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Reports compiled in March 2023 claim that there are over 23,000 cryptocurrencies in circulation, but not all of them are valuable or active. However, this figure still demonstrates the growing scope of the industry and tells us why more investors are interested in cryptocurrencies. No matter how many new crypto have emerged over the last decade, Bitcoin has always been the most valuable and most adopted. With this in mind, we take a look at three Bitcoin trading strategies to explore.
Dollar Cost Averaging (DCA)
If you want to invest in Bitcoin but don’t want to get weighed down by indicators and deep analysis, then look no further than dollar cost averaging (DCA). The idea is fairly simple. Instead of making one large purchase of Bitcoin, you split the total up into smaller payments that you make at regular intervals - regardless of Bitcoin’s value.
By following the DCA strategy, the idea is that you’ll mitigate being hit by the volatile market. Some weeks the value will be down and others it will be up, and the idea is that the value will average out by the time you’ve finished investing.
Before getting started with Bitcoin DCA, you’ll need to find a platform tailored towards Bitcoin investors. This Swan Bitcoin review will tell you all about one of the best Bitcoin platforms in the industry, and it’s perfectly tailored to DCA traders.
Scalping
Scalping involves opening and closing positions based on trends. These types of trades are often held for seconds or minutes, making them the perfect option for investors with short-term financial goals. There are risks involved with scalping, as you may suffer financially when you’re making many trades in a short period. Additionally, you have to be actively observing the market and quick off the mark to close positions.
Many traders that adopt the scalping method don’t have time to sit around watching the same charts for a full day. Therefore, they use trading platforms, which can be set up to automate scalping trades. Some of the best crypto scalping bots include Pionex, Coinrule, and Bitsgap.
Event-Driven Trading
The crypto market value is heavily influenced by world events. Event-driven traders keep track of breaking crypto news and benefit from predicting the direction of the market. For example, at the moment, the SEC is putting more and more pressure on the crypto industry and it’s driving the overall price of the market down.
The simplest way to understand event-driven trading is that when good news breaks, you buy the coin you’re interested in. Then, when negative news breaks, you short Bitcoin by selling it before the drop - and then you attempt to buy back at a better price.
Whether you’ve been trading Bitcoin for a while or you’re just getting started, the strategies outlined above are fantastic ways to manage the volatile nature of the crypto landscape. After deciding on a strategy, you mustn’t deviate, regardless of what your emotions are telling you to do; you’ll only lose money.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.