As a beginner in Bitcoin trading you will need all the help you can get from experts and fellow traders. Bitcoin trading may be profitable but like any investment option, it is laden with risks, especially because the crypto market is known for being ruthlessly volatile. Here are some of the tried-and-tested strategies that newcomers can experiment with when they are trying to get their feet wet in Bitcoin trading:
- HODLing: This is perhaps the safest Bitcoin trading strategy for newcomers. It indicates buying Bitcoins and holding onto these for a long time in the hope that their values will go up. While this may be true, Bitcoin is also known for its volatility and this means you could end up incurring losses as well. So, implement this strategy with a proper risk-management plan.
- Day Trading: This is just the reverse of hodling where you can open and close trade positions within a single trade day. So, you make small investments to take advantage of minor price changes during a day. The risks are greater compared to hodling but you can start off small. You must remember to use only the amount of money you can afford to lose and implement proper stop-loss orders to avoid crashes. When you employ trading bots like immediate edge the trading can go on 24/7 without any manual intervention.
- Hedging: This is for those who own Bitcoins and want to hedge their risks. So, they open trades to lower the risks to their existing positions. You start to short-sell the Bitcoin hoping that prices will fall. When it does, you buy back the coins and profit from this difference in prices. Most traders opt for hedging using CFDs because in this case, they need not own the asset at all.
- Trend trading: This is when you are in a market that is characterized by consistent rises and dips. It works for different timeframes because as a trader, you will hold onto a position as long as you think that trend will continue. The trend could be for days or even months; you can use technical analysis for predicting which way the market is headed. So, trend trading is when you open a trade believing that the current prices will escalate.
- Scalping: This is a fast-paced trading strategy that can assure you of quick returns. But it involves greater risks and delivers the best results when you choose high volume coins. Using this you can capitalize on the micro price fluctuations that a coin undergoes across brief timeframes. Scalping may be exciting for a newbie but you need to implement strict stop-loss measures. Indicators like Bollinger Bands and Volatility Index can help you choose trades.
- Swing Trading: This is similar to day trading but happens across larger time-periods. The idea is to make bigger gains over longer time-periods; so, it is great for beginners. You simply have to focus on daily/weekly charts and use technical and fundamental analysis to see whether a coin will experience a major swing in prices.
- Bitcoin breakout strategy: Breakout means entering the crypto market as fast as you can during a trend so that you are all set for price “breakout”. The belief is that when the market breaks out through a resistance or support level, it will trigger huge volatility.
- RSI Trading Strategy: This is a popular beginner strategy that when used properly in the right time can yield good outcomes. RSI is an indicator measuring change and speeds of recent price movements to see when a market if overbought or oversold.