With last week’s price action, we’ve updated this article to make sure you take advantage of this price action.
Today’s post is all about cryptocurrency trading strategy and bitcoin trading day. You’ve probably heard a lot about it. There are tons of crypto trading strategies that promise to make you rich. Our team at Trading Strategy Guide understands that now everyone wants a piece of the pie. That’s why we have come up with the best Bitcoin trading strategy PDF.
We also have a complete strategy article with a list of all the best trading strategies we have created .
The truth is that bitcoin is the hottest trading market right now. It’s hotter than stock trading, oil trading, gold trading and any other market at the moment. The reason people believe this will continue to be a hot market is because of blockchain technology. This is what allows transactions to happen without a central exchange. Here is another strategy on how to draw trendlines with fractals .
Bitcoin trading for profit is indeed a universal cryptocurrency trading strategy. It can be used to trade any of the 800+ cryptocurrencies available for trade as of today. If you are new to cryptocurrency, it is best to start with a brief introduction.
How to start trading Bitcoins:
The first thing you need to start trading bitcoins is to open a bitcoin wallet. If you don’t have a bitcoin wallet then you can open one at the biggest one called Coinbase. We have arranged a special deal for everyone who wants to start with bitcoin to get $10 free at Coinbase. Get your free $10 by opening your Coinbase account here.
Bitcoin traders are actively looking for the best possible solutions to trade and invest in bitcoin. We have some of the best practices explained right here in this article. We learned this bitcoin wisdom by trial and error and we’ll show you what’s working right now. The methods we teach are independent of the bitcoin price. They can be used whether bitcoin is rising or falling.
Remember that it is possible to lose money. Your capital is at risk while trading crypto as it still trades at the end of the day. We always recommend demo trading before risking any money. Also, read trading volume guide .
These bitcoin strategies can also be used to trade bitcoin cash as well as other cryptocurrencies. In fact, you can use this as a trading guide for any type of trading instrument. Blockchain technology is a huge step forward for the way information is accessed. Many companies are starting to develop applications to use Blockchain to their advantage. Remember that when trading digital currency, it does not appear to be the actual currency. But it really is real. This is not some Ponzi scheme. Before you buy bitcoin, have a solid plan and don’t underestimate the crypto market. You have to do your technical analysis just like you would day trading with any other instrument. You can also read our best Gann Fan trading strategy .
Top Bitcoin & Cryptocurrency Exchanges
One of the reasons why Bitcoin is so popular among day traders is that there are so many different Bitcoin exchanges available. Finding the best Bitcoin exchange will depend on many different factors. These include your country, preferred payment method, fees, limits, liquidity needs, and other factors.
Here are some of the top crypto exchanges on the market:
- Coinbase is the largest cryptocurrency exchange in the world. Available in USA, Canada and most European countries. Offers several payment options.
- Binance is the second largest exchange that trades over 130 different currencies. There are low transaction fees (0.1%).
- Bitmex is the third largest exchange and only trades BTC. Great for short and margin trading.
- Bittrex is a US-based exchange founded by former Microsoft security experts.
- Robinhood is a new exchange with 6 million users and no transaction fees.
- OKEx is an exchange based in Hong Kong. Trade over 145 different cryptocurrencies.
- GDAX – A US-based exchange that allows users to trade Bitcoin, Ether, Litecoin and other cryptocurrencies.
- itBit acts as a global over-the-counter (OTC) and global Bitcoin exchange platform.
- Coinmama – allows you to buy and sell easily. Accepts credit cards and has a large global reach.
What is this free Bitcoin trading strategy?
A cryptocurrency is really no different than the money you have in your wallet. They have no intrinsic value. And cryptocurrencies are just pieces of data while real money are just pieces of paper.
Unlike fiat money, Bitcoin and other cryptocurrencies have no central bank controlling them. This means that cryptocurrency can be sent directly from user to user without any credit card or bank acting as an intermediary. The main advantage of cryptocurrencies is that you cannot print them like central banks do to create fiat money.
When you print a lot of money, inflation will increase causing the value of money to go down. There is a limited amount of Bitcoins. This is true for the majority of other cryptocurrencies. The supply side’s failure to increase makes Bitcoin less susceptible to inflation.
Now, let’s move forward and see how we can profit from the crypto frenzy. We will use our best Bitcoin trading strategy. We are also trained for the best short-term trading strategies .
How to trade Bitcoin during the day
While long-term traders prefer to hold their bitcoin positions for the long term, day traders have found that Bitcoin is potentially lucrative for several reasons:
- Cryptocurrency trading is more volatile than stock trading.
- Bitcoin is traded 24 hours a day 7 days a week.
- Bitcoin allows large transactions with low fees.
- Bitcoin is the most liquid form of cryptocurrency.
- Many trading opportunities appear within 24 hours.
Because Bitcoin is more volatile than other tradable assets, there are more profitable trading opportunities happening every day. Like regular currencies, using technical indicators makes it easier to see when a price rally is likely to occur. Volume, relative strength, oscillators, and moving averages can all be applied to Bitcoin day trading.
It is important to pay attention to technical indicators and developing trends. In this next step, we will talk about OBV trading and how to start buying and selling cryptocurrencies.
Best Bitcoin Trading Strategy – 5 Easy Steps to Profit
This is a crypto trading strategy that can be used to trade all major cryptocurrencies. In fact, this is a Ethereum trading strategy just like Bitcoin trading strategy. If you don’t know Ethereum is the second most popular cryptocurrency (see picture below).
The best Bitcoin trading strategy is the 85% price action strategy and the 15% crypto trading strategy that uses an indicator.
Currently…
Before we move forward, we must identify the mysterious technical indicator. You will need this for the best Bitcoin trading strategy and how to use it:
The only metrics you need are:
About Balanced Volume (OBV): This is one of the best indicators for intraday bitcoin trading. It is basically used to analyze the total cash flow in an instrument. OVB uses a combination of volume and price operations. This tells you the total amount of money entering and leaving the market.
OBV index
The OBV indicator can be found on most trading platforms like Tradingview and MT4. Reading information from the OBV indicator is quite simple. Here you can learn how to profit from trading .
In theory, if Bitcoin is trading up and at the same time OBV is trading down, this is a sign that people are selling into this rally. The move upwards will not be sustainable. The same is true in reverse if Bitcoin is trading down and at the same time OBV is trading.
What we really want to see is OBV moving in the same direction as Bitcoin price. Later on, you will learn how to apply this information along with a cryptocurrency trading strategy.
No technical indicator is 100% effective every time. In this regard, our team at Trading Strategy Guide uses the OBV indicator with other supporting evidence to sustain our trades and get more confirmations. The next step comes from the Ethereum trading strategy that will be used to identify Bitcoin transactions.
Now, before we go any further, we always recommend that you grab a piece of paper and pen and jot down the rules of the best Bitcoin trading strategy.
Let’s start together..
Best Bitcoin Trading Strategy –
(Buy transaction rules)
Step #1: Stack Bitcoin chart with Ethereum chart and OVB indicator.
Your chart setup should basically have 3 windows. One for Bitcoin chart and second for Ethereum chart. Last but not least, create a window for the OVB indicator.
If you follow our crypto trading strategy guidelines, your chart should look like in the image above. All is well for now, so it’s time to move on to the next step of our best Bitcoin trading strategy.
Step #2: Look for the smart money difference between Bitcoin price and Ethereum price.
What do we mean by this?
Simply put, we will be looking at the price divergence between Bitcoin and Ethereum prices. Smart money divergence occurs when one cryptocurrency fails to confirm the actions of another.
For example, if Ethereum price breaks through a key resistance or moves high and Bitcoin fails to do the same, we have a smart money divergence. That means one of the two cryptocurrencies is a lie. This is the main reason why we have used this crypto trading strategy. And Ethereum trading strategy is good.
If you’re still trying to identify support and resistance, we’re back, just read our guide on the subject here: Support and Resistance – Road to Successful Trades .
In the image above, we can notice that the price of Bitcoin did not break through the resistance while the price of Ethereum moved above it and made a new high. This is the first sign that the best Bitcoin trading strategy is about to signal a trade.
The reason why the smart money divergence concept works is because the cryptocurrency market as a whole will go in the same direction when we are in a trend. The same principles have held true for all other major asset classes for decades. The same is true for cryptocurrency trading strategies.
Before buying, we need confirmation from OBV indicator. This brings us to the next step of the best Bitcoin trading strategy.
Step #3: Look for OVB to rise in the direction of the trend.
If Bitcoin lags behind the Ethereum price, it means that sooner or later Bitcoin should follow Ethereum and break through the resistance.
But, how do we know that?
Simply put, OBV is a remarkable technical indicator. It can tell us if real money is actually buying Bitcoins or if they are selling. What we want to see when Bitcoin fails to break through resistance or goes high and Ethereum has been broken, is for OBV to rise in the direction of the trend. We also want it to break out of where Bitcoin previously traded at this resistance (see image below). Here is how to determine the right swing to increase your profits.
Now, all we have to do is place a buy limit order, which brings us to the next step of the best Bitcoin trading strategy.
Step #4: Place a buy limit order at the resistance level in an attempt to catch a possible breakout.
When the OBV indicator gives us a green signal, all we have to do is place a buy limit order. Place an order at the resistance level in anticipation of a possible breakout.
It is not surprising to see this trade triggered and Bitcoin price to break higher than expected. After all, we told you that OBV is a great indicator.
Now, all we need to establish is where to place our protective stop loss and when to take profit for the best Bitcoin trading strategy.
Step #5: Place your SL below the breakout candle and take profit when OBV reaches 105,000.
Placing a stop loss below the breakout candle is a smart way to trade. We wrote more about why to hide your SL above/below the breakout candle in our most recent article here: Breakout trading strategies used by professional traders.
When it comes to our profits, normally OBV reading above 105,000 is an extreme reading that signals at least a pause in the trend. This is where we want to take profits.
Note ** The above is an example of a Buy Buy transaction Use the same – but opposite – rules for a sell transaction. In the picture below you can see a real SALE trading example, using the best Bitcoin trading strategy.
Ways to strengthen this Bitcoin day trading strategy
While bitcoin day trading has some risks, there are ways to mitigate these risks. Here are some of the top ways to enhance your Bitcoin trading strategy.
Memorize:
- Diversify your trading. Combining Bitcoin, Ripple, Litecoin, Ethereum and other cryptocurrencies will help reduce the daily risk associated with a particular currency.
- Minimize transaction costs. Opening multiple positions per day affects your daily ROI. To minimize transaction costs, choose a reliable exchange with low fees.
- View transaction times. Plan a trading time that is compatible with your schedule. Bitcoin trades 24 hours a day. It is different from the 9-5 NYSE.
- Follow Bitcoin News. Pay attention to crypto news stories to stay ahead of the market. Set up alerts and other types of notifications.
- Using technical analysis . Use strong technical indicators like OBV. This will help you justify each of your transactions.
- Use stop loss.Place a stop loss order on each trade. Start with a 2:1 profit/loss ratio.
Maybe one day our fiat money system will work and be completely replaced by cryptocurrencies. We live in a digitalized world and the possibility of Bitcoin or any other major cryptocurrency to replace the way we pay for goods and services is not out of the question.
However, as long as there is still profit from Forex currency trading, we encourage you to read our receipt for success in Forex trading: How to make money trading – 2 keys to success .
We hope that the Best Bitcoin Trading Strategy – has shed some light on how you can use the same technical analysis tools that you use to trade the Forex currency market to trade cryptocurrencies.
Ready to get started? Learn about other top investments in our Best Cryptocurrency tưGuidein 2020 .