The cryptocurrency trading world is not only inviting and lucrative but also intimidating. The volatility and understanding required to champion the market with winning strategic trading moves can test one’s nerves. However, many people draw a definite similarity between stock market trading and cryptocurrency trading, both of which require essential strategies of trading, market knowledge, and analytical skills to pocket profits. Trading requires an essential understanding of market movement, according to which a trader can effectively make use of different trading strategies like day trading, scalping, range trading, etc. If you are new to Bitcoin or crypto trading, read more to know about some of the most effective trading strategies which can be helpful to you as well. Read on to know more in detail to have an overall the digital yuan!
How to Day Trade Bitcoin
Bitcoin traders either follow a long-term holding policy or find Bitcoin essentially lucrative for day trading.
- Since cryptocurrency is volatile day trading minimizes the risk
- Bitcoin trading can be done 24 * 7.
- Among all cryptocurrencies, Bitcoin has the most liquidity rate
- Bitcoin allows considerably low overhead for big trades.
Due to the high volatility of Bitcoin in comparison to other tradable assets, there is potential for multiple trades to be made within a single day. Technical indicators have been developed to help predict likely price increases, taking into account various factors such as volume, oscillators, relative strength, moving averages, and more. By using these technical indicators, Bitcoin day trading can become more manageable and potentially more profitable.
The basic concept of day trading strategy is that you take Bitcoin acquiring and exiting on the same day. The aim is simply to block profits from intraday price movements of Bitcoin or any other cryptocurrency. Whether you rely on technical indicators or your analytical skills, day trading is a popular trading strategy in cryptocurrency trading.
Range trading refers to a trading technique where you refer to a particular resistance range until which you hold onto your holdings through a day to sell it off. Many traders go with the opinion of experienced analysts, who foretell market movement and advice on resistance and support levels for each day. Basically, in day trading, ‘resistance’ refers to the ultimate level up to which the cryptocurrency price may rise and therefore a resistance level means to be a price that will always be higher than the current price. Contrary to this concept, ‘Support’ is the minimal level below which the price of crypto is not supposed to drop.
Scalping is comparatively riskier concerning range trading since in this pattern increased trading volumes are blocked to book profit. However, if you are a skilled trader, you would know the way to hold on to your required profit margin, thereby minimizing the risk factor. To be a crafty scalper one needs to develop analytical skills with which one needs to essentially monitor volumes, the crypto asset, carefully pick entry and exit points, past trends, etc. within a day.
High-Frequency Trading (HFT)
High-frequency trading (HFT), as the name implies, is a complex trading strategy that relies on algorithmic analysis, and is primarily used by quant traders. In order to identify the best entry and exit points for a given crypto asset, trading bots are often utilized in conjunction with sophisticated algorithms. This approach to trading is typically utilized by experienced and advanced traders, rather than beginners.
Invest Small Amount
It is indeed an important point to discuss that when you are planning to even day trade, investing a huge amount may not be worth it. In case the market falls and the crypto asset you have invested in also drops in value, your loss amount will increase. However, if you decide on a limit of investment and consider taking any day trading pattern it can help you to play without FOMO.
Finally, when you are into cryptocurrency trading one of the greatest barriers as well as support seems to be the media and news. While many times, effective news, like Microsoft’s investment in Bitcoin, or Tesla taking up Bitcoin as payment make a huge impact on market movement, many false claims and news on social media lead new investors to a pit hole. It is indeed important, therefore, to diversify your investment portfolio beyond cryptocurrency as well, and Yuan being a prospective investment nowadays, you can check out Yuan Pay Groupfor more information about investment in Yuan, its prospects, and risks.