Top 3 bitcoin trading strategies that you must be aware of

Trading bitcoins in India is becoming popular as days passes by, and the market is showing no signs of slowing down. So if you are thinking of how to buy bitcoin, now is the perfect time to go for it. Figure out how to do that, and join in on the action. Although there are several trading tools that will make this process easy for you, you still need to get a fair idea regarding trading strategies to succeed. It doesn’t matter if you are a beginner or an experienced trader, the following strategies will help you go ahead. 1) HODLing It is one of the most popular Bitcoin trading strategies. The term was first coined in a Bitcoin forum almost seven years ago. Fun fact, the author at that time misspelt the word ‘HOLD’, he intended to indicate that he would not be exiting his position. HODling means holding a long position on Bitcoin and wishing that the price increases in the long term. Many believe that it is a great strategy especially for new traders or traders who are unsure about their skills. Although, it is worth noting that Bitcoin is extremely volatile and the price could go down instead of rising. So, in such a scenario, HODling strategy could turn out to be a not-so-smart move. 2) Hedging Have you heard of the term ‘hedge your bets'? It is exactly what this Bitcoin trading strategy means. Hedging is the practice of opening trades in order to reduce or eliminate the risks regarding the existing positions. As Bitcoin is known to be notoriously volatile, the possibility of losing money on trades is always there. Hence, it is of paramount importance to ‘hedge your bets’ by opening a position to mitigate the effects of a decline. There are three routes you can take to hedge bitcoin

- Short-sell

In short selling, you sell the Bitcoin at the prevailing price and hope that the price will decline so that you will be able to buy it back at a lower price. And, if it goes down, then immediately buy it back and make a profit from the difference. Now, this profit will help to offset any loss from your current position. You can’t short-sell without bearing the risk involved in mind.

- Hedge with the help of CFDs (Contracts for Difference)

There are an array of financial instruments available for you to hedge your Bitcoin exposure, however, most traders prefer CFDs. If you have a long position, open a CFD that bets on the Bitcoin price declining.

Hedge with the help of Bitcoin futures

Bitcoin futures are contracts that took place between two parties who agreed to trade Bitcoin at a specified price on a specified future date. It does not matter how the price moves, the trade needs to happen. 3) Trend trading This strategy depends highly on the prevailing trends in the market. You can either shut your eyes to what other traders are talking about or use technical analysis to make an educated guess on what is about to happen. For a lot of traders, Bitcoin itself is a trend. Bitcoin experienced a huge surge back in 2017, which led it to reach a high of $19,763.50 in December. The main reason behind this peak was that people didn’t want to miss out on the next big thing, basically FOMO. It is crucial that trend traders stay abreast of any new news and events that might influence the price of Bitcoin or any other cryptocurrencies in India.

Final Note

Without a doubt, Bitcoin trading is one of the most flexible ways of generating money online. However, you must consider risk and put strategies in place to manage the risk involved.