BTC trading ideas allow you to speculate on cryptocurrency price movements. While this has traditionally consisted of buying bitcoin through an exchange in the hope that its price will rise over time, cryptocurrency traders are increasingly using derivatives to speculate on both rising and falling prices – to make the most of the volatility of to make bitcoin.
At IG, you can take a position on the price of Bitcoin using financial derivatives such as CFDs. This product allows you to take advantage of price movements in both directions without becoming an owner of the underlying coins – which means you don’t have to take responsibility for the security of bitcoin tokens.
BTC trading ideas steps
- Find out what moves Bitcoin’s price
- Choose a BTC trading style and strategy
- Choose how you want to be exposed to Bitcoin
- Decide whether you want to go long or short
- Set your stops and limits
- Open and monitor your trade
- Close your position to make a profit or limit a loss
Find out what moves Bitcoin’s price
To participate in an emerging opportunity or short the latest bubble, you must first understand the factors affecting the price of bitcoin:
Bitcoin supply. The current bitcoin supply is capped at 21 million, which is expected to be exhausted by 2140. Limited supply means Bitcoin’s price could rise as demand increases in the years to come
Bad press. Any breaking news regarding Bitcoin’s safety, value, and longevity will negatively impact the coin’s overall market price
Integration. Bitcoin’s public profile depends on its integration into new payment systems and banking frameworks. If this is done successfully, demand could increase, which will have a positive impact on the price of Bitcoin
Key events. Regulatory changes, security breaches, and macroeconomic Bitcoin announcements can all impact prices. Any agreement among users on how to speed up the network could also lead to increased trust in Bitcoin – driving up its price
BTC trading ideas: style and strategy
- Day trading
- Trend trading
- Bitcoin hedging
- HODL (or buy and hold)
How to trade bitcoin a day
Day trading Bitcoin means you open and close a position within a single trading day – so you don’t have overnight Bitcoin market exposure. This means you avoid overnight funding fees on your position. This strategy might suit you if you want to profit from Bitcoin’s short-term price movements, and it can allow you to make the most of daily Bitcoin price volatility.
How to trend bitcoin
Trend trading means taking a position that corresponds to the current trend. For example, if the market is in an uptrend, you would go long, and if the trend was down, you would go short. If this trend slows down or reverses, you should consider closing your position and opening a new one to accommodate the emerging trend.
Bitcoin hedging strategy
Hedging bitcoin means mitigating your risk by taking an opposite position to an already open position. You would do this if you were concerned about the market moving against you. For example, if you owned some bitcoin but were concerned about a short-term drop in value, you could open a short position on bitcoin using CFDs. If the market price of bitcoin falls, the gains from your short position would offset some or all of the losses on the coins you own.
HODL bitcoin strategy
The “HODL” bitcoin strategy involves buying and holding bitcoin. Its name derives from a misspelling of “hold” on a popular cryptocurrency forum, and it’s now often said to mean “hold on for dear life.” However, this phrase should not be taken too seriously – you should only buy and hold Bitcoin if you have a positive outlook on its long-term price. If your research or BTC trading ideas indicate that you should sell your positions to lock in profits or limit losses, you should – or you could set stop losses to automatically close your positions.
Choose how you want to be exposed to Bitcoin
- Bitcoin derivatives trading
- Buy bitcoin on an exchange
- Crypto 10 index
BTC trading ideas derivatives
Trading Bitcoin derivatives with us means that you do not own Bitcoin directly but speculate on its price with CFDs. As a result, you can take a position when Bitcoin’s price goes up by going long or down by going short. Here are more advantages of BTC trading ideas derivatives with us:
Leverage and Margin: CFDs are always traded with leverage, meaning you only need to put down a deposit – known as margin – to get full market exposure
Deep Liquidity: Thanks to our large customer base, our bitcoin market is very liquid. This means your orders are more likely to be filled at your desired price – even if you’re trading large sizes
Hedging: Shorting derivatives can be an effective way to hedge your portfolio and protect against market downturns
Buy bitcoin on an exchange
Buying bitcoin through an exchange is mainly for those using a buy-and-hold bitcoin strategy. Because buying it through exchange means you own Bitcoin outright with the expectation that its price will increase.
However, there are some issues with buying bitcoin through an exchange:
Bitcoin exchanges often lack proper regulation and the infrastructure needed to quickly respond to requests for support
The matching engines and servers on bitcoin exchanges are often unreliable, which can lead to suspended markets or reduced execution accuracy
Bitcoin exchanges often impose fees and restrictions on deposits and withdrawals from your exchange account, while opening accounts themselves can take days
Crypto 10 Index
Besides BTC trading ideas, derivatives, or buying coins directly from an exchange, you can trade with the Crypto 10 Index, which gives you access to 10 major cryptocurrencies like Bitcoin in a single trade. This index speculates on these cryptocurrencies and accurately tracks or reflects their underlying market price.
Decide whether you want to go long or short
Trading financial derivatives make it possible to go both long and short depending on the current market sentiment. Going long means you expect the price of Bitcoin to go up, and going short means you expect the price to go down.
Set your stops and limits
Stops and limits are crucial risk management tools – and you have several to choose from when trading with us:
Normal stops close your position at a set level, but they could be subject to slippage if the underlying market price changes rapidly.
Trailing Stops follow favorable market movements to lock in profits while limiting your downside risk. However, they can also be subject to slippage.
Guaranteed Stops close your position at a set level regardless of any slippage. Guaranteed Stops can be set for free, but you will be charged if your Guaranteed Stop is triggered.
Open and monitor your trade
To open a bitcoin trade, you would buy if you think the price will go up or sell if you think the price will go down. Once your trade is open, you need to monitor the market to make sure it’s moving as you expected.
The technical indicators available on our trading platform can help you determine how the price of Bitcoin might move next. Indicators can also help you monitor current market conditions such as volatility or market sentiment.
Close your position to make a profit or limit a loss
You can close your position whenever you want to make a profit or limit a loss that has reached a level you are uncomfortable with. Your profits are paid directly to your trading account while your losses are deducted from your account balance.
Why Bitcoin cloud mining?
An unknown individual or group called Satoshi Nakamoto introduced the Bitcoin network in 2009. In 2021, there will be more than 10,000 different projects in cryptocurrencies. So each of them has its role in building the future of money.
The market value of cryptocurrencies reached $ 1 trillion for the first time in January 2021. It passed $ 2.5 trillion less than three months later. So it shows that this market is one of the growing markets favoring its investors.
Minerland Bitcoin Cloud Mining is the process by which you participate in a mining pool to a cloud miner website and purchase a certain amount of hash power. In this pool, the profit will distribute equally among all participants who have participated in the mining pool. It will happen based on hash power. Also, the cloud mining platform allows you to mine your BTC without installing any hardware and at no extra cost. So Minerland, the best crypto cloud mining service to earn Bitcoin, helps you invest in Bitcoin easily and with low risk. For more information about us, you can follow Minerland’s Instagram account.
BTC trading ideas: 10 tips
The BTC trading ideas and tips below are not exhaustive and do not constitute professional investment advice.
Instead, you should use this article as a starting point for your research before using one of the many demo accounts available to hone your trading skills before opening a live position.
1. Start small
The first of our BTC trading ideas and tips is to proceed with caution and start with a relatively small investment.
Despite being an exciting market with a reputation for making substantial profits in a short period for the lucky few, trading bitcoin is by no means easy and involves tremendous risk.
Cryptocurrencies in general are extremely volatile. Avoid the temptation to fire all guns and instead opt for small-stakes trades that allow you to get a handle on the market with minimal risk.
Of course, the best of all Bitcoin tips is to never trade with more than you can afford to lose.
2. Choose a secure wallet
Your bitcoin wallet is a repository for your digital assets, so it’s important to choose wisely to ensure security and easy access.
There are several options, each with its characteristics and functionality.
Beginners should trade through a reputable broker like Coinbase and use the wallet they provide. However, if you want to choose your wallet, you need to decide which type is right for you.
Wallets are described as either hot or cold:
- Hot wallets are connected to the internet and thus open to hackers
- Cold wallets store your wealth offline and are generally considered safer
If you want instant access and only hold a small amount of bitcoin, a hot wallet should suffice as long as you check the provider’s reputation. If you are holding high-value bitcoin, it is best to go for a cold wallet.
Ideally, you would use both and keep a limited amount available with the bulk of your funds safely stored offline.
3. Research the market
The only surefire way to become a successful bitcoin trader is to do your homework and learn the market.
This is not an easy process as many of the practices used to evaluate other financial markets do not apply to Bitcoin. It’s a largely speculative field and the impact of global news and events on Bitcoin’s value is highly unpredictable.
However, there are steps you can take to increase your understanding.
Technical analysis is a key research skill. So take the time to practice reading charts and spotting patterns to support your trading strategies.
You should also be careful with Bitcoin tips from other traders. The nature of the market means many people are waiting to take advantage of the inexperienced. These same people are only too happy to tell you the “right time to buy” in hopes of adding value so they can exit with a big profit. Never take advice at face value and do your due diligence before entering into a trade.
4. Decide on a trading strategy
Before you even think about opening a position, you should think carefully about what kind of trader you want to be. It largely depends on how much time you need to devote to trading activities and market analysis and how fast you want to make profits.
Bitcoin traders typically fall into one of four categories:
Scalpers are the most active, making multiple trades a day for small profits.
Day traders enter and exit the market within 24 hours and benefit from short-term market movements.
Another technique is swing trading, which relies on thorough technical analysis to catch market trends.
Finally, you may want to be a passive trader, holding onto your positions and focused on long-term profits.
The benefits of this last approach are discussed in number eight of our BTC trading ideas and tips.
5. be strict with profit targets and stop-loss orders
As previously mentioned, Bitcoin is unpredictably volatile, more so than any other financial instrument, so having a plan and sticking to it is important.
Before opening a position, think about what profit you would like to take from the trade, what losses you can afford, and set your target and stop-loss level from the start.
This is one of the most important tips because, without a disciplined approach, it’s all too easy to expose yourself to potentially devastating moves.
Many novice traders fall prey to greed and hold onto a position to seek further gains only to see prices fall, while others are optimistic that a downtrend will reverse as they delve deeper into the red fall.
By strictly following your profit targets and stop-loss orders, you can easily avoid this trap and minimize risk.
6. Use leverage with extreme caution
Leverage allows you to hold a much higher percentage of a trade than the actual capital in your account would otherwise allow. While this may seem tempting and can translate into significant profits, it can also result in huge losses if a leveraged trade were to turn against you.
Using leverage successfully is a balancing act between risk and reward and takes practice to master.
For Bitcoin beginners, leverage is best used with extreme caution and preferably avoided altogether, at least until you develop your confidence and trading style.
Only the most experienced traders with in-depth knowledge of the market should adopt leverage as part of their BTC trading strategy.
7. Diversify with different cryptocurrencies
The top BTC trading tips focus on risk reduction, and diversifying your portfolio is one such tip.
Too many first-time traders become obsessed with Bitcoin’s potential and fail to address its falls.
By trading other cryptocurrencies, you protect your investments. If one falls in value, your loss can be offset against another’s gain.
Diversification can also increase your profits in good market conditions. If you’ve invested wisely, you might find yourself holding multiple high-value assets.
However, it’s important not to dilute your portfolio too much. You still need to allocate a worthwhile amount of capital to each trade. Find a balance that reasonably increases your profit potential while minimizing your risk in any cryptocurrency.
8. Buy and hold bitcoin
As mentioned earlier, there are different types of BTC trading ideas and strategies. The buy and hold approach is a passive strategy where positions will hold for weeks to years.
- This has several advantages:
By buying and holding Bitcoin, you can bypass its short-term volatility. It’s not uncommon to see significant movement on any given day, which can mean your stop loss and take profit targets are easily hit and throw you out of your trade.
This in turn can lead to overtrading and since opening a new position is costly, overtrading can seriously eat away at your profits.
As a passive trader, you can keep your position open and potentially make a good profit in a short amount of time, but you still need to have a robust risk management strategy with carefully considered stop-loss orders.
9. Get a grip on your emotions
Aside from BTC trading tips on risk management and strategy, there are also emotional factors to consider, most notably fear of missing out (FOMO).
Due to Bitcoin’s extreme volatility, it’s not uncommon to see dramatic price spikes in a very short period, and it can be tempting to buy into an uptrend for fear of missing out on big gains if you don’t.
However, this violates the most basic trading rule – buy low, sell high.
If bitcoin has skyrocketed, you’ve probably already missed the beneficial point of the uptrend, and you end up paying a premium for an asset that will inevitably fall in value, causing you to incur a significant loss.
Falling victim to FOMO is one of the main reasons why so many novice traders fail. Be careful and accept that some profitable opportunities just weren’t meant for you.
10. Watch out for scammers
Unfortunately, with no central exchange and little regulation, the Bitcoin market is an ideal environment for scammers.
Fake exchanges and wallets are common, as well as phishing scams, where deceptive emails redirect you to scam sites identical to the platforms you are using to collect sensitive data.
Ponzi schemes, which operate on a pyramid structure, offer increased returns for investors who recruit other investors and should be avoided at all costs.
Malware is, of course, another problem and without proper security measures around your bitcoin wallet, you put yourself at risk of having your account drained.
Can I profit from BTC trading ideas?
You can certainly profit from BTC trading, and your ability to turn a profit will depend on the depth of your market analysis, market knowledge, and the underlying market conditions.
How do BTC trading ideas work?
Trading Bitcoin works by allowing you to take a speculative position on Bitcoin price movements using financial derivatives such as CFDs.
These allow you to go long and speculate on the upside, and short and speculate on the downside. The accuracy of your prediction and the size of the market movement will determine your profit or loss.
Are BTC trading ideas safe?
Trading Bitcoin can be risky due to the volatility of the market. However, when you open an account with us, you get access to all of our risk management and training tools. This includes in-platform stops and limits, as well as the educational resources available on the IG Academy – so you can take control of your trading.
We are licensed by the Bermuda Monetary Authority to conduct investment and digital asset transactions, so any funds in your account are kept separate from our company funds – meaning your money is protected even if we go bust.
When is the best time to trade Bitcoin?
Although cryptocurrency is a market that is open 24 hours a day, seven days a week, some hours will experience increased volatility and liquidity. For example, at noon UK time, there may increase volatility as both the UK and US markets gain momentum for the day.