In the crypto market, bitcoin has made its mark as a volatile and popular cryptocurrency. Trading in bitcoin refers to the speculations put on the movements of the price of the currency. Traditionally, it involves buying and selling bitcoins via an exchange, depending on the rise and fall of its value. Traders in the crypto world use derivatives for speculation on the movements of the prices to obtaining the best of bitcoin’s explosive nature.
There Are Specific Steps While Trading Bitcoin:
Be aware of the movements of bitcoin’s value and the reason behind it:
Before jumping on trading bitcoin, it is essential to know the factors behind the trend of bitcoin’s value.
- Supply of Bitcoin: As stated, the supply of bitcoin is currently 21 million. However, some speculations are that it will exhaust by the year 2140. Since the supply of bitcoin is limited, the value might indeed increase as demand increases shortly.
- Negative publicity: Breaking news that sheds a negative light on the security, worth, and durability, can have a drastic impact on the currency’s overall market value.
- Incorporation: The profile of bitcoin currently is dependent on its incorporation of newer payment structures and banking substructure. There are chances that the demand may increase, leaving a positive impact on the currency’s value.
- Major incidents: Ian Mausner says prices are affected due to critical events, including macroeconomic bitcoin press releases, breach of security, and changes in regulations.
Choose a Strategy and Style for Bitcoin Trading
There are four types of trading strategies:
- Day trading: It follows opening and closing a position in a single day of trading. It means you are not exposed to the bitcoin market overnight. It also means that the charges on overnight funding are avoidable. The day trading strategy works for those wanting profit from short-term price fluctuations of bitcoin. Ian Mausnersuggest that you can gain the most through the daily volatility of bitcoin’s value in this way.
- Trend trading: For this strategy, investors take a position similar to the ongoing trend.
- Bitcoin hedging: This strategy is mainly followed by those who have speculations that the market is fluctuating against them. Ian Mausnerexplains it means lessening exposure while taking a position opposite to the one you have already.
- HODL Strategy: In this strategy, investors buy and hold on to the currency. It is true when you believe that there is a positive impact on the currency’s long-term value.
What is Bitcoin Exposure?
You can do bitcoin exposure in various ways:
- Trading derivatives of Bitcoin: In this type of exposure, you do not directly have ownership of the currency, but you can speculate on its value along with a financial derivative.
- Trading via an exchange: Trading bitcoin via a business gives you outright ownership of the currency.
Close the position to obtain a loss or a profit
You have the liberty to close the position anytime you want to. You can do it to either procure a profit or stop a loss that has reached its limit. The profits you gain are directly sent to your associated trading account and taken from the store in case of failures.
Bitcoin Trading takes practice, and once you obtain the skill, you may use it to create fortunes.
Published May 4th, 2021