Newcomers may find it challenging to choose the right Bitcoin trading strategy as there are quite a few effective strategies out there. Whether its day trading, swing trading, hedging, holding, or scalping, you will find it hard to make a choice; you need to see which works for you. The end goal for every Bitcoin trader is to make profits and given Bitcoin’s spectacular rise in recent months; investors are not willing to wait any longer.
What Are Some Easy Steps To Profit In Bitcoin Trading?
To start trading Bitcoins, you need a wallet for transacting. It is advisable to choose a wallet and a cryptoexchange for trading with caution. You must also understand that your money is at risk when you trade any crypto, Bitcoin or otherwise. So, it may be a good idea to engage in demo trading for a while to assess the risks. Besides, before buying Bitcoins, you need to have a proper trading plan in place. The market is volatile and you must perform technical analysis to make good trades.
- OBV: On Balance Volume indicator is one of the best for Bitcoin day traders. It evaluates the total money coming in and out of the market and makes use of a combination of price activity and volume. You will identify this indicator on many trading platforms. When BTC is trading up and OBV is trading down simultaneously, it means traders are selling. The reverse is also true. The OBV has to move in the same path as the price for traders to profit.
- Overlay Bitcoin chart with OBV indicator and Ethereum chart: You need to search for what is called smart money divergence between Ethereum and Bitcoin prices. This happens when a crypto fails to confirm actions of another crypto. So, if Ethereum’s price breaks a resistance but Bitcoin fails there is smart money divergence. It also means that any of these two cryptos is “lying”. The concept of smart money divergence works because, ideally, the entire crypto market must move in one direction if there is trend.
- Wait for OVB to go up in the trend’s direction: When the Bitcoin’s value is lagging compared to the Ethereum; it indicates that very soon the Bitcoin will follow Ethereum to break the resistance.
- Place buy limit orders: You must fix this at resistance levels to catch a prospective breakout. When the OVB indicators give you a go-ahead signal, you must place buy limit orders. You will then need to establish a protective stop loss and take profit to achieve the best trading strategy.
- Place stop loss below breakout candle: This is one of the easiest steps in Bitcoin trading. The rules for buy trade and sell trades will be opposite to one another.
Bitcoin day trading entails risks but these can be minimized. The easiest way is to diversify your trades by allocating funds to different coins besides the BTC. You can open many trading positions every day which will impact your daily returns on investment. Remember to select a credible cryptoexchange which charges reasonable fees. You need to plan out trade times that suit your schedule and flow crypto stories to stay ahead.