How to Develop Your Bitcoin Trading Strategy

As far as cryptocurrencies go, the most popular is Bitcoin, which, according to, has grown in value to USD 60,000 (Bitcoin EUR 50,400) since it was first created back in 2009. So, it stands to reason that many investors have made quite a lot of money on the currency. Although it is unlikely that there will be a repeat of this success, and the best has now passed, investors are still looking for ways to reap returns. However, before you look to start investing in cryptocurrency, it is vital to go in with a strategy and stick to it. Here are our three most important tips for successful Bitcoin trading.

Choose the Right Crypto Wallet

Bitcoin wallets are where investors keep their BTC. These are what keep your funds safe and they also allow you to trade on different exchange platforms. Also, if you do intend to use Bitcoin for real-life purchases and services, then you cannot do so without a Bitcoin wallet. So, you need to research which is the best Bitcoin wallet to suit your needs. You can usually pick from four options – hardware, web, desktop and mobile wallets.

The hardware is a cold wallet and is more suitable for long-term investors as opposed to trading. This is considered more secure, but less accessible.

Then there are hot wallet options such as the web wallet which allows you to trade and invest freely online with minimal effort. Many often have two – a cold wallet for their bigger investments and a hot wallet for smaller sums that they use to trade.

Pick a Safe Trading Site

It is important that you choose a safe, trustworthy and reputable Bitcoin trading site. There are options of automated trading sites designed for traders with little experience as they buy and sell Bitcoin automatically for you. They also let you sign up with deposits of just $250 but allow you to withdraw up to $20,000, allowing for great flexibility and accessibility.

Many also allow you to invest and trade on mobile smartphones, which means that you have immediate access to your investments allowing you to monitor and trade whenever you need to.

Research Bitcoin and Blockchain

Whatever you choose to invest money in, the most important piece of advice you can ever have is to research and understand exactly where your money is going. It is vital that you are constantly reading up on the industry and see exactly what is happening, as this can indicate where the trend will go. For example, if there are rumours that a big company is investing in cryptocurrency, then the likelihood is that the prices will go up. However, if there are any problems associated with the crypto, chances are it will drop.

Surviving a Bear Market

It isn’t all about rises and wins. Any bitcoin drop can have a knock-on effect on the whole cryptocurrency market. The most important thing though, when you notice a ‘Bear Market’ is happening (drops in the market) is to understand that this is inevitable and not to panic.

Market crashes and drops are common, and before you develop any kind of strategy you need to be prepared for this. When this does happen, you simply need to think of the long term. The most successful traders are those that lose the least when the values drop. As such, you should always be mindful and risk no more than 1% of your capital in one Bitcoin transaction. Whatever you do, do not be tempted to buy a huge sum of bitcoin to compensate for any money you may have lost.  More often than not, this will only end up making your situation worse.

Making Money During a Bear Market

If you have a lot of nerve and the right skill sets then, with the right strategy, you could even make money from a bear market. This is a short term trading strategy and can go one of two ways… it could either double your money or wipe you out.

However, the best thing you could do during this time is to save your capital – and if you know what you are doing and do enough research, you could change the layout of your portfolio by gradually adding different coins that haven’t been as badly affected by the drop. This may help you to strengthen your portfolio for future bear markets.

The End of the Bear Market

If you have managed and developed your Bitcoin strategy well enough, then you should be still financially sound when the downturn comes to an end. Although for stocks and shares, the end of the drop tends to be after a fall of around 20%, cryptocurrencies can drop by over 70% during this time – and this drop could keep on going for up to a year in some instances. Sometimes you just need to sit and hold it out. If you have planned well enough for this scenario, you won’t have invested money that you are depending on during this time, so you can try to ride out the storm.

Eventually, the market will start to rise again and with that, so should your funds. When the Bitcoin price drops to a low level, you can rest assured that investors will start investing again, and eventually the tide will turn and the prices start to rise again.

Accepting the Risks

If you are going into Bitcoin then you need to develop a strategy that prepares you for the highs and the lows of the market. There is always some risk involved and your strategy needs to reflect this.

You need to learn how Bitcoin operates and what events can alter the trajectory of Bitcoin. You need to read up on historical data and look at the Bull and Bear market phases. Knowledge is power, and that is true of Bitcoin investments.