How to improve your crypto trading strategy
More and more people are interested in investing in cryptocurrencies – this also applies in Germany. Bitcoin is of course particularly popular. This digital currency has existed since 2009, which is not centrally controlled and was therefore unique from the start. However, the price of Bitcoin is very volatile. Again and again there are huge swings up and down in a very short period of time. Traders can take advantage of this and make huge profits with proper forecasting.
Of course, trading bitcoins is not about a long-term investment. Anyone who assumes that Bitcoin will increase in value over a period of several years should not take into account the daily price fluctuations. Trading, on the other hand, is about short-term positions. These can also be opened or closed around the clock – trading in cryptocurrencies has no fixed opening hours.
Trading and analysis methods
There are different methods of trading and you should know the advantages and disadvantages of each one. In so-called day trading, investors want to make money on short-term falling or rising prices. Spread over the day, you usually enter several trades, which should be closed at the end of the day. Scalping, on the other hand, relies on positions that go even shorter. Here the focus is on very small profits, so returns require many successful trades. At the same time, the risk can be minimised. Finally, swing trading, which involves larger price cycles, should also be mentioned. Individual positions are held for weeks or months.
Whatever type of trade you decide on, it’s important to keep an eye on the latest news. After all, the collapse of the crypto exchange FTX in November 2022 was hardly predictable, but it led to huge drops in the prices of Bitcoin and other cryptocurrencies in a matter of days. These setbacks also came at the end of a year that had seen little good news for the industry as a whole. In 2023, therefore, traders should expect news and even rumors of regulation of certain aspects of cryptocurrencies to cause high price movements in the short term.
Looking at the year as a whole, some analysts assumed in early 2023 that the price of Bitcoin could even fall as low as $10,000. In this case, the market value of Bitcoin will still be around $200 billion, but the drop will still be dramatic. But even when prices fall, traders can make money with the right tools. Falling prices are more of a problem for long-term investors.
Entry into trade
During January, it became clear that long-term forecasts for the Bitcoin price are very difficult. This rose as much as only a few experts had predicted. This development has once again shown that trading depends on the right strategy. In any case, you should always keep an eye on your own risk and not make trades based on a gut feeling.
Anyone who follows this rule has already taken an important step. Practical things like analyzing charts or recognizing patterns are then the next aspect. But the work you put into it can definitely pay off investing in cryptocurrencies
