Over the years, people have found many ways to make money by trading bitcoin. We now live in a world where there are millionaires buying fancy houses and sports cards and traveling the world because of their good investment in bitcoin. In the midst of those millionaires, there are still beginners trying to figure out how the game works and what kind of strategy they want to use to make their money. It’s never too late to invest and learn how the game works.
The thing is, there are a lot of strategies out there that you can make use of. None are better than the other, but each strategy tailors to a different kind of trading.
Different Bitcoin Trading Strategies
“HODL” is one of the most used cryptocurrency slangs. It was created in 2013 when bitcoin’s price was falling but a user decided not to sell. He meant to write “HOLDing” but instead, “HODLing” was born and the community took it to mean “Holding On for Dear Life”. HODLing basically means that you’re going to buy bitcoin at a certain price and pray that your investment grows over time. HODLers believe that the coin they invested in will be profitable one day, even if it isn’t profitable today.
HODLing is probably the easiest among all the other strategies. When the price of bitcoin drops, that’s the best time to buy bitcoin in bulk. Keep your bitcoins close, keep watch on the crypto market, and hope that your investment will grow. Beware that the price of cryptocurrency goes up and down pretty consistently. So hodl at your own risk.
Although HODLing is not technically a form of trading, it’s certainly a way to invest in bitcoin.
One of the more common forms, day-trading is the form of trading that happens all within a single trading day. It involves executing long and short trades to capitalize on the market price of the day. Basically, you conduct trades during the day and close all your trades by the end of the day to prevent open positions overnight.
The downside to day trading is that it’s very technical and has a very steep learning curve. To counteract this, make sure to do extensive research and quit your day job because this is going to take up a lot of your time. You’ll need to watch multiple screens to spot trade opportunities and then quickly exploit them. It’s done day after day which requires a high degree of focus and concentration, not to mention the amount of knowledge needed to capitalize on opportunities.
Compared to day-trading, swing-trading is kind of the opposite. You won’t really need to keep your eyes glued to your monitors and you won’t have to quit your day job. You can swing-trade as a side profit as long as you have the investment capital.
Swing traders hold open positions. They hold these positions over short periods of time. According to BitcoinMarketJournal, these positions can last from as short as overnight to as long as several weeks. Swing traders buy and sell bitcoins during significant raises and dips in bitcoin’s price respectively.
Comparing it once again to day-trading, swing traders run the risk of larger losses since they hold their positions for longer periods of time.
Since the birth of many new cryptocurrencies, “alt-coin flipping” has grown in popularity and is now one of the most common methods of trading. “Alt-coin flipping” refers to the trading of various altcoins in the hopes that you can manipulate the prices into earning a profit.
Related to altcoin flipping, you can also check how profitable altcoin mining can be. Bitcoin cash mining profitability can be something to look into.
If you’re planning to trade altcoins, it’s important to note that most of these coins can only be bought with bitcoin, not fiat currencies. Also, if you’re going to use this strategy, make sure to keep track of all your trades via Excel or Google Spreadsheet. There are tons of bitcoin excel spreadsheet templates on the web to use.
For a more in-depth tutorial on how to flip your altcoins, check out this article done by DeepDotWeb.
On these platforms, buyers and sellers find each other and trade on their terms guided by the platform of their choice. With the vast number of payment options, you can trade almost anything for bitcoin as well as sell your extra bitcoin for any of the available payment methods. An example of this would be to use your bitcoins to buy discounted gift cards that you can sell back. You could also stack the gift cards, buy a product with those gift cards, and then sell the product (you could turn your iTunes gift cards into a new iPad). It is recommended that you use Paxful as they specialize in gift cards. Although gift cards may be their specialty, they also have other payment options to choose from. The basically add more to the mix than any other peer-to-peer marketplace.
Using it in E-commerce
If you’re a business owner and are looking to accept bitcoin as a payment method, then there are a ton of easy ways to do so. There are apps, online payment intermediaries, or you could start small by putting up a small sign on your website saying that you accept bitcoins as payment. It’s as simple as registering yourself up for an online wallet and giving the wallet address out to your customers.
There are also a ton of affiliate programs out there that you can take advantage of. These programs will help you earn a passive income on the side while you focus on your business.
In comparison to peer-to-peer platforms, traditional bitcoin exchanges are more popular and more well-known since they’ve been around for a longer time. On these exchanges, buyers and sellers are matched via order book and a middleman is tasked to complete the task for them. They’re very easy to use and can provide more privacy as users rarely have to interact with their trade partner.
The downside is that since there’s a middleman, there are higher fees compared to a peer-to-peer marketplace.
Which style suits you?
Now that you know the more popular forms of bitcoin trading, it’s time for you to decide which strategy suits you the most. Be sure to make use of all the bitcoin tools at your disposal. You can also look for bitcoin-friendly banks and it’ll make your trading experience much easier.
Let us know which style of trading suits you the most! All of us here at We The Cryptos are bitcoin enthusiasts ourselves and we’d love the insight!