Trading Risks. Bitcoin trading is exciting because of Bitcoin’s price movements, global nature, and 24/7 trading. It’s important, however, to understand the many risks that come with trading Bitcoin. Leaving Money on an Exchange. Perhaps one of the most famous events in Bitcoin’s history is the collapse of Mt. Gox. In Bitcoin’s early. Best Bitcoin Trading Tips & Strategies ️ View an actionable summary of the best bitcoin trading tips & strategies which includes the leverages, minimum deposits and more. Apr 14, · The best Bitcoin trading strategy is an 85% price action strategy and a 15% cryptocurrency trading strategy that uses an indicator/5(48).
Best strategy for bitcoin tradingThe Best Bitcoin Trading Strategies You Should Try Right Now – NewsDay Zimbabwe
Using NLP programming, one can teach their bots how to programmatically interpret words and phrases and analyse the underlying sentiment.
Partnership news is usually pretty bullish. This may be the greatest mistake in the crypto community to date. But seeing as the supply of Bitcoin is finite, any time someone loses any, that means the circulating supply decreases. So even when we reach 21 million, the number available to buy, sell, store and use will be lower. Your private key gives access to your Bitcoin. Some people have written down their credentials, only to lose or accidentally throw away the piece of paper.
Others committed them to memory, then later forgot it. In addition, people may destroy their private key on purpose for various reasons. The creator of Bitcoin, Satoshi Nakamoto, is believed to have mined one million but has never touched them. Some believe Nakamoto destroyed the private key. Falling for an email scam is something that can happen to anyone.
Also known as a phishing scam, it involves using email and fraudulent websites to steal sensitive information such as passwords, credit card numbers, account data, addresses, and more. With the increasing popularity of cryptocurrency airdrops, it is no surprise that there are also many scams out there.
This secures the account. For example, if 2FA is applied to a cryptocurrency exchange account you would need to log in with your username and password, but you will also need to enter a 2FA authentication PIN.
The authenticator is usually on a secondary device like a mobile phone or a USB key. Try to feel and think logically to shatter the dreams of high returns. When you notice the market going up, try to avoid feeling like investing in the hopes of it going higher. The most effective strategy for minimizing risk is diversification.
A well-diversified portfolio consists of different types of securities from diverse industries, with varying degrees of risk. Pump and dump is a scheme that boosts the price through recommendations based on false, misleading or greatly exaggerated statements. In this scheme, a horde of traders drum up enthusiasm for a coin by evangelizing it on multiple channels, including social media.
Subsequently, they instigate a coordinated purchasing frenzy for it. The coordinated action is repeated, except this time around in selling the coin, when it reaches a certain price target. This causes a sharp decline in its price. While the pump-and-dump group makes profits, other traders, who purchased the coin based on false promises, are left holding losses.
A price ticker will alert you whenever the price fluctuates. Depending on the price, you can make wise investment decisions. Actually, it is not the price which should be the sole factor to watch out before investing. You should always observe the market capitalization as that is an eminent factor. As much as trading can be enjoyable and rewarding, the negatives are often overlooked when people first begin.
One way to prevent the chance of burning through your funds is by utilising the tools available to you. Trailing stops become very important when trading Bitcoin. Regular stops are fixed at one price, meaning a market can rise points and fall back down to the level the stop is set at, and no profit is earned. Price alerts are another tool in your risk-management arsenal. You can choose to receive the alerts either via email or an app notification.
Once triggered you can act accordingly, whether that means closing your position, setting a new alert or opening a new position. So, if a sharp price rise is followed by a quick decrease in price, this may spark worry and cause people to panic. Once this happens, another price crash could very well occur. Just keep in mind that a price can fall just as sharply as it rises.
Many people invest in Bitcoin in the long run, anticipating price rises. Trading short term can be as efficient. Bitcoin and cryptos are some of the most unpredictable markets to trade down to their reliance solely on sentiment to drive price — no company statement or centralised bank will affect its price directly in the way, for instance, equities will. However, there still are trends that can be seen. Therefore, the price is likely to rise if demand remains constant, as supply not the existing supply but the supply of Bitcoins left to mine decreases.
With the next halving, the period 12 months after that date could prove to be interesting. It is subtle trends like these that should be looked out for. Some suggest that this change will be more significant for the next halving, as the mining reward will fall to an eighth of what it started as from 50 Btc to just 6. With no monthly statement, planned quarter or annual reports or any other official announcements, it can seem like Bitcoin price changes originate at random. This is far from the case, as its price is based on trader and consumer confidence in the crypto.
So, be sure to follow the influential figures in the Bitcoin world. Keep informed on what companies are looking to embrace Bitcoin and which ones condemn it. Look at how other cryptos are performing in comparison to Bitcoin. Look at the markets that may have a direct impact on Bitcoin. Other currencies may be worth following as if one or more begins to crash, more faith may be put in the decentralised cryptos. The volatility in Bitcoin is enough to scare off even the most experienced of traditional investors.
Generally, yes they do. This will depend on your trading style, and your goals. Check our list of the 27 best Bitcoin trading tips and strategies directly from the Forex Suggest website. RSS Feed. Open a Free Trading Account.
Broker of the month. Top 27 Regulated Forex Brokers. Forex No Deposit Bonuses. Live Charts. Economic Calendars. Overview Bitcoin trading is the act of buying low and selling high. Fundamental analysis tries to predict the price by looking at the big picture. Overall Rating. Min Deposit. Official Site.
Visit Broker. User Score. Sign Up. Table of Contents:. Author Details. Louis Schoeman. Bitcoin and Cryptocurrency exchanges allow for the sale and purchase of Bitcoin. It can either be bought or sold through regular, or fiat, currencies, or it can be done by using cryptocurrencies. To select a cryptocurrency exchange, a similar process has to be followed as with selecting a Forex broker and this involves key factors that must be considered such as safety, transparency, record, user experience, and the fees involved.
Cryptocurrency exchange platforms are not regulated by regulatory entities as Forex brokers may be and thus client funds are not held or secured by the exchange. It is imperative for traders to test and rate the level of security that the exchange platform offers along with seeing what their record is in terms of hacking attempts and how they mitigate and manage such attempts. It is important to gain insight into the experience of other users when considering a platform as it may highlight any issues that other traders have, or have had, with a platform.
The fees involved need to be considered and it is imperative for traders to first understand their own trading needs and any financial limitations that they have as they have to compensate of trading and non-trading fees along with any losses that they may suffer.
Traders must know what their budgetary needs and requirements are before they start trading Bitcoin. This needs to be laid out in their trading plan as it provides a good idea of how much can be put towards trading. In addition, it also helps traders avoid spending more than they can afford along with compensating for any losses which may occur. Should traders put more on the line than they can afford to lose, they risk losing everything and there is always a chance that the trading account can go into a negative if the trader does not have negative balance protection.
Learning to trade in small amounts and to control position sizes is a key element that beginners need to learn from the start. It would be detrimental for traders to start trading blindly as there is no framework provided for the needs and objectives of the trader and essentially traders also have no idea where their entry and exit parameters are. Traders need to formulate a trading plan to ensure that they know when and were to buy, and when and where to sell, or exit a trade, to lock in profits and minimize losses.
Earlier in this article, hot and cold wallets along with the issues surrounding security on exchanges was discussed. Traders are cautioned in never leaving funds on an exchange that they are not actively and currently trading with. Should traders leave funds on exchanges, it takes away from the control that the trader has over it and should the exchange experience a successful hacking attempt or the exchange goes offline or out of business, traders may lose their funds.
These are two emotions that tend to control and drive the actions of traders. Both emotions may be detrimental as traders may experience fear and prematurely close their trades when they hear disturbing news or a rumour which may affect their trade.
Greed may also be based on the fear of missing out when traders are informed of new trends, or new opportunities and it may lead to opening trades too soon, or a delay in closing existing trades. Traders need to be aware of the psychology involved with trading and they need to understand their own emotions and emotional triggers to avoid making mistakes that may lead to substantial losses.
Regardless of whether traders are successful or not, there are lessons to be learnt in trading. No trader will ever only experience profitable trades and in the art of making profits, traders will lose some along the way to becoming more profitable. Traders need to focus on the insights that can be gained while trading, not only on making profits as learning lessons can lead to improved skills, knowledge, and experience. Firstly, traders need to learn the basics of Bitcoin trading followed by what both fundamental and technical analysis entails and how it must be done.
This will allow traders to get to know the Bitcoin market and more proficiently analyse the trends as Bitcoin prices are extremely speculative and they do not agree with traditional financial theories.
Traders will need to consider the factors which impact the price of bitcoin such as the demand, supply, news, and events. By collaborating both fundamental and technical analysis, traders can more accurately learn when to buy and when to sell Bitcoin. Bitcoin trading needs to be done at a set pace as it is not a sprint to see who can make the most profit in the most efficient or fastest way.
Traders need to map out their long-term goals and adapt their strategies to work for them especially where manual trading is concerned. Traders need to determine the time that they can put into trading along with what they want to achieve over a long period of time and whether they can sustain those goals as well. Trading involves a lot of risks and it is imperative for traders to ensure that they have risk management protocols in place to minimize their losses.
The Bitcoin and cryptocurrency market is extremely volatile and when trading, it is important to make use of stop loss orders to avoid substantial losses that may exceed the capital of the trader. Leverage is a useful tool in trading, despite the financial instrument being traded, as it allows the trader to open larger positions despite their initial capital. Where there are great profits to be gained, there are also substantial losses which can be incurred. Leverage in itself has a lot of risks while cryptocurrency trading has its own as well and traders will find that Forex brokers do not offer a high level of leverage while most cryptocurrency exchange platforms do not offer any leverage at all.
When using too much leverage, traders run the risk of becoming reckless and losing more than their initial capital while too little leverage may hamper the trade performance as premium trades cannot provide traders with their expected returns. This involves experience, skills, and knowledge in coding as it opens a new world for traders to refine their trading skills and to tailor their strategies to precisely what they need.
By learning to create strategies from scratch, traders can make use of algorithms as they trade based on finite parameters and there are thousands of ways to incorporate various factors and parameters into conducting analysis and executing trades.
There are various ways in which Bitcoin can be traded where strategies, utilities, and methods are concerned, and traders should take time in exploring different options to find ways which cater specifically to their needs and objectives.
While trading, traders are urged to put the correct amount of funds into a trade while keeping tabs on specific sizing methods to ensure that the risk and reward ratios are correct and to avoid putting too much funds at risk. Before selecting a Forex broker to facilitate trades or a cryptocurrency exchange platform through which to buy, sell, or trade, traders need to identify their trading needs and objectives. This allows traders to refine and narrow down their search on finding a broker or exchange that caters more specifically for them.
Before trading in a live environment or choosing a specific broker or an exchange, it is imperative for traders to make use of demo accounts to test the platform and offering of a broker or an exchange. These trading bots are able to open and close trades without the trader intervening and provide traders with peace of mind that they will not miss out on opportunities when they are not able to trade manually and look for trends or changes in the market.
This strategy forms part of the trend-following aspect of Scalping and features two moving averages which can be utilized in identifying the short-term trend of Bitcoin. The cross of a shorter period moving average is placed above the longer period moving average which signals an uptrend while the shorter moving average below that of the longer signals a downtrend. The Stochastic oscillator is used by traders to identify market conditions where overbuying or overselling is present.
This signals the trader of a turning point in the current trend. Should the faster period moving average cross over the lower period moving average, the trader is signalled of a short-term uptrend in bitcoin. Stochastic values above 80 signals the trader to overbought market conditions while anything below 20 signals oversold conditions.
A short signal is returned when the period moving average crosses below that of the period moving average. This signals the trader of a short-term downtrend. When using this strategy on short timeframes such as 1M or 5M, it tends to return the best result. Traders should ensure that stop losses are placed just above the recent swing high in case of short positions. Stop losses can also be placed just below the recent swing low in case of long positions. The profit targets of the trader should be the approximate size of the Stop Loss so that the trader can at least have a return to risk.
When using this strategy, the focus is on identifying breakouts around familiar price ranges and chart patterns such as:. When a breakout occurs, it is often followed by a substantial buying or selling momentum in the direction of the breakout with traders attempting to catch the momentum to profit from it. This day trading strategy is based on the trade of the underlying trend of Bitcoin. This used to be a profitable approach when the cryptocurrency market knew only an upward direction but with ranging cryptocurrencies, a breakout approach would be better.
Although, should a new trend in Bitcoin be established and it is characterized by higher highs and higher lows in uptrends, or lower lows and lower highs in downtrends, this trading strategy may yet again become more viable. This strategy refers to catching price corrections which may go against an established trend. This strategy is not recommended for beginners as it involves a substantial amount of risk associated with the level of volatility in the cryptocurrency market.
The name of the strategy is self-explanatory. Automated trading involves making use of AI technology such as trading robots, or Expert Advisors, to trade on behalf of the trader. There are numerous trading bots available with different parameters programmed which can be downloaded or purchased. A lot of Forex brokers and crypto exchanges also provide such robots to traders. The trading bots are programmed according to different strategies and when choosing a bot, it depends on the traders trading needs, objectives, and parameters in deciding which one to use when trading.
This strategy is, however, notoriously risky as the cryptocurrency market is volatile and in using this strategy, it may lead to substantial losses. This strategy is rarely recommended, and it requires a strict risk management plan. In Hedging Bitcoin, traders open strategic trades to decrease or eliminate the risk of existing positions. Traders hedge an existing holding by opening a position to short their current position. This involves the selling of the asset on the current market price in the expectation that it will decline.
Should the market price fall, traders will then buy their asset back for the lower price and coin profits from the difference. This means that, when using this strategy, traders will be trading on times when massive news breaks. This includes instances where the news reports events such as natural disasters, terrorist attacks, and others which cause assets to fall.
However, this is a risky strategy as there is a likelihood that prices on these assets may fall even lower. This strategy entails that a trader enters a position as the price dives should the expectation be that the current trend will endure. This also involves a lot of discipline in trading psychology as it may trigger the overwhelming urge to close the position should the price continue declining in a downward trend.
Trading, and Bitcoin trading, deserves a lot of consideration and tactic with the goal on making profits and minimizing any losses. Therefore, it is imperative for traders to ensure that they start with a basic understanding of Bitcoin trading first before trading.
There are numerous strategies that can be employed when trading Bitcoin and traders are urged to ensure that they thoroughly research and learn their strategy before moving to another. The general rule concerning strategies is that it is better to have one good strategy that works instead of having numerous strategies that increase the chance of losses while they do not make profit at all. In addition, traders need to realize that there is no holy grail of strategies where trading, Bitcoin included, is concerned and one trading strategy that works for a trader will not work the same for another trader as each has their own trading styles, needs, and objectives.
When trading in Bitcoin it is imperative to secure your investments. Bitcoins are only as secure as the wallet storing them. Best Forex Copy trading Platforms and Brokers according to research in South Africa, Copy trading, also known as social trading, mirror trading, or auto trading […]. View Share. Sign up and we'll let you know when a new broker review is out. All data is delayed by at least 15 minutes. Tel: Read Review. Download our free e-book. Skip to content Search. What is Ripple? What is Litecoin?
Is Luno Safe? Best Brokers. Forex No Deposit Bonus. Open a Bitcoin Wallet. Broker of the Month. Bitcoin Overview When trading Bitcoin, it is the simple process involved with buying low and selling high. Fundamental Analysis Fundamental analysis involves the evaluation of mainly both economic and financial variables along with several others.
There are numerous variables that influence the demand of Bitcoin including: User adoption Transaction activity, and Trading User adoption is important as it is crucial to the long-term viability of cryptocurrency, and the driving force behind user adoption is the fact that money has various uses. Technical Analysis Technical Analysis in Bitcoin trading requires traders to read charts and it is an essential skill in trading Bitcoin successfully. Ways to Trade Bitcoin There are numerous ways in which Bitcoin can be traded with two of the most predominant ways being the trading of Bitcoin and other cryptocurrencies on Forex and thus through a Forex broker , or by trading through a cryptocurrency exchange platform.
It is one of the best trading platforms which provides traders with an array of tools such as: Advanced charting tools A wide range of timeframes to choose from Different order types, and more. How to choose the right broker through which to trade Bitcoin Numerous Forex brokers have started making provision for the trading of Bitcoin by offering cryptocurrencies as a financial instrument in their portfolios of assets offered.
But before traders can start with selecting a broker, there are some key points that need to be considered in choosing the right broker namely: Traders need to know their needs whether it is educational sources, as a beginner, trading tools, research sources and tools, and more. It is also imperative to understand what trading goals and objectives the trader has.
Narrowing down the field — as soon as the trader knows what they need, they can look at brokers to identify which ones will more sufficiently meet those needs. Both these ways in which Bitcoin can be traded have distinct differences such as: Bitcoin currency pairs are traded in the same way as conventional Forex pairs. Should the trader buy a Bitcoin currency pair, they are speculating that Bitcoin will strengthen against the quite currency. When dealing with Bitcoin CFDs, traders can profit from the change of price in Bitcoin without owning the asset.