There is no doubt that bitcoin trading has become prevalent in the last couple of years and will likely continue this way in the future. Read on to find out more about the different important factors that impact the price of bitcoin and the common trading tactics for Bitcoin that are popular these days.
What Moves Price of Bitcoin
- Supply of Bitcoin: The current supply of Bitcoin is capped at 21 million, which will probably exhaust by 2140. A limited supply means that the bitcoin price can increase if the demand goes up in the coming years
- Poor press: Any breaking news that is regarding the security of Bitcoin, longevity, and value will have a negative impact on the overall market price of the cryptocurrency
- Key events: Changes in regulation, macroeconomic bitcoin announcements, and security breaches can all impact prices. Any agreement made between users on how to speed up the network can also see confidence in rise of bitcoin – boosting up the price.
Common Trading Tactics for Bitcoin
These are 4 of the most common trading tactics for Bitcoin that you should know of. All of these trading styles are very common and are being used by crypto traders around the world.
Day Trading Bitcoin
Any expert trader will tell you that this one is one of the most popular trading strategies for bitcoin these days and most likely this trend will continue in the future as well! What you should know is that day trading bitcoin means that you will close and open a position within one single day of trading – so you will not have any market exposure of bitcoin overnight. This means that you will avoid overnight charges of funding on your position. This particular strategy can be for you if you are looking to make profits from bitcoin’s short-term movements in price and it can allow you to make the most of bitcoin price’s daily volatility.
Bitcoin Hedging Tactic
This is another effective trading tactic you can use for trading bitcoin on the market. If you are not aware of this particular expression, hedging bitcoin means lowering your exposure to risk by taking 180 degrees opposite position to the one you have open already. You would do this if you had concerns regarding the market moving against you. As a case to point, if you owned a few bitcoins but had concerns about a short-term decline in their value, you can open a short bitcoin position with CFDs. If the bitcoin market price falls, the gains you will make on your short position will offset all or some of the losses on the crypto coins you own.
HODL Bitcoin Tactic
‘HODL’ bitcoin tactic entails purchasing and holding bitcoin and this is actually a very common trading style when it comes to trading bitcoin. Its name happens to derive from a misspelling of the word ‘hold’ on a famous cryptocurrency forum, and it is now regularly said to be an abbreviation for ‘hold on for dear life’. That said, this particular phrase should not be taken too seriously – it is important that you ought to only purchase and hold bitcoin if you have a positive outlook on its price in the long term. If your trading plan or research indicates that you should sell your particular positions to limit loss or get profit, you could or should set stop losses to automatically close your positions.
Bitcoin Trend Trading
Trend trading bitcoin means when you take a position that aligns with the existing trend. For instance, if the market happens to be in a bullish trend, you will go long and if the trend is bearish, you would have an inclination to go short. If this trend began to reverse or slow, you would think about closing your position and then opening a new one to align the trends that are emerging.