In India, there are over 10 crore Bitcoin owners, according to a recent news piece. This holiday season, the number is almost certainly going to rise.
The trading of cryptocurrencies is nevertheless fraught with risks, much like the trading of equities and commodities. If they want to profit from cryptocurrency trading in the long run, market experts must develop strategies that may make trading thrilling and secure at the same time.
Let’s start by going over a few strategies that can provide you with positive results.
Trading days
Taking positions and selling them on the same day is part of this trading approach. When engaging in such a transaction, a trader’s goal is to book profits during intraday price fluctuations in the cryptocurrency of his choice. Technical indicators are widely used by investors to decide when to start and quit a trade for a certain cryptocurrency.
Using a range
Market participants often look to seasoned professionals for support and resistance levels daily. Since “resistance” refers to the maximum that the price may rise, a resistance level is a price that is higher than the current price. ‘Support’ on the other hand is a level below which a cryptocurrency price is not supposed to fall; as a result, a support level is always lower than the present price.
Scalping
In this trading strategy, increased trading volume is employed to increase earnings. Although there is a risk, a shrewd trader follows the margin requirement and other important rules to avoid undesirable trading outcomes. Before deciding on an entry and exit point within a day, scalpers look at the cryptocurrency asset, historical trends, and volume.
Trading at a high frequency (HFT)
HFT is a form of an algorithmic trading strategy used by quant traders. This involves developing trading algorithms and bots that enable quick entry into and exit from a Bitcoin asset. Such bots need a strong basis in mathematics and computer science, as well as the creation of complex market concepts. Therefore, seasoned traders would gain more from it than the beginning ones.
Arbitrage
Arbitrage trading entails purchasing bitcoin on one exchange and selling it on another. The distinction between the buy and sell prices is known as a spread. Trading volume and liquidity variations offer the potential for profit for investors. You must open accounts on exchanges where there is a sizable price spread for the cryptocurrency you are trading if you want to take advantage of this opportunity.
Betting on the Volatility of Bitcoin
It is common knowledge that cryptocurrencies are among the most volatile asset classes traded. Bitcoin’s price recently fluctuated by about 30% in a single session. You may bet on volatility by trading Bitcoin futures. Buying a call and a put option at the same time is the best line of action. The strike price and expiration date must also be the same. You must sell the call and put in an option at the same moment to exit when cryptocurrency values fall or rise sharply.
FAQS:
What are smart trading techniques?
Multiple technical indicators and more complex products, like options and futures, are typically used in advanced trading methods.
