Riding the Trend
Most financial markets will have long-term price trends to make money trading bitcoins. In these the general direction of motion will be in one direction for months or years at a time. The price will go up and down all the time, of course, but a clear trend will remain. Some long term traders will simply look for this long-term trend and trade in that direction. You do not even have to spot the point at which a trend turns and a new one begins in the opposite direction, as long as you don’t need to cash out any time soon using an online crypto trading platform.
Alternatively to Riding the Trend, where you might hold your investment for months or years, day-trading involves profiting from the short-term movements. These can happen on a time scale as short as from minute-to-minute or even less, since the markets are driven by sentiment and herd mentality as well as by appreciation of the long-term value or potential. Bitcoin is still in its infancy and has a relatively small market cap, and comparatively small amounts of money (by expert day traders’ standards) put into or taken out of it can push the price significantly one way or another – only to have the effect amplified by other traders who want to get in on the next major movement and make money trading bitcoins.
This method uses a range of technical indicators that are usually available on the crypto trading platform, to look for the turning points in short-term trends. You can then profit from the daily swings up and down in the price of Bitcoin, regardless of whether the long-term direction is up or down. This often involves looking for ‘support’ and ‘resistance’ levels.
Leverage Your Positions
Leverage, or margin trading, means borrowing money on a short-term basis to speculate on the price of bitcoin. The loan is paid back when you exit the position so you can make money trading bitcoins.
Margin trading can magnify your profits 10 fold but, you can also lose a lot of money this way: if the price goes the opposite direction then you expect. It is potentially extremely profitable, but can also be very costly.
Shorting the Markets
Shorting is a way of profiting from downward movements in price. Usually you would need to purchase bitcoins to profit, selling them at a higher price and pocketing the difference. If you want to profit from the price falling, you must own bitcoins in the first place on a crypto trading platform. You sell them and buy back at a lower price. This is the simplest way of shorting, but it only works if you have bitcoins in your account.
Scalping is a strategy applied mostly within short term trading timeframes. The trading profit earned is the difference between bid price buying and ask price selling. Scalping works well in a quiet market, and for smaller amounts.
This is a more complicated strategy compared to day trading where the timeframe can be as long as from many days to months. To execute this trading strategy, you will have to consider many different factors and analyze the long-term market trends. In general, positions can be opened as soon as a trend is established, and closed when it breaks.