How to Create Bitcoin Trading Strategies: Everything You Need to Know

Although bitcoin has been around for several years already, it really exploded during the coronavirus pandemic. In fact, during that time, many investors seemed to become bitcoin millionaires overnight.

Of course, not everyone is going to strike it rich by investing in bitcoin. But you can achieve a nice return on your investment by utilizing the right investing strategy.

Luckily for you, we are here to help you with just that. So if you would like to learn more then keep on reading and we will show you how to create bitcoin trading strategies. 

1 Dollar Cost Averaging (DCA)

How to Create Bitcoin Trading Strategies Everything You Need to KnowDollar cost averaging works for all kinds of investments, not just crypto. It is a very popular investment strategy that takes the emotion out of investing.  One way to likely lose money is by investing all of your available cash into bitcoin all at once. Bitcoin fluctuates widely and you could end up buying it at too high of a price. 

This is what makes dollar cost averaging so powerful. With this method, you buy a certain amount of bitcoin at different time intervals. 

For example, you will set aside $1,000 to invest in bitcoin. Then, on the first day Monday of each week, you would invest $250 into bitcoin until you reach your $1,000 total. This is effective because it will let you account for the wild swings in bitcoin. Some days you will pay more for bitcoin but other days you could end up paying less. This will prevent you from trying to time the market.

2 Golden Cross/Death Cross

This trading strategy is a method that uses two moving averages. For this method, you want to find crossovers between the 50 Moving Average and the 200 Moving Average. This is a good strategy for people who are interested in investing in bitcoin in the long term.

You are looking for convergence and divergence. A convergence is a signal that the asset is gaining momentum. That means it is a good time to purchase bitcoin. A divergence shows you the opposite. So bitcoin is losing momentum with buyers. This means that it is time to sell your bitcoin holdings.

3 RSI Divergence

The RSI is the relative strength index. It indicates momentum. This is similar to the previous strategy but is best for short-term plays. You’ll be able to understand when bitcoin is overbought or oversold based on the RSI.

If you want to sell your bitcoin, you can take advantage of a bitcoin ATM (https://www.bytefederal.com/what-is-a-bitcoin-atm-how-does-it-work/

The Importance of Knowing How to Create Bitcoin Trading Strategies

Hopefully, after reading the above article, you now have a better understanding of how to create bitcoin trading strategies. As we can see, there are many different ways to trade bitcoin. So you need to figure out which strategy is going to help you achieve your investing goals.

Make sure to check out the rest of our blog for more helpful articles! 

 
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