Bitcoin trading can be a profitable venture, but it takes careful consideration and preparation to do it well. Bitcoin is an extremely volatile currency that goes through many changes in value on a daily basis.
Bitcoin trading plans are the best way to ensure you’re following the right strategy for your goals. If you want to learn more about Bitcoin trading strategies in 2021, then this article will provide you with all the information you need to know.
Table of Contents
Develop the Right Strategy for Trading Bitcoin
Bitcoin is a currency that you can use to purchase goods and services from many different providers, but its value fluctuates rapidly.
The price of Bitcoin can be divided into four parts: the current price, price trends over time, support levels in case it falls below $1000 again, resistance levels if it rises above $2000.
Each part gives traders important information about when they should buy or sell Bitcoin so they don’t lose money trading this volatile asset class.
Manage Your Risks Appropriately
Bitcoin trading is risky, no matter the Bitcoin trading plan you choose. It’s important to balance your risk against your Bitcoin investment goals so that you don’t lose more than you can afford.
Maintain a diversified Bitcoin portfolio across several different exchanges and currencies instead of putting all of your eggs in one basket or trying to day trade Bitcoin with an extremely high-risk margin strategy.
The more money you stand to lose on any given trade, the less of it should be allocated towards Bitcoin until you’re comfortable enough with the exchange platform and trading strategies used by its users.
Diversify Your Portfolio
The best Bitcoin trading plans are those that diversify their portfolios across several different cryptocurrencies.
Bitcoin is not the only cryptocurrency out there, and some of them may grow more rapidly than Bitcoin in 2021 or provide better returns on your investment.
Cryptocurrencies like Dashcoin, Litecoin, Ethereum Classic, IOTA, Monero have all experienced an increase in value over time as well so it’s important to take advantage of these trends by investing a portion of your portfolio into each one.
Focus on Long-Term Crypto Trading
Trading Bitcoin and other cryptocurrencies on a daily or weekly basis are risky for your portfolio.
It’s important to consider Bitcoin trading strategies in 2021 that focus more on long-term crypto trading instead of day trading so you don’t lose money by trying to time the market.
Investing some money into Bitcoin, holding onto it for several months or even years, then selling it when it has increased significantly in value will give you better returns than if you bought and sold Bitcoin every few days with an extremely high-risk margin strategy.
Automate All Your Crypto Transactions
Trading Bitcoin is a very time-consuming process that can take up much of your day.
It’s important to use Bitcoin trading plans in 2021 that allows you to automate all Bitcoin transactions so you don’t have to spend several hours monitoring the market every single day.
Some exchanges will let users set price alerts, limit orders, and stop-losses for Bitcoin trades automatically through their platforms or mobile apps which lets traders monitor their investments even while they’re away from the computer screen.
Create an initial Bitcoin investment plan based on current support levels and resistance points then set it and forget about it until those thresholds are reached again.
This way, you’ll never miss out on valuable opportunities because your money was tied up elsewhere when Bitcoin suddenly jumped in price.
Manage Bitcoin Withdrawals and Deposits Properly
It’s important to create a Bitcoin trading strategy 2021 that lets you withdraw money from your Bitcoin account as quickly as possible so you can reinvest any profits back into the market immediately.
Many exchanges have long withdrawal times or even minimum thresholds for how much Bitcoin must be deposited before being allowed to trade, which means traders miss out on opportunities because their money has been locked away too long without gaining interest.
Create a trading plan that allows you to manage all deposits and withdrawals through automated processes based on current support levels and resistance points.
Then, set it up with an initial deposit of Bitcoins small enough not to lock up more than 30% of your portfolio during peak trading periods.
Use Trading Bots if Possible
Trading Bitcoin manually is a time-consuming process, which can be difficult for traders to manage when Bitcoin trading strategy 2021 shifts from slow and steady growth towards an expected parabolic increase.
Using Bitcoin trading bots or automated trading platforms that read market indicators and execute trades based on preset instructions will help you avoid missing out on any opportunities while also saving valuable time throughout the day.
Start Off Small in the Beginning
It’s important to start off small in the beginning so you can see how Bitcoin behaves over time.
This way, if Bitcoin drops significantly overnight or one trading day then you don’t lose money on your investment because it didn’t experience enough of an increase for you to turn a profit yet.
You’ll be able to make changes and adjustments more quickly this way as well since Bitcoin is constantly changing depending on market conditions, which makes developing a Bitcoin trade strategy even more challenging.
Make sure any initial deposit is only large enough to cover transaction fees associated with buying Bitcoins through exchanges instead of paying high premiums from brokers.
Select a Secure Bitcoin Wallet
To avoid Bitcoin trading strategy 2021 risks, it’s important to use a Bitcoin wallet that offers two-factor authentication and is not connected to the internet.
This way, nobody can hack into your account or steal Bitcoins from you if they gain access to your password.
This is because the only thing on their end would be encrypted data which no one could decrypt without also having physical possession of your phone or computer with authentication information.
Always Research the Market
Researching the market is a critical part of creating an initial investment plan and monitoring its progress over time.
This way, you’ll be able to understand why your Bitcoin investments are going up or down in value so you can adjust accordingly as needed.
Take the money out if it goes downhill for too long because there’s always another chance at investing later on when conditions improve again.
Keep track of all transactions made with each exchange platform including fees paid which will give you a better idea of whether that particular one is right for your needs or not.
Take Extreme Caution When Using Leverage
Using Bitcoin trading bots or margin trading with Bitcoin is not recommended unless you’re an experienced trader who understands the risks.
This includes using Bitcoin loans to invest in Bitcoin, which can result in serious financial consequences if your investments suddenly drop without any warning whatsoever after leveraging all of your available funds.
It’s important to use proper risk management across the board when investing in Bitcoin.
Otherwise, these strategies are useless and will only make it more difficult for traders to monitor their accounts every day while still allowing them enough time for other daily activities like work or family obligations.
Be sure that each trade made represents a logical decision instead of reacting based on emotions triggered by fear, boredom, excitement about others doing well financially because those factors could harm long-term consequences.
Use Different Cryptocurrencies
Using different cryptocurrencies to diversify Bitcoin can also help traders during Bitcoin trading strategy 2021.
For example, Litecoin and Ethereum both experience significant gains when Bitcoin is in a downtrend while Ripple tends to be more stable throughout the entire process leading up to fiat currency conversion for withdrawal at exchanges.
This means that you could potentially use your three favorite cryptocurrencies along with two others picked by their historical performance which will increase chances of success across all four networks combined instead of just one or two alone.
Buy and Hold Your Bitcoin Assets
If Bitcoin trading strategy 2021 is your goal, then it’s important to purchase Bitcoin and hold onto it just like how you would with any other currency.
This means only buying at exchanges when prices are low enough for investment opportunities to trigger profits once they’re converted into fiat currency if necessary before moving them back to cold storage wallets again.
The same applies for selling at a higher price point as well instead of doing so continuously throughout the day which will cause more problems than benefits in the long run across all cryptocurrency markets combined without exception.
Never Trade with Emotions or Hype
Trading Bitcoin and other cryptocurrencies is a long-term investment strategy, so it’s important to avoid trading with emotions.
This means not overreacting based on fear or excitement generated by others through news articles and social media posts without any kind of research first which could lead to financial losses if not careful enough.
Be Careful of Scammers
The Bitcoin market is full of scammers who are out there to take advantage of new traders with limited experience, according to www.bytefederal.com.
This means avoiding Bitcoin trading bots, Bitcoin cloud mining contracts that do not exist, or other websites that seem too good to be true because they most likely are based on previous experiences over time without exception.
Ready to Practice These Bitcoin Trading Plans?
Following these Bitcoin trading plans is essential for growing your portfolio and becoming a successful investor. To learn more about this subject, continue reading our blog for more helpful articles.
