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How to Trade Bitcoin Employing Successful Strategies?

Trading Bitcoin is an art that one needs to master to be successful. It is not simply about getting in front of a computer screen and putting your money into a random crypto asset at any time.

There is a proper methodology involved here that takes into account the price points where you will enter a trade and exit a trade, minimizing the chances of losses.

How to Trade Bitcoin Employing Successful Strategies: eAskme
How to Trade Bitcoin Employing Successful Strategies: eAskme

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Before you start full-fledged trading of Bitcoins it may be wise to invest in an ICO or initial coin offering.

This will help you buy crypto tokens at much lower prices before these are made available to general people; so, the potential to get big profits is high. But researching on the crypto coins is a must before you invest.

You need to check out the latest ICOs and read reviews about these.

It is necessary to find out utility behind these coins and whether they have a good supply and demand.

You should also inquire about the developers behind the project.

The idea is to buy many ICOs and not put all your money into just one.

Here are some key trading strategies that may make you a successful Bitcoin trader:

HODLing:

One of the best known trading strategies is HODLing that means holding onto your coins for as long as possible to get impressive returns.

The term “hodling” was coined first in 2013 when a user had incorrectly typed holding as ‘hodling”.

This means holding onto a position for the long-term expecting prices to increase over time.

You must however understand that, Bitcoin being volatile, the chances of losses are huge too.

This is why you should have a risk-management strategy to fall back on.

Hedging:

Hedging your Bitcoins is another effective trading strategy that can prove to be successful.

Those holding Bitcoins may try to hedge these if they think that prices may come down for a while.

So, they open strategic trades in order to eliminate risks of existing positions.

The idea is to short-sell Bitcoins; so, you sell your Bitcoins at the current price hoping that it will come down.

When the prices do come down finally, you can buy these back at low prices and make profits in the process.

Hedging is not free from risks because when you sell Bitcoins, there is no knowing how much the market can move against you; so, you may actually end up making unprecedented losses.

Trend Trading:

Trend trading your Bitcoins is another useful and successful Bitcoin trading strategy.

In this, you hold onto the coins for as long as a trend continues and this could go on for months or even years.

To do trend trading you must use technical analysis to correctly predict which way the market will move.

When you practice trend trading, you open a position at that time when you think that the prices will keep moving in its current direction.

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Breakout Strategy:

Breakout strategy is commonly applied by Bitcoin traders who enter the market as soon as possible when a trend sets in and are prepared for the prices to “break out” from the earlier range.

They think that when the market breaks through a resistance or support level it will trigger major volatility.

So, traders use this strategy to ride a trend from beginning till end.

The Best Strategy:

The dollar cost averaging tactic is not something that you need to spend a lot of time researching on.

This is when you buy a fixed amount of a token at regular intervals during which prices are moving up or down.

So, you average all purchases during those set intervals and this can be brought down to one average price that is typically higher or lower than if you had to buy at one go during a single interval.

This strategy however demands that you follow the trade charts diligently to do a proper technical analysis.

You must check out 3 months of trade history to see if the token has recovered before this on multiple occasions.

So, it is best to use this strategy when you are dealing with crypto coins that have been around for a long time like BTC, LTC, and ETH.

You do not want to get stuck with crypto coins that have no history of recovery in previous years.

Balanced Portfolio Strategy:

A balanced portfolio strategy is right for someone who is cautious and desires balance in his life.

In this, you can buy multiple crypto tokens for the exact same price throughout the market.

So, you can invest the same amount in Litecoin, Bitcoin and Monero to spread out your risks.

It is also a good way to test the coins because you may not be confident which ones will perform well and which will not.

After this, you can choose to invest in two tokens that have brought you maximum gains.

The best way to success using this trading technique is to ensure that each of the coins you invested in have different utilities; so you can choose one equity coin, one security coin, and one privacy coin.

UnBalanced Portfolio Strategy:

Like the balanced portfolio strategy there is an unbalanced portfolio strategy in which you keep aside a part of your funds for investing into every coin depending on how you feel it will perform.

So, you automatically allocate the maximum amounts for the coins you are certain will perform best.

If it is Litecoin in your view, then you must go ahead and invest the highest percentage in it.

This strategy is obviously not for everyone; you must have a solid knowledge and enough background research to use it successfully.

Invest the Profits

You can also choose to invest the profits you have made into other crypto coins.

So, when you have succeeded in amassing reasonable profits through any of the above-mentioned strategies you could select some potential coins to invest in.

These coins should ideally be those that have had high profit margins.

This helps you to own a diversified portfolio.

It is a good strategy for new Bitcoin traders because investing too much in a single asset is not a wise move.

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