Not choosing a finance major in college is a major regret in my life. Starting from my freshman year, I began to learn about stocks, finance, foreign exchange, etc., online. The colorful screens filled with red and green captivated me and added color to my life. With infinite yearning for the market, I naively opened an account in my sophomore year. Later, I gradually learned about the cryptocurrency world and Bitcoin. Through an introduction from a classmate, I learned more and more, and I became very interested, thus starting my investment career. Like most friends who entered the market not long ago, I was initially fascinated by technical indicators, constantly backtesting various cryptocurrencies to find patterns. I was keen on entering low-priced coins or those that had significantly retraced, believing they were safer. In reality, my understanding of the market was completely wrong.
Later I realized that if you want to achieve quick returns in the market, you must do short-term + medium to long-term compounding together! The summary is: do not let the blood of profits cloud your mind. You must understand that the hardest thing in the world is how to sustain profits. Be sure to review seriously whether it is luck or strength; a stable trading system suitable for you is the key to continuous profit.
There is a saying that impressed me: Ideology, if you do not occupy it, others will occupy it.
Today's article is about cryptocurrency trading strategies and Bitcoin day trading. In fact, Bitcoin is currently the hottest trading market. At this moment, it is more popular than stock trading, oil trading, gold trading, and any other market.
Exchanges for Bitcoin and cryptocurrency trading
One reason Bitcoin is so popular among short-term traders is that there are many different Bitcoin exchanges to choose from. Finding the best Bitcoin exchange depends on many different factors, including your nationality, preferred payment methods, fees, limits, liquidity needs, and other factors.
Here are some of the top cryptocurrency exchanges in the market:
Coinbase is the largest cryptocurrency exchange in the world. It is suitable for most countries in the U.S., Canada, and Europe. It offers multiple payment methods.
Binance is the second-largest exchange, trading over 130 different currencies. Trading fees are low (0.1%).
Bitmex is the third-largest exchange, trading only Bitcoin. It is very suitable for short selling and leveraged trading.
Bittrex is an exchange based in the U.S., founded by former Microsoft security experts.
Robinhood is a new exchange with 6 million users and zero trading fees.
OKEx is an exchange based in Hong Kong. It trades over 145 different cryptocurrencies.
GDAX - A U.S. exchange that allows users to trade Bitcoin, Ethereum, Litecoin, and other cryptocurrencies.
itBit is both a global over-the-counter (OTC) trading platform and a global Bitcoin trading platform.
Coinmama - makes buying and selling easy. Accepts credit cards and has a large business globally.
How to conduct Bitcoin day trading. Although long-term traders prefer to hold Bitcoin positions for a long time, short-term traders find Bitcoin profitable for many reasons:
The cryptocurrency trading market is more volatile than the stock market.
Bitcoin trades 7 days a week, 24 hours a day.
Bitcoin allows large transactions at low costs.
Bitcoin is the most liquid cryptocurrency.
Due to Bitcoin's greater volatility compared to other tradable assets, there are numerous profitable trading opportunities every day. Using technical indicators, just like with regular currencies, makes it easier to judge when prices might rise. Trading volume, relative strength, oscillation index, and moving averages can all be applied to Bitcoin day trading.
It is important to pay attention to technical indicators and development trends. Below, we will discuss OVB trading and how to start buying and selling cryptocurrencies.
Best Bitcoin trading strategy - 5 simple steps to profit
The only indicator you need is:
Volume (OBV): This is one of the best indicators for Bitcoin day trading. It is mainly used to analyze the total amount of funds flowing in and out. OVB combines trading volume and price, informing you of the total funds entering and exiting the market.
The OBV indicator can be found on most trading platforms, and reading information from the OBV indicator is very straightforward. Theoretically, if Bitcoin is rising while the OBV is falling, it indicates that people are selling during this rebound. This upward trend is unsustainable, and vice versa.
What we hope to see is that the OBV aligns with the price direction of Bitcoin. No technical indicator is 100% effective; our team uses the OBV indicator along with other valid evidence to verify.
Step 1: Load the Ethereum chart and OVB indicator onto the Bitcoin chart.
Your chart setup should have three windows. One for the Bitcoin chart, another for the Ethereum chart, and finally one for the OVB indicator.
Step 2: Look for price differences between Bitcoin and Ethereum.
Simply put, we will focus on the price differences between Bitcoin and Ethereum.
For example, if Ethereum's price breaks through a significant resistance or peak, while Bitcoin fails to do so, a divergence occurs. This indicates that one of these two cryptocurrencies is 'lying.' This is the main reason we use this cryptocurrency trading strategy, as well as Ethereum's trading strategy.
From the above chart, we can see that Bitcoin's price failed to break through the resistance level, while Ethereum's price broke through the resistance and hit a new high. This is the first trading signal.
The concept of price divergence is effective because when we are in a trend, the cryptocurrency market as a whole should move in the same direction. For decades, all other major asset classes have followed the same principle. Cryptocurrency trading strategies are no exception. Of course, we also need the OBV indicator for confirmation.
Step 3: Increase OVB in the direction of the trend.
If Bitcoin's price lags behind Ethereum's price, it means that Bitcoin will eventually follow Ethereum's price and break through resistance. But how do we know?
Simply put, OBV is a significant technical indicator. It tells us whether funds are buying Bitcoin or selling Bitcoin. We hope to see that when Bitcoin fails to break a resistance level or peak, and Ethereum has already broken through, the OBV increases in the direction of the trend. We also hope it exceeds the trading volume level Bitcoin previously had at this resistance point (see the chart below).
Step 4: Set buy breakout orders at resistance levels to catch possible breakouts.
Once the OBV indicator gives a signal, what we need to do is set up breakout orders at the resistance level.
Step 5: Place your SL below the breakout point.
Setting the stop loss below the breakout candle is a wise trading method.
When we talk about taking profits, a significant reading above 105,000 is usually an extreme reading indicating that the trend has at least paused. This is where we want to take profits, or adopt a trailing stop method.
Note: The above is an example of a buy transaction. The same rules apply to sell transactions, just in reverse. In the chart below, you can see an actual example of a sell transaction.
Of course, while knowing these trades, you should also be aware of some more important techniques! These are the iron rules of trading cryptocurrencies!
Sharing a set of trading strategies that are both simple and very effective! Hope it helps everyone!
The first rule: closely follow the fluctuations of Bitcoin trading. Generally, Bitcoin serves as a barometer for other altcoins in the cryptocurrency market. There are few altcoins like Ethereum that have a strong conceptual logic; sometimes they may deviate from Bitcoin's influence and create unilateral trends, but most altcoins cannot escape Bitcoin's influence.
The second rule: seize the golden moments of trading. The phenomenon of 'golden light' is most likely to occur between midnight and 1 a.m. the next day. Those looking to pick up bargains can place ultra-low buy orders before sleep or set ideal sell orders for passive income; you might just make a deal because this time is the trading volume period for most parts of the world, and anything can happen.
The third rule: seize the price trend of the intermediate currency USDT. Generally, USDT and Bitcoin move in opposite directions. If one day you find USDT rapidly rising, you should immediately be wary of Bitcoin's sharp decline; conversely, when Bitcoin is rising, it is the golden low point to buy USDT.
The fourth rule: pay attention to the financial news from central banks every day. The most important influencing factor in the cryptocurrency market is the attitude of governments towards Bitcoin. If it is a crackdown or control, the market trend will generally decline; additionally, the impact of U.S. financial policies is also significant, such as the recent news about taxing the wealthy.
The fifth rule: pay attention to several key time periods, which can reduce risk and increase returns. Every day from 6 a.m. to 8 a.m. is a key point for judging buy and sell, and it is also the time basis for judging the day's rise and fall. If it continues to fall from midnight to 6 a.m., it is a buying or averaging opportunity; the day is likely to rise. Conversely, if it continues to rise from midnight to 6 a.m., it is a selling opportunity; the day is likely to fall.
The sixth rule: Black Friday. There is a saying in the cryptocurrency circle about 'Black Friday,' where Fridays often see significant declines, but there are also instances of sideways movement or significant increases. It’s not particularly accurate; just pay a little attention to the news.
The seventh rule: trading volume is the lifeline of cryptocurrencies. If a cryptocurrency with a certain trading volume guarantee falls, there’s no need to worry; patience will ensure you recoup your losses. Short-term may take a week, while long-term might take a month. If you have spare USDT, you can increase your position gradually to lower the average price. If you have no extra money, just wait; it won't let you down.
The eighth rule: do not trade frequently. Holding the same cryptocurrency for the long term yields much greater returns than frequent trading, which mainly tests your patience.
Finally, I am Old Chen, who has been in the cryptocurrency circle for many years, loves to speak the truth, updates daily, and shares selflessly. If it helps, feel free to follow, like, comment, and share.
