The Best Bitcoin Trading Strategy - 5 Simple Steps

01/13/2021
The Best Bitcoin Trading Strategy - 5 Simple Steps

Bitcoin is the hottest trading market right now. It is hotter than stock trading, oil trading, gold trading and any other market at this point. The reason people believe this is going to continue to be a hot market is because of blockchain technology. This is what allows transactions to happen without a central exchange. Trading bitcoin for profit is actually a universal cryptocurrency trading strategy. It can be used to trade any of the 800-plus cryptocurrencies available to trade as of today. Bitcoin traders are actively seeking the best possible solutions for trading and investing in bitcoin.

Top Exchanges for Trading Bitcoin & Cryptocurrencies

The major reason why Bitcoin has become so popular among day traders is that there are many different Bitcoin exchanges available. Finding the best Bitcoin exchange will depend on many different factors. These include your home country, the preferred method of payment, fees, limits, liquidity needs, and other factors.

Here are some of the top cryptocurrency exchanges in the market:

  • Coinbase is the world’s largest crypto exchange. Available in the United States, Canada, and the majority of countries in Europe. Offers several payment options.
  • Binance is the second-largest exchange that trades over 130 different currencies. Has low transaction fees (0.1%).
  • Bitmex is the third-largest exchange and only trades BTC. Great for short selling and margin trades.
  • Bittrex is a US-based exchange founded by ex-Microsoft security professionals.
  • Robinhood is a new exchange with 6 million users and takes zero trading fees.
  • OKEx is a Hong Kong-based exchange. Trades over 145 different cryptocurrencies.
  • GDAX - United States-based exchange that allows users to trade Bitcoin, Ether, Litecoin, and other cryptocurrencies.
  • Bit operates as both a global over-the-counter (OTC) trading desk and a global Bitcoin exchange platform.
  • Coinmama - allows you to buy and sell easily. Accepts credit cards and has a large global reach.
  • Start your Cryptocurrency trading Safely and Securely with Botsfolio. Botsfolio has made Cryptocurrency trading very simple and easy for everyone. To start cryptocurrency trading Click Here

    What is This Free Bitcoin Trading Strategy?

    A cryptocurrency is really no different from the money you use in your real life and have in your wallet. Unlike physical money, Bitcoins and other cryptocurrencies have no central bank that controls them. This means that cryptocurrencies can be sent directly from user to user without any credit cards or banks acting as the intermediary. The major advantage of cryptocurrencies is that you don’t need to print them like central banks do to create physical money.

    When you print lots of money, inflation goes up which makes the currency value going down. Bitcoins are available in limited amounts. This holds the majority of the other cryptocurrencies. The supply side can’t increase which makes Bitcoin less prone to being affected by inflation.

    Now, let’s move forward and see how we can profit from the fast growing cryptocurrency uptrend.

    How to start Day Trade Bitcoin

    While long term traders prefer to hold their bitcoin positions for an extended period of long run, day traders have discovered that Bitcoin is lucrative for many reasons:

    • Crypto trading is more volatile than stock trading.
    • Bitcoin is traded 24*7*365.
    • Bitcoin allows big trades with low overhead.
    • Bitcoin is the most liquid form of cryptocurrency.
    • Multiple trading opportunities emerge within a 24 hour period.

    Because Bitcoin is more volatile than other online trading assets, this has grown as a high profitable trading opportunity. Like ordinary currencies, using technical indicators will make it easier to tell when price increases are 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 changing trends of Bitcoin. In this next step, we will talk about OBV trading and how to get started buying and selling cryptocurrencies.

    The Best Bitcoin Trading Strategy – 5 Easy Steps to Profit

    This is a cryptocurrency trading strategy that can be helpful for trading all the important cryptocurrencies. The best Bitcoin trading strategy is a 85% price action strategy and a 15% cryptocurrency trading strategy.

    .

    Now…

    Before we move forward, we must define the mysterious technical indicator. You'll need this for the best Bitcoin trading strategy and how to use it:

    The only indicator you need is the:

    On Balance Volume (OBV): This is one of the best indicators for day trading bitcoin. It is used to analyze the total money flow in and out of an instrument. The OBV uses the combination of volume and price activity. This tells you the total amount of money going in and out of the market.

    The OBV indicator is found on most trading platforms like Tradingview and MT4. If Bitcoin is trading up and at the same time the OBV was trading down, this is an indication that people are selling into this rally. The move to the upside wouldn’t be sustainable. The same is true in reverse if Bitcoin was trading down and at the same time the OBV was trading up.

    No technical indicator is 100% effective every single time. In this regard, our team at Trading Strategy Guides uses the OBV indicator with other supporting evidence to sustain our trades and gain more confirmation.

    Now, before we go any further, we always recommend taking a piece of paper and a pen and note down the rules of the best Bitcoin trading strategy.

    Let’s get started.. The Best Bitcoin Trading Strategy

    Step #1: Compare the Bitcoin chart with the Ethereum chart and the OVB indicator for clear understanding.

    Your chart setup should basically have 3 windows format. One for the Bitcoin chart and the other for the Ethereum chart. And the Last but not least, make one window for the OVB indicator.

    Step #2: Look for Smart Money Divergence between the Bitcoin price and the Ethereum price.

    What do we mean by this?
    If we put this simply, we are going to look after price divergence between the Bitcoin price and the Ethereum. Smart money divergence happens when one cryptocurrency fails to confirm the action of the other cryptocurrency. For example, if Ethereum price breaks above an important resistance or swings high and Bitcoin fails to do the same, we have smart money divergence. It means that one of the two cryptocurrencies is “lying.' This is the main reason why we have used this cryptocurrency trading strategy.

    The reason why the smart money divergence concept works is because the cryptocurrency market as a whole should move in the same direction when we’re in a trend. The same principles have been true for all the other major asset classes for decades. It’s true for the cryptocurrency trading strategy as well.

    Before buying, we need confirmation from the OBV indicator. This brings us to the next step of the best Bitcoin trading strategy.

    Step #3: Look for the OVB to increase in the direction of the trend.

    If the Bitcoin is lagging behind the Ethereum price it means that sooner or later the Bitcoin should follow the Ethereum and break above the resistance.

    But, how do we know that?
    If we put this simple, the OBV is a remarkable technical indicator. It can show us if the real money is really buying Bitcoin or if they are selling. What we want to see when Bitcoin is failing to break above a resistance level or a momentum of swing high, and the Ethereum already broke, is for the OBV to increase in the direction of the trend. We also want it to move beyond the level it was when the Bitcoin was trading previously at this resistance level.

    Now, all it remains for us to do is to 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 the possible breakout.

    Once the OBV indicator gives us the green signal, all we have to do is to place a buy limit order. Place the order at the resistance level in anticipation of the possible breakout.

    It’s no surprise to see that the trade is getting triggered and for the Bitcoin price to break higher than expected. After all, we told you the OBV is an amazing indicator.

    Now, all we need to establish is where to place our protective stop loss and when to take profits for the best Bitcoin trading strategy.

    Step #5: Place your SL below the breakout candle and take profit once the OBV reaches 105,000.

    Placing the stop loss below the breakout candle is a smart way to trade. When it comes to our take profit, usually an 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 was an example of a buy trade… Use the same rules – but in reverse – for a sell trade. Ways to Enhance This Bitcoin Day Trading Strategy

    While bitcoin day trading does have some risks, there are many ways these risks can be reduced. Here are some of the top ways to enhance your Bitcoin trading strategy.

    Remember to:

    • Diversify your trades
    • Minimize trading costs
    • Watch Trading times
    • Follow Bitcoin News
    • Use technical analysis
    • Use stop losses

    Conclusion

    One day our physical money system will go down and will get completely replaced by cryptocurrencies. We’re living in a digitalized world and the possibility of Bitcoin or any other major cryptocurrencies to replace the way we are paying for the goods and services is not beyond the realms of possibility.

    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 for trading the Forex currency market to now trade the cryptocurrencies. If you are still confused and need some expert guidance to start your cryptocurrency trading sign up at Botsfolio. Botsfolio is the Best place to trade cryptocurrencies.

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