What is bitcoin trading?
Bitcoin trading allows you to speculate on movements in the price of the cryptocurrency. While traditionally it was a question of buying bitcoin on a stock market, hoping that their price would rise over time, cryptocurrency traders are increasingly using derivatives to position themselves both on the upside and on the higher side. on falling prices in order to get the most out of bitcoin’s volatility.
With IG, you can take a position on the price of bitcoin with derivative products such as CFDs . This product can allow you to take advantage of price movements in both directions (up and down) without having to hold the underlying currencies, so you don’t have to hold onto bitcoin tokens.
Open a limited risk account to start trading bitcoin
To take advantage of an opportunity or take a short position on the last bubble, you first need to understand the factors that affect the price of bitcoin:
The offer . The current supply of bitcoin is capped at 21 million, it is expected to be exhausted by 2140. A limited supply means that the price of bitcoin could increase if demand grows in the years to come.
Bad press . Any last minute announcement regarding the safety, value and sustainability of bitcoin will have a negative effect on the overall market price.
Integration . The public profile of bitcoin depends on its integration into new payment systems and banking frameworks. If this adaptation is carried out, demand could increase, which would have a positive effect on the price of bitcoin.
The events major . Regulatory changes, security breaches, and macroeconomic announcements relating to bitcoin can all impact its price. Any agreement between users on how to speed up the network could also see confidence in bitcoin rise, which would push up its price.
Opt for a bitcoin trading strategy
Day trading
Trend trading
Bitcoin hedging
Buy and hold strategy (HODL)
How to apply the day trading strategy to bitcoin?
The bitcoin day trading strategy means that you open and close a position within the same trading day, so you will not have any exposure to the bitcoin market overnight. This means that you will avoid overnight funding fees on your position. This strategy might be right for you if you are looking to profit from short-term market movements. It can also allow you to get the most out of daily bitcoin price volatility.
How to use bitcoin trend trading?
Trend trading consists of taking a position that corresponds to the current trend. For example, if the market has been trending upward , you will take a long position and if the trend is bearish , you will take a short position. If this trend starts to slow down or reverse, you would consider closing your position and opening a new one to follow the new trend.
The bitcoin hedging strategy
Hedging or hedging bitcoin means reducing your exposure to risk by opening a position in the opposite direction to the one already open. This would apply if you were concerned that the market would move against you. For example, if you own bitcoins but are worried about their value going down in the short term, you can open a short position in bitcoins through CFDs. If the bitcoin market price drops, the gains from your short position will offset some or all of the losses on the coins you own.
The HODL bitcoin strategy
The HODL or “buy and hold” strategy is to buy and hold bitcoin. Its name comes from a spelling error of the English word “hold” on a popular cryptocurrency forum, and today it is claimed to come from “hold on for dear life” (as if your life depended on it). However, this phrase shouldn’t be taken too seriously: you should only buy and hold bitcoin if you have a positive outlook on the long-term price. If your goal or trading strategy involves selling your positions in order to make gains or limit losses, then you should – or you could – then set stop-losses to close your positions automatically.