The financial markets are really unstable. This also applies to bitcoin trading as it is no different. If just a few years ago, to earn good money, it was enough to purchase a token or coin, now the trader must take a comprehensive approach. First, he needs to have more than one strategy in his arsenal, be able to analyze the market, predict the “behavior” of the cryptocurrency, and conduct analytics. Secondly, the user must use the maximum opportunities that open up. About what trading tools exist, how to successfully trade cryptocurrency and what strategies for trading are the most popular. Additional details by clicking here.
Top 5 Rules for Successful Bitcoin Trading
As practice shows, cryptocurrencies are super volatile. As an example, we can take at least the beginning of 2020, when the price of Bitcoin paired with Teaser first increased by $ 3,000. Then suddenly fell several times, recovering again a couple of weeks later. Many believe that volatility is an opportunity for huge earnings because you can raise your capital in a few days. However, the advantages of the so-called “roller coaster” of cryptocurrencies cannot be used correctly by everyone. First, you need to be a professional, be able to predict outcomes and think a few steps ahead. Secondly, you need to be psychologically prepared for such sharp price changes.
In this regard, we have five rules that need to be taken into account when choosing a strategy and direction in the process of trading:
- It is recommended to opt for pairs with the dollar since any goods presented on the world market are valued in conventional units;
- It is better not to use leverage. This is a very risky business, as volatility can be so high that the trader will not have enough experience to properly use this opportunity. All this can not only lead to the loss of all user funds but also drive him into a debt pit;
- You can’t be guided by the fact that something is very expensive or cheap. For example, the prohibitive value of tokens and coins may not change much longer than your account allows.
- Bitcoin is a globally recognized and sustainable investment asset, which cannot be said about altcoins. They are very unstable, so they can be subject to sharp volatility or a complete drop in price.
- It is recommended to use Stop-Loss to ensure your capital and reduce the risk of losing funds.
What are the indicators used for bitcoin trading?
Indicators act as signals for opening positions. With their help, traders easily identify the zones of resistance and support, as well as oversold and overbought markets. For example, the RSI indicates oversold and overbought. An equally informative signal for the sale is the moving average.
Dominance Chart: Features of Use
To determine the so-called “altcoin seasons”, it is necessary to use a dominance graph. If it grows, this indicates the growing popularity of bitcoin and the fact that it is impractical to acquire altcoins. For example, when dominance falls, it is worth paying attention to, for example, EOS, LTC, BCH, etc.
Investment strategy
Investments in cryptocurrency are gaining more and more popularity. However, to have success in this business, you must follow a few rules:
- Do not invest too much money (the cryptocurrency is unstable enough, so even the same bitcoin can crash in just a few weeks);
- It is not necessary to form a portfolio only of cryptocurrencies (they should be about 65%, among other assets, there should be bonds, stocks, etc.).
Arbitrage Strategies
They are divided into the following types: intra-exchange, inter-exchange arbitrage, and futures-spot. Given that prices on different exchanges may differ, an arbitrage trader must register on several sites simultaneously. Thanks to this, you will be able to buy assets at a lower price on one exchange and sell more expensive ones on another.
Conclusion
Despite so many trading strategies, there are no perfect and universal ones. Finding the right platform is crucial to the success of the investment and getting good results, which is what we expect when investing. Try to assess the situation in the financial market, conduct technical analysis, improve skills, and expand knowledge before investing. In addition to bitcoin trading, you can also trade with Ethereum at the ethereum-trader. app.