Bitcoin trading continues to be popular amongst crypto enthusiasts and this is why it will not hurt to stay informed about the most effective trading techniques for 2020. You will find plenty of resources and advice on the Internet about Bitcoin trading but it also important to have an in-depth knowledge of the different trading strategies, and choosing one which will work for you.
Best Bitcoin Trade Strategies for 2020:
- HODLing: This name was given to a trade strategy which believes in buying Bitcoins and then holding onto them for a long period to get impressive returns. You can buy Bitcoins when prices are low and then keep them with you till prices surge. This will help you sell off your assets at good prices and make massive profits. It is a safe and effective trading technique for most traders, especially newcomers. The downside is that Bitcoin values may nose-dive; so, it is wise to have a risk-management plan in place too.
- Trend Trading: This strategy depends on optimizing existing trends in crypto space. So, you have to closely watch what others are doing. Trend trading can be a lengthy process, stretching into months and years. You can use technical analysis methods in order to make educated guesses. Trend trading appears to be less risky than the other methods but you have to bear in mind that there may be an overwhelmingly large number of factors impacting prices of the Bitcoin. However, bitcoin traders have started using automated trading apps like bitcoin rush which perform the trade autonomously.
- Hedging: If you can hedge your assets you will stay safe, and that is the crux of this trading strategy. As the Bitcoin prices are extremely volatile, chances are that you will lose heavily in short term trades. You may resort to short-selling and sell your coins hoping that prices will go down again and you will be able to re-purchase them at a later date. You may hedge with CFDs that are not actual crypto coins, but derivatives of Bitcoins. Alternatively, you can hedge your coins with Bitcoin futures. This is contract between parties which agree to trade Bitcoins for a specific price on a specific date. If the price of the Bitcoin goes up or comes down on that day, you can either make a profit or loss.
- Breakout Trading: This follows trend trading but here you will try to buy or sell the coins either at the start or end of the existing trend. When the support and resistance levels break down, prices of the Bitcoin become highly volatile and this is the breakout point. But, anticipating this rightly is what it takes to be successful in this strategy. When you are adept at doing this, you can surely make some great trades. This strategy has its share of risks too; even though you can set automated buy or sell orders, you need to monitor the market movements closely.
To sum up, these are the basic trading strategies that will stand you in good stead even in 2020. But, it is important for you to learn about these strategies in depth before diving into them. Each of these has its share of drawbacks and you must have a trading plan in place. You need to mitigate risks as far as possible by implementing stop-loss and limit-close orders.