Simple Tips to Help You Maximize Crypto Trading Profits

Bitcoin is a cryptocurrency that doesn’t require much introduction. It is the leading digital asset in terms of market cap and a top trend that has been around for a while. With increased popularity and adoption comes the debate around the best way to make money with Bitcoin. There are several ways to make money with the asset, it all depends on your investing approach or trading strategy. Buying and selling bitcoin or called bitcoin trading is one of the ways you can make money with the digital asset. But if you want to buy bitcoin and sell with the aim of making a profit, there are certain evaluations you have to make.

Bitcoin Trading

Trading simply means buying and selling, mostly with the aim of making profits/money. So bitcoin trading means buying bitcoin at a reasonably low price and selling it at a much higher price. Bitcoin trading depends greatly on how effective you are at gathering intelligence, analysing the market, and taking calculated risks. Having a good risk mitigation strategy and a profit taking plan is also crucial. Below are some of the strategies traders implement when crypto trading.

Day Trading

Day trading entails taking trades within short timeframes. The method involves a careful reading of the market, spotting the small opportunities to make profit, and making the most of those opportunities by taking decisive action. So basically, you buy bitcoin at a low price, wait for a little positive swing in price and then you sell. You are taking advantage of the daily volatility in the price of BTC and those price market movements. Although the gains could seem relatively small especially when trading with modest capital, over time those smaller profits accumulate into quite significant gains. When implementing the day trading strategy, you can open and close several trades daily. Traders implementing this strategy spend a lot of time closely monitoring their positions. Some experts believe that day trading is the most effective way to make profits from bitcoin trading since the market is highly volatile.

Swing Trading

Swing trading mainly involves a trader buying an asset at a low price, then waiting for that asset’s price to appreciate before selling it off at a higher price. In essence, this type of trading involves taking advantage of swings in crypto asset prices. Swing trading may require waiting a long time compared to day trading, but not as long as when you are implementing the HODL strategy. Basically, you buy BTC at a low price, wait a while for a positive price swing, and close your trade at a higher price. Swing traders don’t spend much time looking at their screen as they can wait for weeks or sometimes months before closing a position.

Arbitrage

This simply means taking advantage of varying bitcoin prices on different digital currency exchanges rather than within the same exchange. This method is effective in places where bitcoin price varies from one exchange to the other like South Africa. So you buy bitcoin from an exchange at a low price and sell on another exchange at a higher price.

Buying and HODLing

HODL is just a play on the word HOLD that has become a common word within the crypto community. HODLing simply means buying bitcoin and then holding with an expectation that the price will go higher in the future. Although the concept of the strategy might sound easy, it nonetheless requires patience and emotional stability. Basically, there are two factors that make trading quite difficult, the first is FOMO which is the fear of missing out, and FUD –  fear, uncertainty and doubt. Traders who cannot keep their composure when markets are volatile typically end up buying or selling as a result of either FOMO or FUD which means they buy above the market price or sell at a loss. 

In conclusion, bitcoin trading can yield amazing results when done correctly, however, it can also be risky when you don’t have an idea of how to properly make your profit out of it. The rule of thumb is always to only invest or trade what you are prepared to risk losing. 

Bitcoin can be a highly volatile asset, and its price actions can be unpredictable at times. While its price movements can be exceptionally high and sometimes low, no one can time the market for certain as there are always many forces and factors that determine the trajectory of market performance. 

That’s one reason why risking large amounts of money on a single trade is never recommended. Even if you think you’ve done enough research, making extremely risky moves such as leveraged trading when you don’t have the know-how to properly risk manage could result in massive losses which is never a good idea.It is important to maintain your composure and to take a level-headed approach to trading. Knowing the fundamentals and understanding that sometimes a cryptocurrency can drop in price sharply but also rebound massively can help you avoid panic selling at a loss. However, also holding on to an asset that continues to poorly perform can sometimes be even worse. It’s ultimately about following through on your chosen trading strategy and adapting as you learn new information in order that your decision making and action taking are always aligned with your objectives. Find out more about 20 of the best platforms to sell or buy Bitcoin in South Africa.