The burgeoning cryptocurrency market is filled with investors and enthusiasts, each with their own way of making money. The volatility and excitement gives way to plenty of trading strategies in order to attain maximum returns.
When trading cryptocurrency such as Bitcoin, there are several tried-and-true methods. Here are 3 of them.
Swing Trading
The concept of swing trading is simple- buy when the cryptocurrency is low and sell when it’s high. It’s the same strategy used in stock trading as well as in the Forex market.
Swing trading is actually a good strategy to employ in a highly volatile market like cryptocurrency. Unlike stocks that are not likely to change in value everyday, Bitcoin and its ilk are prone to ‘swings’ from low to high. This can be a good thing especially if you want to see progress and profits on a daily basis.
Timing is everything in this method. You will need to predict when the cryptocurrency will rise to your preferred value. Furthermore, you will have to be ready to make the trade when this happens.
Swing trading gets a whole lot easier when you use Bitcoin Banker software to trade Bitcoin online. You can employ techniques that are not possible without it.
Fundamental Analysis
Fundamental analysis is one of the oldest strategies in the trading book. This method applies to almost all investments, such as stocks, bonds and yes, even cryptocurrency. The key is to check the indicators to see if a cryptocurrency is overvalued or undervalued.
Beginners will have trouble understanding the basics at first, but with retention and practice they’ll soon get the hang of it. Furthermore, FA doesn’t rely on quick decisions, e.g., day trading, but more like identifying and holding on to a digital asset for a long time.
Traders will check a particular cryptocurrency and ask, ‘will this crypto be popular and soar in value next year or so?’ If the answer is yes then they would buy a considerable amount and wait for it to come true. It’s not just guesswork- some of the factors to consider include news, current events, the crypto coin’s function and the team that created it.
Arbitrage
Arbitrage is somewhat similar to swing trading in that they maximize the movement of the cryptocurrency. In a short span of time, usually within a day, the trader will complete actions in order to make a profit.
This trading method is not limited to a single crypto exchange platform. Typically, a trader looks for Bitcoin prices that are priced low, buy there and look for a platform that buys it at a higher price. You make a profit when you buy an item for $50 and sell it for $100, as an example.
Arbitrage requires a bit of planning and execution at the same time. You will have to know where to buy cryptocurrencies at a low price and where to sell them for more than what you bought it with. Waiting a day to sell the assets may spell failure since crypto markets are very volatile.
