BITCOIN TRADING STRATEGIES…
If there is no cryptocurrency, someone needs to find them. Indeed, the daily change in the price of Bitcoin is usually greater than currency pairs such as EUR / USD, USD / JPY, and other major currencies. Because the price of Bitcoin moves bigger, it means you can get more and faster profit.
The cryptocurrency trading mechanism with FBS is simple. You can trade Bitcoin, LiteCoin, Ethereum, and Dash vs. USD as well as other currency pairs use MetaTrader.
To increase your chances of success, you must be systematic. In this article, we present 2 strategies that will help you get an edge in Bitcoin trading. The strategy takes into account the high volatility. Choose the one that suits you best and start earning!
Bitcoin does not usually react to news from the economic calendar. You must follow specific news about Bitcoin. News like that seems to have a more lasting impact than some economic news like US nonfarm salaries. For example, if you know that large funds invest hundreds of millions in Bitcoin, consider buying digital currencies over the next few days. If a large cryptocurrency exchange is hacked, consider selling Bitcoin.
Let’s illustrate this idea with the latest examples. Bitcoin prices rose in early April. The progress of cryptocurrency is due to several reasons. First, Bitcoin is announced by Sharia law. Second, there are reports that famous investor George Soros is interested in cryptocurrency trading. Also, traders are waiting for the World Blockchain Forum which will take place in Dubai on April 16-17. The green arrow marks the start of the Bitcoin swing. Cryptocurrency is up 30% for a month due to positive news.
However, then new factors come into play. Microsoft’s search engine, Bing, joined the ranks of other internet giants in banning crypto-related ads from its network in July 2018. Also, cryptocurrency received criticism from European financial authorities. The red arrow marks the start of a Bitcoin sell-off. The negative trend continues today.
Technical analysis can also be a source of Bitcoin trading ideas. We do not recommend scalping or, in other words, trading during the shortest period. A better focus on timeframes beyond H1 because they will allow you to get the best from this market.
Bitcoin tends to move in trends. The most promising strategy is to choose a trend trading system for Bitcoin. This can be as simple as trading based on moving averages or a combination of MAs.
Here’s an example of a Bitcoin trading strategy.
Indicators: EMA 200, 26 and 12 (Exponential Moving Averages)
This strategy produces a SELL signal, when:
1. The market is in a downtrend. Price must be below 200 EMA (orange line on the chart).
2. 12 EMA (red line) is below 26 EMA (blue line).
Take profits when prices move back and touch the 12-period EMA. Place a Stop Loss on a high swing. Don’t forget about money management. Do the opposite for trade BUY.
To minimize your risk and maximize your profits when trading cryptocurrency, diversify your capital among several of them. Different cryptocurrency has different goals. For example, Bitcoin and Litecoin act directly as currency. Ethereum represents a decentralized application platform, while DASH focuses on the privacy of its users. These are all cryptocurrencies with high liquidity and market capitalization, and you can trade it with FBS. It is wise to choose the cryptocurrency that represents different industries: if one of them shoots to the moon, you will be ready!
The conclusion is simple: diversify, follow the news, and use technical analysis to benefit from cryptocurrency!
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