Bitcoin trading and investment tactics

Bitcoin trading and investment tactics

Bitcoin trading and investment tactics

Bitcoin investments, trading and transactions are booming across the globe.

On an average, there are over two thousand bitcoin transactions per day. Like any trading platforms, you don’t want to just trade with bitcoins or cryptocurrency and hope for a profit. Instead, bitcoin trading should use a strategy so you are able to derive a profit. If you plan to trade bitcoin, or invest in the bitcoin market, you need to have a plan in place. Bitcoin trading is more than just purchasing bitcoins and selling them when the market grows.

What is Bitcoin?

Before moving forward, just to make sure that all readers are on the same page, we should all know the answer to the question – What is Bitcoin?

Since the creation of the internet, there have been several attempts to create cryptocurrency. However, none of these attempts was successful. In 2008, a paper was published by Satoshi Nakamoto titled, “Bitcoin: A Peer-to-Peer Electronic Cash System”, and in the same year, the domain “” was registered.

From there, bitcoin turned into a reality and today has become a stable financial medium. The uniqueness of bitcoin lies in the technology it uses (blockchain) and that it is decentralized currency (it’s not backed by a government or a bank).

How can you Start Bitcoin Trading?

There are many bitcoin exchanges you can join, which would help you start bitcoin trading. When you “invest in bitcoin”, it essentially means that exchanging one currency for another. You are able to gain or lose when trading in the currency during volatile market conditions – depending on your decision. When you trade in bitcoins and currencies, you are exploiting the volatility of the market to make a profit.

There are several bitcoin exchanges you can try out like:

  • Coinbase
  • Cryptsy
  • BTC-e
  • Bitcoin source

It’s also crucial that you have a bitcoin wallet in place. This is necessary for you to store your bitcoins. These wallets are quite secure. However, if you are looking to invest heavily in bitcoins and want stringent digital security, then you might want to purchase a Trezor Wallet. It’s a USB bitcoin wallet that you can carry and use to access your bitcoins.

Investment Tactics

Plan for the Long-term

This is a strategy you should utilize for all your investment strategies and not just bitcoin trading. When you invest, don’t look for quick returns. The same applies to bitcoin trading. You don’t want to conduct bitcoin trading on the fritz.

Be Prepared to Lose

Bitcoin trading is a venture that carries risk and you should be prepared to lose. The key is to win big and lose what you can afford to lose. This, of course, depends on your bitcoin trading tactics.

Avoid Daily Trading

Following the previous point of “Plan for the long-term”, you should avoid bitcoin trading on a daily basis. Daily trading makes you subjected to market manipulations and “pump and dump schemes” which are quite common. By not trading daily, you give yourself time to analyse the market and make decisions based on data.

Momentum Trading Strategy

Momentum trading is quite often seen on the stock exchange floor. With this strategy, the trader is dependent on market trends and looks at trading options that show a strong upward trend over time. To identify this upward trend, the traders look at data metrics such as volume, daily watch lists and more.

In fact, a small analysis published by Philipp Kallerhoff, a Hedge Fund manager identified that this was a viable strategy.

Value Investing

Ben Yu, who’s made over $400,000 through bitcoin trading, proposes that value investing is a reliable strategy. Value investing refers to picking trading options that the market has undervalued. The short term variations of the currency price should concern the trader. This requires intensive analysis to find an undervalued trading option.

Bitcoin Mining

Rather than earn bitcoins through trading, you can become a bitcoin trader. A bitcoin miner mines a block to earn bitcoins in return. Because bitcoins are not backed by a financial institution, each transaction needs to be verified. This verification is done through bitcoin mining.

So how do you mine bitcoins?

Bitcoin mining machine

You have to set up a bitcoin mining machine. There are special systems built using bitcoin mining hardware like AntMiner or Avalon. However, the system consumes a lot of power and wears out easily.

Cloud Mining

Another method of bitcoin mining is to outsource your bitcoin mining hardware requirements to a cloud mining service. For this option, it is recommended that you have a quick internet and a large bandwidth connection.

Bitcoin Mining Pool

When you join a mining pool, you work with other miners to solve the blocks and earn the rewards.

Investing in bitcoin mining is profitable. However, it is vital that you apply the right investment tactics.

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