Bitcoin trading refers to the speculation of a crypto currency’s price movements. Traditionally, this involved just the buying of Bitcoin through the exchange and expecting its price to rise with time; the traders in the cryptocurrency have been increasingly involved in speculating it using derivatives on the rise and fall in the prices to make the most profits out of the volatility of the bitcoin. In order to make money in most efficient way, learn from Oil trading software
With IG, a position can be taken on a bitcoin price using financial derivatives. This product advantage can be taken using the price movements in both directions without the constraint of taking ownership of the bitcoin.
Analyzing the movement of Bitcoin prices
To take advantage of a heaving opportunity, you must understand the factors that impact the price of a Bitcoin:
Supply of Bitcoin: There is a current supply capped at a maximum of 21 million, and it’s expected to be exhausted by 2140. Having a preset supply implies that if the demand rises, there would be an increase in Bitcoin price.
Bad news in the press: Whenever there is breaking news in the market that concerns the security, longevity, and value of a bitcoin, there will be a negative effect of the same the overall market price.
Combination: The integration of bitcoins into banking frameworks and the latest payment system define their public profile. The demand for bitcoin rises when the integration gets effectively carried out, which leads to a positive impact on bitcoin price.
Key Events: Changes in regulations, breaches in security, and the announcements of macroeconomic bitcoin affect the prices of bitcoin. An agreement on how the network can speed up between users would also lead to a rise in the bitcoin price by pushing it up.
Strategy and Style of picking a bitcoin
Mechanism of Day Trade Bitcoin
Day trading bitcoin refers to the opening and close of a position in a single trading day to avoid any overnight exposure of the bitcoin market, i.e., avoiding the charges of overnight funding of the position held. This strategy is used to generate profits from the movements in the short-term price of bitcoins, which also enables you to make the most out of the daily volatility in the price of bitcoin.
Trend Trading of Bitcoin
Trend Trading means taking a position that is matching the current market trend. For example, you’d be going long when the market has a bullish trend and going short when the market has a bearish trend.
Bitcoin Hedging Strategy
Hedging bitcoin refers to the mitigation of any risk exposure done by taking a position opposite to the open position you already have. This is done when you are concerned that the market might move against you.
HODL Bitcoin Strategy
This strategy involves buying and then holding a bitcoin. The name of the strategy derived on a cryptocurrency forum from the misspelling of the word ‘hold.’ You should buy and hold onto a bitcoin-only if you get a positive outlook for its price in the long-term. You could also set up stop losses so as to automatically close the position held by you.
Different ways of getting bitcoin exposure
Trading in bitcoin derivatives
Trading bitcoin derivatives means speculating the price of bitcoin with CFDs instead of owning it outright.
Buying through an exchange
Buying the bitcoin through an exchange is for the users who use the buy and hold strategy of bitcoin because buying through the exchange provides the possession of the bitcoin.
Crypto 10 Index
Crypto 10 Index provides exposure to trade in 10 major cryptocurrencies, including bitcoin, through a single trade.
Decide whether you take a long or short position.
While trading in financial derivatives, go long if you expect a rise in bitcoin’s price and go short if you expect a fall in the price.
Set Limits and Stops
Monitor the trade activities
Keep monitoring the market to check whether it is moving as per your anticipation and how you want to trade in it, i.e., you buy if you think that the price is going to increase and sell if you think that the price will fall.
Close the position to bring in profit or trim down the loss.