Bitcoin trading is very profitable for everyone willing to invest both their time and money. the market has a lot of spreads that have made it highly disintegrated. Arbitrage and margin trading makes it possible for the masses to make money by trading bitcoin or other cryptocurrencies.
Like every phase of life, it is very important to have a plan made up before starting to trade bitcoins.
The most crucial advantage of Bitcoin trading is that you can trade it without ever actually having to use them. This is known as CFD that was created to trade Bitcoin without having to physically own it Also CFDs are also beneficial for those who have started Bitcoin trading for the first time.
Top Bitcoin Trading Strategies
In this article, we will discuss some of the techniques of trading bitcoin, including how to short bitcoin in case you analyze that it may crash at any point in time.
Strategies to trade Bitcoin
For instance in the figure above we can notice that Bitcoin’s price is unable to break the resistance, while Ethereum’s price was able to do the same and reached a new high. This notifies that the best Bitcoin trading mechanism is about to show a trade.
The reason why smart money divergence does well because the cryptocurrency market as a whole should move in the same way when in a trend. This is similarly true for any other assets apart from cryptocurrencies.
To understand this, we use the help of the OBV indicator, which is explained above. This can give us an idea of whether real money is purchasing or selling Bitcoin. You must keep an eye on when Bitcoin can cross the resistance level and Ethereum is already broke. Ethereneum must get done to the level at which, Bitcoin was trading before at the same resistance level.
Ways to Short Bitcoin
- Futures Market – Similar to any other asset, bitcoin too has a futures market. The security is sold here under a contract to a prospective buyer that mentions clearly when and at what price, the security has been sold. This contract guarantees that you will get a good price in security if you are willing to wait to see the changes in its price shortly. Sell a futures contract only when you predict that the price of bitcoin will decrease in price.
- Binary Options Trading – Call and put option is also a way to short bitcoin Implement a put order to short the currency. In this manner, you must be able to sell the currency at today’s price. even if there are chances of the price to drop on later. Binary options are available in many offshore exchanges but again the probabilities of price rise and risks are high.
- Short Selling Bitcoin Assets – Investors who are willing to buy and sell actual bitcoin can short sell the currency directly. Sell them at a price you want to sell, wait until the price drop and eventually buy back the tokens again. If the price does not drop or rise as you may have expected, you are likely to either lose money or bitcoin assets in the process.
One day, fiat currencies will be taken over by cryptocurrencies as the world is rapidly advancing towards the age of digitalization and automation in the 21st century. It may be possible that shortly we would purchase everything using cryptocurrencies such as Ethereum and Bitcoin. Hence it is highly recommended when we have both the fiat currencies and cryptocurrencies side by side, we do learn how to trade them for one another that may work out well when we are supposed to replace the fiat currency with the former one once and for all.
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