If you are planning to dive deeper into Bitcoin trading, at first, you need to be well aware of effective trading strategies. Purchasing Bitcoins and dealing with them through any exchange, platform requires you to have a basic overall understanding. The cryptocurrency traders mostly use derivatives for speculation on the fluctuation of prices. These are done because of booking profit in the volatility of Bitcoin prices.
With the immediate connect official site, users can easily speculate on the price movements on the cryptocurrency with the derivatives such as CFDs. Products enable the users to take advantage of the price movement without owning the underlying coins. It means that the users will not need to take any responsibility for the security of the bitcoin tokens.
Factors That Fluctuates The Price Of Bitcoin
Below mentioned are some important factors that determine the price fluctuation of bitcoin or other cryptocurrencies. Read on to know more.
- Bitcoin supply: – Current supply of Bitcoin is staying still at 21 million, and it is highly expected to get exhausted by 2140. Finite supply means that a Bitcoin price might increase if the demand rise in upcoming years.
- Bad press: – Any breaking news that concerns the security of Bitcoin, the longevity and value will also hurt the overall market price of the coin.
- Integration: – The public profile of Bitcoin depends on the integration in new banking frameworks or payment systems. If it is carried out successfully, then the demand can rise. It will also have a positive effect on the price of Bitcoin.
- Key events: – Macroeconomic announcements, security breaches and regulation changes might affect the price of Bitcoin. Any agreement between the users on how to speed the network upwards might see the confidence in the rise of Bitcoin. It might push the price upwards.
Pick The Trading Strategy And Style.
- Day Trade
In the day trading strategy, the traders get the option to sell their purchased bitcoin or other cryptocurrencies at any point of time in the day. In simple words, this means that the traders canopen and close the position in one trading day. You will not have any market exposure to Bitcoin overnight. It means that you will have to avoid the overnight funding charges on the position. The strategy seems comparatively safer that other trading strategies. Ifyou are looking for a profit from short term price movements, then this strategy can help you make the most profits because of volatility in the price of Bitcoin.
- Trend Trade
So, what is trend trading? Such trading process signifies the current market trends. For instance, if the market is bullish, the traders are advised to keeptheir shares on hold to profit more in the future. Alternatively, if the market trend is bearish, then traders are advised to sell their shares faster. If the movement starts to reverse or slow, you will have to think about closing the position or opening a new one to match a new trend.
- Hedging Strategy
Next comes the hedging strategy where traders mitigate the risk by taking the opposing position.You will do this if you are concerned about moving the market against you. For instance:- if you have owned a few Bitcoin but is worried about short term drop in value, you can open a temporary position on the bitcoins. If the market price falls, then the gains on the short part will offset all or some of the losses on coins you have purchased.
- HODL Strategy
Next comes the most popular HODL strategy thatinvolves the holding and purchasing of bitcoins. In the HODL strategy, if the trading plan and research indicate that you must sell the positions for taking a limit loss or profit, then you must or else you can set the stop losses for closing the functions automatically.
Conclusion
At the end of the day, trading on the Bitcoin market is quite risky because of its volatile nature. Considering all the points mentioned above, you must have full knowledge about trading and other related important factors. Having a little bit of experience in trading will give you plus points to book more profits in your portfolio. You can consult any professional for getting an idea of trading.