Cryptocurrency Trading: What Are the Most Popular Strategies?

by Alex Hayes 2 months ago in blockchain

A while back, I wrote an article on the simplest ways to buy Bitcoin. As an aside, I also made a purchase of some Bitcoin at that time to conduct a little Cryptocurrency investment experiment. In this article, I will give you a complete rundown of how that went and hopefully give you some great strategies to work with when you buy your Bitcoin.

Cryptocurrency Trading: What Are the Most Popular Strategies?

How to Buy Bitcoin

Buying Bitcoin is really simple. Buying other cryptocurrencies can be a little more difficult. That is why it is best to buy from exchanges that support multiple currency purchases.

If you want to buy Litecoin on some exchanges, for example, you would need to first buy Bitcoin and then buy your Litecoin with the Bitcoin you have bought. This is not only time consuming but it also incurs fees, eating away at profit margins and sometimes not being profitable at all.

I decided to keep it simple and buy Bitcoin and headed over to my exchange of choice, CEX.IO. Incidentally, on CEX.IO you can buy other cryptocurrencies as well; you aren’t limited to just Bitcoin. I was able to skip the whole wallet process, as I already trade Crypto and have a hardware wallet (make sure you grab one of these if you’re looking to trade seriously).

crypto Vouchers

Once you have got your wallet, the easiest way to buy crypto is by using a crypto voucher. This works like a prepaid top-up card; you buy the amount you want and then supply your wallet address; within 10 minutes you have your funds transferred to you.

The reason the voucher route is great for first-time investors is that you skip the exchange registration process, and you also skip the process of buying the crypto on the exchange and transferring it to your own wallet manually.

I used the exchange because I was already registered and I read a lot about its features at the time. As easy as that—$100 worth of Bitcoin purchased. In hindsight, it would have been faster with the crypto voucher method.

When You Own Crypto—You Need Patience and Discipline

When I had my $100 worth of Bitcoin, I was eager to start trading and turning a profit. I vaguely knew that this would lead to a blog post at some point and I wanted to show the maximum amount of profit. This meant I had plenty of urges to trade off and actively pursue profits.

This could have been my undoing entirely had I succumbed to those impulses. The coins that were attractive during that six month period are not so attractive now, and it would have been easy to switch to other currencies and take a loss.

The poker phrase of knowing when to “hold 'em” and when to "fold 'em" comes to mind! In this circumstance, I chose to “hold em” for the entire six month period, and didn’t once trade away from my Bitcoin.

The end result was that now, at the time of writing this article, I have cashed in that $100 investment for over $300. In six months, I had more than trebled my money just by having cryptocurrency sat on a hard-drive in my room that was gathering dust.

The Reason for this Growth?

The main reason for this growth is that Bitcoin was at a pretty low price point when I bought it after trading at an all-time high just over a year ago. It means that Bitcoin is still on that tentative rise towards recovering, and could in theory even eclipse its previous high point. It still has a long way to go.

Since the collapse over the Christmas period of 2017, Bitcoin and cryptocurrency in general have suffered terribly because there is a lot of bitterness and mistrust. The crypto market has always been a volatile market, and traders realized just how volatile it was when the bottom fell out.

That means there is always a great amount of risk involved when trading cryptocurrency; and it also means that if you know the landscape and market you know when it is a good time to buy or sell.

Facebook Libra

Recently, this dark cloud has all but gone and the hole market is rosier with even tech giants like Facebook looking to launch a cryptocurrency. This is helping bring cryptocurrency back to prominence and also cementing it a bit more in people’s minds. Facebook’s new initiative could just be the thing that makes cryptocurrency mainstream.

As with any new stock, the success or failure of it will have a noticeable effect on the market at large. With Facebook itself being such a vast entity, the effect of a Facebook cryptocurrency (known as Libra) could really shake up the whole industry.

In fact, it hasn’t even been launched yet and it is already drawing widespread attention with regulators in the EU keen to make sure it behaves in line with data protection regulations. This means for a currency like Bitcoin, which aims to be the first mainstream cryptocurrency, it has a very well-funded competitor to deal with.

The Future of Cryptocurrency

While I made a profit by not actually trading beyond my original investment, this doesn’t mean that this strategy will work for you and you shouldn’t take this as investment advice. With the landscape and market changing so much, it is near-impossible for anyone to give investment advice on cryptocurrency.

It is a trading game that you will have to stay abreast of; ensure you know what launches are happening and when they will be happening. You will need to know what external influences impact the price of the coin in your wallet. You will also need to know the history of the coin you own.

Once you have informed yourself thoroughly, cryptocurrency is a tremendous place to invest in. The volatility makes it exciting, and seasoned crypto investors know the warning signs to sell before the big dips.

blockchain
Alex Hayes
Alex Hayes
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