The investment of 1000 euros in cryptocurrencies in early 2017 could have made you a millionaire. A year later, buying bitcoin cost some investors more than 90%.
So how do you arm yourself against the high instability of the crypto market? How can you create a profitable trading plan, which strategies used by professional traders can you incorporate, and how a solid crypto portfolio should be structured?
What bitcoin trading strategies do professional traders use?
People are by nature subject to strong emotional fluctuations when you perform bitcoin leverage trading.
Unfortunately, these emotions can easily lead to irrational decisions that you may later regret. That is why it is essential to have a fixed plan for each crypto investment from the very beginning.
The 3 main trading strategies are:
In daily trading, the trader makes several purchases and sales every day. Through these “intraday transactions”, the trader hopes to take advantage of small price fluctuations and thus increase its profits compared to long-term strategies. Experienced traders can actually increase their expectations for a profit with this strategy. But in addition to the high stress and time factor, the style is characterized, among other things, by the fact that many individual trades on some exchanges mean that you have to pay proportionally more fees. In addition, unpredictable price spikes can often be observed in these small time intervals.
For example, a bitcoin kit sale can shift the price by more than 5% in one direction in a few minutes, which can be fatal for traders during the day.
Swing trading increases the time horizon. Swing traders usually trade several cryptocurrencies at the same time. Always be careful about possible trends so that they can adjust their positions as profitably as possible. As soon as the swing trader suspects a high has been reached, he directs his strategy to the so-called short positions. With them, he bets against a price increase and wins when it falls. However, if the trader thinks that the bitcoins are resold at the moment, he charges a bitcoin long position, so he buys bitcoins again to raise the price. It is important to note that you do not need to catch the absolute peak or the absolute low price every time! It is often a wiser decision to wait and make sure that the price has really taken a course. At the beginning of 2020, for example, it looked as if the price of bitcoin had risen upwards and would rise again. But…The price of Bitcoin failed to reach a peak of $ 14,000 and the downward trend continued. Moreover, in the following weeks, the price even dropped by more than 50% to below $ 4,500 in most exchanges including Kraken.
The last strategy we want to present to you is traditional investing. We believe that net investment in cryptocurrency is the best option for many investors.
The three most important points for us are the following:
• Significant time savings
Of course, in the beginning, you have to put a lot of work into researching the different cryptocurrencies. Ultimately, you want to invest in solid projects with competent teams and good future prospects. But once you have found your 5-6 projects, you can sit back and wait for prices to rise.
• Reduced risk
We probably agree that cryptocurrency had similar potential to that of the Internet at the time. It is only a matter of time before large banks, institutions, and hedge funds start investing their money in this new asset class. Why should you put your capital at risk every day with hundreds of trades, even if just holding them can make extremely high returns possible?
If you are not a full-time trader, the investment strategy is extremely attractive to investors who only want to increase their income with bitcoin and cryptocurrencies.
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The views expressed in the article are wholly those of the author and do not represent those of, nor should they be attributed to, ZyCrypto. This article is not meant to give financial advice. Please carry out your own research before investing in any of the various cryptocurrencies available.