when the price will rise, and it keeps track of news about everything that might have an impact on the cryptocurrency market. Then, when the price of Bitcoin is surging, you sell your holdings.
Digital assets can be rewarding investments if this straightforward strategy uses correctly. Take Bitcoin’s historical behavior following the halving day in the prior time, for instance. In that event, the average growth in the price of Bitcoin can reach 29 xs in at least a year following the day of halving.
2. Purchasing bitcoin gradually
In addition to storing your assets, you can also use the more complex buy-and-hold method of trading crypto assets. This practice of buying assets gradually is recognized or referred to as Dollar Cost Averaging (DCA) among investors.
Investors don’t have to worry about whether Bitcoin is at the top or bottom with this approach, which is a benefit. In addition, you don’t have to spend all of the money you wish to set aside; you can invest a portion of it each month. Therefore, if you have IDR 2,000,000, you can regularly store Bitcoin for ten months or every month; you just need to put IDR 200,000 into it. By doing this, you can lower your investment risk and steer clear of poor timing and hasty investment choices.
The DCA method’s success depends on constancy in consistently saving money in bitcoin. You can benefit from trading crypto assets through applications to make it simpler to invest in Bitcoin each month. For instance, you can begin investing in Bitcoin on the Bitcoin Era platform with just IDR 55,000, and every investor will be secure doing so.
Prior to Buying Bitcoin
Investors who have the private key to a public address on the Bitcoin blockchain can approve transactions. Privacy and security are crucial problems. Investors must be aware that a public address’s balance can be seen, and private keys should be kept private.
3. Purchase more digital assets
In a bullish market, an asset’s increase does not only experience a daily upward trend in the graph. Instead, there are occasions when it will decrease before rising once more as a result of investors taking profits. You should purchase other digital assets when the market starts to fix itself.
For instance, if you already own Bitcoin and would like to add Ethereum to your portfolio of digital assets (ETH). This strategy is frequently using by investors for risk control and portfolio diversification to lower market volatility. The price fluctuations of other digital assets are inevitable because Bitcoin is currently the most valued crypto asset.
4. Price Movements of Bitcoin
When trading Bitcoin, one of the most important concepts to understand is “Bitcoin price movement.” You need a program or application to assist you with this so that it would be simpler for you to keep track of the relatively erratic price changes of bitcoin. Knowing the trends in the price of bitcoin both now and in the past will help you decide when is the best time to buy and when is the best time to sell your bitcoin.
5. Making Use of Risk Management
For those of you who are unfamiliar with risk management, it can compare to applying the brakes when driving in hazardous conditions. It is directly tied to the psyche of inexperienced investors, who frequently feel egotistical and want to make the biggest profit possible without recognizing that risk always comes with consequences when trading Bitcoin.
When Bitcoin and other digital assets are experiencing bullish price movement, you can use the three methods of trading outlined above. In order to achieve the best timing when purchasing digital assets at cheap prices, every investor has to have a trading strategy for buying and selling digital assets. This strategy should involve using the Moving Average to identify support and resistance levels.
Which trading approach is ideal for cryptocurrency?
Another well-liked trading method in the bitcoin market is scalping. With the help of this trading approach, investors can profit from brief price fluctuations that occur frequently. The objective is to accumulate little daily profits to eventually generate a substantial sum of money.
Is 2022 favorable or unfavorable for crypto?
The prediction game has become much more difficult since Bitcoin’s significant decline. The most fervent cryptocurrency critics anticipate that Bitcoin will crash to as little as $10,000 in 2022, but a more reasonable position could be to believe that the digital currency can still rise to $100,000 as many experts projected late last year, only on a slower timeline.
What time of day is ideal for cryptocurrency trading?
The most popular trading hours for cryptocurrencies are from 8 am to 4 pm local time. Although the cryptocurrency market is open around-the-clock, your deals are more likely to be processed during periods of high activity. It can be more challenging to open and close trades during off-peak trading times.
When is cryptocurrency at its lowest?
Over the course of two years, they performed this every hour of every day of the week. I’m sure it took a lot of work! The researchers discovered that on Fridays at 6 am UTC, the average price of Bitcoin was at its lowest. This indicates that generally speaking, now is the optimum moment to enter a long trade.