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How Has Bitcoin Trading Evolved Nowadays?

So, you’ve created an account, bought bitcoin, and it’s sitting in your wallet, now what? Now, it’s time to trade. However, before you start trading, you need to have a strategy in place.

You would be making a mistake if you considered the events that take place on the crypto markets to be random and traded solely based on your instincts. Trading decisions that are made primarily on instinct can in fact result in large profits. 

However, this success was solely due to random luck; even if you put in a lot of effort, there is no guarantee that you would be able to achieve the same outcomes again and again.

Which is why you need to have a plan in mind of how you are going to go about trading bitcoin that has a lower risk level and a higher gain possibility!

Today, we are going to go over how bitcoin trading has evolved and hopefully you will be able to find a strategy which is best suited for you!

Photo by Traxer on Unsplash

Photo by Traxer on Unsplash

Bitcoin Trading Bots

Starting off strong with the latest advancement in the market, the trading bots. Trading bots are computer programmes that are designed to automate the process of trading cryptocurrency assets on your behalf. 

Normally, you will be required to sit in front of the desk and determine which cryptocurrencies to purchase or sell and at what time. When you are engaging in trading practice, one aspect that is quite important to pay attention to is the various market statistics.

The examination and interpretation of market statistics are both capable of being easily automated by crypto trading bots. They are able to gather data from the market, analyze it, calculate the potential risks associated with the market, and execute the buying and selling of bitcoin assets. You could, for instance, programme a cryptocurrency trading bot to automatically purchase additional Bitcoin whenever the price of BTC falls below a certain threshold.

One such example of this is the Bitalpha AI, a new bitcoin robot. According to the website for BitAlpha AI, this application makes use of high-frequency trading and may operate automatically in the background even when registered traders are away from their computers. 

Its application programming interface (API) is capable of being integrated with the cryptocurrency exchange of the user’s choosing and finds potentially successful trading configurations with a win rate of 80%.

However, even with a bot with such a high success rate, it’s important to keep in mind that there will be days when the market fluctuates and the value will go down, so only invest a sum of money you are willing to take the risk to lose and won’t affect your daily life.

Scalping 

Traders can make a profit from this method despite the fact that there is relatively minimal price fluctuation at frequent intervals. The objective is to trade small profits on a daily basis in order to add up to a sizable sum once some time has passed.

Scalpers frequently make use of leverage so that they can open more trades and employ tight stop losses as a risk management strategy. They trade based on time limits of one minute, fifteen minutes, and thirty minutes. Their transactions can be as little as a few seconds or as long as a few minutes, but they never exceed an hour’s duration.

Day Trading

Day trading entails entering and exiting positions on the same trading day. As a result, the goal of day traders is to profit from intraday price changes, which are defined as shifts in price that occur during the course of a single trading day. 

Day traders trade on timescales that are higher than those used by scalpers, but they still exit their positions within the same trading day. Trading cryptocurrencies on a day-to-day basis allows investors to capitalize on minute price fluctuations. However, while you may be worrying about the value decreasing, others decide to take to Twitter and joke about the fluctuations!

This kind of trading makes use of technical analysis, and since it requires more knowledge and time, it is usually a strategy employed by advanced traders.

Swing Trading

This kind of trading takes longer than a day but it normally does not take longer than weeks or months. This trading strategy allows you to have more time to think about the decisions you want to take since you won’t have to decide in a matter of minutes, but rather have ample time to think thoroughly. 

Position Trading

Traders who engage in position trading are able to maintain their open trading positions for extended periods of time. It could be a few months or it could even be a few years. 

They typically pay less attention to the market’s short-term fluctuations in price and more attention to the market’s longer-term patterns. Traders typically concentrate on the daily, weekly, and monthly periods while engaging in this kind of trade. 

Position traders also make use of fundamental analysis in order to evaluate potential price trends in the market. In addition, position traders take into consideration other factors such as historical patterns and market trends.

This type of trade is for those who have excellent knowledge of the market and who are looking for a long-term investment. You need to make careful decisions over the span of months and years, therefore, you need to stay updated with market trends and have additional time to continue conducting research.

Arbitrage Trade

Arbitrage trading refers to the process of purchasing cryptocurrencies on one market and then selling them on another market in order to profit from discrepancies in price between the two markets. Taking advantage of the low price correlation among crypto assets that are listed on two or more exchanges allows the trader to make a profit.

For example, if the price of Bitcoin on Binance is $43,000 but the price of Bitcoin on Coinbase is $43,400, you have the option of purchasing Bitcoin on Binance and then transferring the BTC that you acquired to Coinbase in order to sell it at a greater rate there.

Since there are hundreds of cryptocurrency spot market exchanges, the prospects for arbitrage involving cryptocurrencies are nearly unlimited. As a consequence of this, traders are looking for more effective strategies to spot price differentials across several exchanges and capitalize on them, and this pattern is anticipated to continue in the foreseeable future.

Concluding Thoughts

While there are all of these trading options available to you, you need to figure out which one works best for you. You need to see what your lifestyle allows and doesn’t allow.

There isn’t one good trading strategy, all of them can make you gain money, and all of them can potentially lose your money.

Take the time to go over your options and choose the one that is most feasible for you!

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