Trading Bitcoin Strategies That You Should Know

Bitcoin, unlike traditional currencies, is not issued by nor substantiated by any authorities. Consequently, bitcoin does not apply traditional currency value indicators such as inflation rates, monetary policy, and economic growth. The algorithms make new bitcoin available and distribute it to pc users who solve predefined mathematical challenges in a process called mining. A hash is a 64-digit hexadecimal number less than or equivalent to the aim hash.

How to Start Trading Bitcoin

To set up an account with a cryptocurrency exchange like CoinField, you just need an email and a strong password. Most authentic exchanges require you to follow some KYC and AML norms. This means that they take your security seriously. The KYC process is simple and fast. You just need to take a selfie and update your latest identity document, and some traders might have to upload the proof of address. Here is a simple breakdown of the process for CoinField. 

Once you’ve registered with the exchange and completed the KYC process, you can fund your account. Most exchanges allow users to deposit fiat and crypto via several methods.

Trading Bitcoin on the Exchange

Once you have funded your account, you can begin by buying bitcoin or trading bitcoin against another crypto. You will also notice that there are many currency pairs available. For example, CoinField allows you to trade bitcoin against other currencies, including EUR, USD, CAD, GBP, JPY, USDC, USDT, and XRP.

Most cryptocurrency exchanges also provide a soft wallet inside the exchange where your crypto balance is reflected. There are two kinds of cryptocurrency wallets: software wallets and hardware wallets. Both are secure, but hardware wallets offer the most security because they store your cryptocurrency on a hardware device that is not connected to the web. You can use your cryptocurrency wallet address for transactions if you don’t choose to store your bitcoin on a hardware wallet.

Trading Bitcoin With Active Trading Strategies 

To profit from price changes on a short-term stock chart, active trading involves buying and selling cryptocurrencies based on short-term fluctuations. The long-term buy-and-hold approach investors use differs from the mindset associated with an active trading strategy. If you are a beginner to crypto and looking to enter the market, these most popular active trading strategies can be implemented.

 Active trading strategies

Day Trading

The activity of purchasing and selling crypto or stocks in a brief period, typically one day, is known as day trading. The objective is to make a low return on every trade and build profits over time. Day trading is one of the few strategies known to create a healthy earning flow, depending less on the long-term performances of currencies and more on the volatility of the cryptocurrency. 

Day trading is an active trading strategy since it involves entering and exiting positions within the same day. It is also called intraday trading for the same reason. A day trader must understand the market well and have some trading experience to make timely decisions. 

Day Trading

Advantages of Day Trading 

It is simple to get started. One of the most inherent benefits of day trading is that starting is straightforward. Using an exchange like CoinField, you can efficiently day trade because it allows you to monitor crypto prices closely via an intuitive dashboard and make a trade in real-time. 

Traders have control over their fate. Since you set your own profit goals, it is easier to know the risks and the rewards. There is a lot of control over the capital. The other side of the coin is that you will have to remain informed about the market’s situation by the minute. 

The market is open 24/7 and truly global. The most significant advantage of day trading bitcoin or any other crypto is that the market is open round the clock daily. Usually, crypto exchanges where you will be trading bitcoin are available worldwide. For example, CoinField lets you trade in over 183 countries worldwide. This means you can trade anytime and anywhere since the crypto world never sleeps and never stops.

Position Trading

Some people genuinely view position trading as a buy-and-hold tactic rather than an active trading technique, and skilled trades with Technical analysis knowledge usually carry it out; position trading can be a type of active trading.

Longer-term charts, ranging from daily to monthly, are used in position trading and other techniques to identify the trend of the current market direction. Depending on the trend, this type of trade may extend for a few days to a few weeks or even longer.

To identify the trend of an asset, traders search for a series of highs or lower patterns and then attempt to profit from both market ups and downs by joining and riding the “wave”. Trend traders do not try to predict price levels; instead, they seek to identify the market’s direction. Trend traders typically enter a trend after it has already taken hold, and they usually depart the trend when it turns against them. This implies that trend trading is more challenging at times of high market volatility, and its positions are typically more minor. 

You can use position trading to trade your bitcoin because it is less stressful than other active trading strategies but requires a solid technical analysis background.

Swing Trading

Swing traders usually jump into action when a trend breaks. Price volatility often occurs when a trend ends as a new trend attempts to take hold. When price volatility begins, swing traders may buy or sell. Typically, swing trades are kept for a shorter period of time but longer than a day. Technical or fundamental analysis is frequently used by swing traders to develop a set of trading rules.

Specific trading rules or algorithms are used to decide when to purchase and sell a security. While a swing-trading algorithm does not need to be precise and foresee the peak or valley of a price move, it does require a market that goes in one direction or the other.

Experienced traders use this strategy because it requires less time and attention when compared to day trading and offers a higher potential return per trade. Still, at the same time, it also has a higher potential for more significant losses per trade.

Scalping Trading

One of the fastest tactics used by active traders is scalping trading. You can use this strategy when entering or exiting Bitcoin trading. It involves spotting and taking advantage of bid-ask spreads that are a bit bigger or narrower than usual due to imbalances in supply and demand.

A scalper won’t try to take advantage of significant moves or engage in heavy volume trading. Instead, they aim to profit from frequent, tiny movements with controlled transaction quantities.

Scalpers seek markets with high levels of liquidity to increase the frequency of their trades because the average profit per trade is low, which is in contrast to swing traders. Scalpers choose calm markets that don’t frequently experience sharp price changes that can still turn a profit despite slight price changes. The little profit per trade often requires a significant upfront investment to get even moderate gains and is one of the most time-consuming methods.

How Do You Analyse the Bitcoin Market Before Trading?

One of the most important things to note before trading bitcoin is that it is volatile in nature, which means that the asset’s value fluctuates more often than traditional stocks. This is important because it is a factor that can help you assess where its price just might end up in a given time frame. When you begin to analyse the bitcoin trading charts, you will know that a much deeper market understanding is required to make any price assessment using Sentimental, Fundamental, and Technical analysis.

Sentiment Analysis (SA): You can take positions in a market that is being led by bulls or bears using sentiment analysis (SA), and in a bull market, you can purchase high and sell higher, while in a bear market, you will need to buy low and sell higher. This method of sentiment trading is known as momentum-based. Furthermore, sentiment analysis needs to be combined with other forms of research because you need to gather as much knowledge of the market situation and events or news related to crypto as possible before trading.

Fundamental Analysis (FA): Crypto investors who wish to justify the performance of each coin and how external variables like new advancements and the number of coins in the market can affect a coin’s performance will use fundamental analysis (FA) to concentrate on the coin’s quantitative and qualitative qualities. For instance, only 21 million Bitcoin exist and are now accepted as payment by international retailers. It would imply that Bitcoin’s value will rise in the future due to its constrained supply and increasing demand.

Technical Analysis (TA): This analysis method will assist traders in comprehending market forecasts and market behaviour based on price and volume data. Astute cryptocurrency investors use this method to analyse historical price movements and forecast prospective future prices. Users can determine trends and potential new market chances to buy or sell using cryptocurrency volume and price fluctuations. To get in-depth with the technical analysis, we will introduce you to the tools to use to identify the chart trends that are a part of the technical analysis.

Technical Analysis Indicators

The Index of Relative Strength (RSI) is known as a momentum indicator. To determine the acceleration and change of price movements, it compares the magnitude of recent surges to recent downswings. It ranges from 1 to 100. The consensus is that the RSI should be less than 30 when buying and greater than 70 when selling.

Moving Average Weighted (MAW) is often used to evaluate the general trend felt all across the market. This is accomplished by analyzing market volatility in the presence of the short, medium, and lengthy moving averages. The moving average is obtained by simply averaging the data points over a specific timeframe.

Candlestick Chart Patterns were developed in Japan over a century, well before bar and point-and-figure infographics were designed in the West. A Japanese man named Homma observed in the 1700s that, although there was a connection between price and the supply-demand of rice, the industries were heavily influenced by traders’ feelings.

Candlestick reading is actually rather simple. Each candle’s height is defined by its opening and closing prices for the time period, which is typically 15 minutes, 30 minutes, one hour, four hours, one day, one week, and one month. Each candle’s wick or tail line above and below the box shows its peak and lowest prices but not its closing price. Simply said, this is the highest position that the candle has ever reached. The price closed lower if the body is solid, black, or red. In other words, if the candlestick shows in hollow, white or green, it indicates that the price closed higher than it did at the beginning of the candle. Traders commonly use the candlestick chart to follow every movement of bitcoin by the second.

Why Should You Consider Trading Bitcoin?

Bitcoin, abbreviated BTC, is the world’s first cryptocurrency and offers a variety of advantages. It is limited to 21 million coins and is trusted to be inflation-proof. In addition, Bitcoin is the most widely used coin for crypto-backed payments and the most commonly adopted by merchants worldwide.

Bitcoin users have full control. Bitcoin guarantees client self-governance because its price is unrelated to particular government policies. This means that cryptocurrency users and owners have complete control over their funds.

Multinational Bitcoin transactions are cheaper. Service charges and trading costs are typically associated with conventional wire transfers and international payments. Because bitcoin transactions do not involve any middlemen, institutions or governments, the transaction costs are generally lower than those for bank transfers. Furthermore, bitcoin transfers are quick, eradicating the troubles of traditional approval prerequisites and wait times.

Everyone can access Bitcoin. Since users can send and receive bitcoins using a laptop or smartphone, bitcoin is conceivably accessible to populations of users who do not have access to conventional financial systems, bank cards, or other payment options.

Start Trading Bitcoin With CoinField

Whether you choose to HODL or trade, bitcoin could be a pretty future-proof asset to consider. Start trading bitcoin is easy, and open an account with CoinField, deposit fiat and click buy Bitcoin. You can access the CoinField trading terminal 24/7 and trade bitcoin with lower fees when you hold CFC in your account!


Please note that this is not trading advice. We recommend you to carry out your own research before making any trading decisions. This article is for informational purposes only.

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