3 Best Bitcoin Trading Strategies: In Depth Analysis Of An Expert

By Wilbert S

January 10, 2024   •   Fact checked by Dumb Little Man

Want to jump straight to the answer? The best cryptocurrency brokers for traders are Coinbase and Gemini

The #1 Crypto and Forex Trading Course is Asia Forex Mentor

Trading skills are valuable as you can apply them for a lifelong career. And successful traders master the trading skills and go a notch higher – they thrive in markets with strategies that are tried and tested.

Therefore, over and above the strategies, traders are required to approach markets with enough time taken to analyze the markets to verify if all conditions have been met. This post aims to expound on 3 simple Bitcoin trading approaches. Bitcoin traders can master the three within short spans of time and get ahead to trade successfully.

As part of giving back, we’ll seek the expertise of Ezekiel Chew to share the simple Bitcoin strategies that traders can take on and excel in the markets. He is a lead trainer and mentor via Asia Forex Mentor. On the sidelines, He speaks at major global Forex events and gives market analysis that helps retail traders across the markets.

In finer detail, Ezekiel Chew helps traders build trading skills and test strategies to trade crypto on trading platforms. You can access a ton of information from his site, which also includes a training package. In this post, he will share three key strategies that are suitable for Bitcoin traders.

3 Best Bitcoin Trading Approaches on a Trading Platform

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Cryptocurrencies have been a hype since the inception of Bitcoin. And market actors agree that they are risky and volatile investments, especially when traders approach them over long-term investment plans.

Day traders, however, view the high volatility as an opportunity, which they target to rake in lots of money. The opportunities are limitless in the cryptocurrency market, and we’ll highlight three BTC trading strategies here.

The beauty of cryptocurrencies builds on the way traders thrive with volatility. Actually, for Bitcoin and others as well, there’s no difference if you approach it as a currency or an asset. So the trading skills apply across the board.

Therefore, in that order, trading crypto has many strategies applicable to any trading platform. Also, the skills applicable to trading cryptocurrency are equally helpful to Forex and stocks. The overarching point here is to take on the opportunities with clear targets with the aspects of high volatility, which adds to the turbulence in the markets.

While at it, the key aspect is to get handy tricks to help thrive within the awareness of the strengths against the weaknesses of each. When such comes into the picture, it helps traders to define a trading style that suits the unique needs and situations at an individual trading level.

For the purpose of this post, the three strategies we’ll cover are helpful to newbie traders looking to take on digital assets for crypto investments. Over time, traders accustom themselves and are able to refine more complex strategies and grow towards more expertise along the way.

3 Cryptocurrency Trading Strategies for High Market volatility

#1. The Dollar Cost Averaging Strategy

The Dollar Cost Averaging or DCA appears as more of an investment strategy than it is for day trading. According to Reddit, many traders use the DCA as one of the BTC trading strategies that have low risks for starters.

DCA for investors looking to profit from Bitcoin takes long-term timelines and builds on a very simple idea. In reality, an investor does not invest all of it at once. On the contrary, the investor invests it in small portions at intervals of choice.

Let’s see that in a practical example of DCA in trading cryptocurrencies

Assuming you have a sum of $10,000 and you are to invest in a Cryptocurrency of choice, like Bitcoin. Therefore, as per the model with DCA, you’ll not transact once with the entire amount – $10,000.00. Rather, you’ll approach the investment in 20 equal portions of $500. And the options are limitless, for you may choose to do lots of 4100 or $50. Next, all you require is to pick an interval after which you’ll invest your lots.

The next portion is ensuring you adhere to the set intervals as you make the investments. And the rules are not cast in stone. You could do weekly lots or monthly, or quarterly. And over and above the set intervals, the next point that needs to be clear is that the investor has no worry about the price fluctuation of the target assets – Bitcoin in this case. Therefore, upon the expiry of every interval, the investor purchases a lot of Bitcoin.

As a consequence, the amount of BTC you’ll have keeps fluctuating as per the price of Bitcoin every time you make a purchase. The ideal position here is to ensure that you avoid the shock of investing all at once and risking too much in case the price goes against all of the capital at once.

The lots you spread the investments ensure that you spread the volatility across your investment timespan. Across the investments, you may capture an advantageous moment by buying when the price is too low. It means you get more units of BTC. If after prices shoot upwards, you end up holding huge amounts worth of BTC.

An investor might end up owning a reasonably high amount of Bitcoin than the position if they purchased the Bitcoin all in one go. As part of the simplicity, Dollar Cost Averaging suits beginners who are not deeply conversant with the fluctuations that occur every now and then across the Bitcoin market.

If you consider everything in the process, investors may even take the option of taking on the entire process with bots to automate the investments. A trading bot can pick on the rules you set and follow them without getting any more input from your end.

Looking at the opportunities, investors may only get returns; far below they would as the DCA strategy escapes few opportunistic events with the markets. Realistically, markets keep swinging between the lows and the heights. In order to take more advantage of the price swings, it may be better to make the investments manually. However, going the manual way is riskier and takes time for them to analyze the price action.

#2. Golden Cross/Death Cross

The Golden Cross/Death Cross strategy may almost scare new investors, but it’s straightforward to grasp the concept and invest practically following it. It remains among the leading strategies for Bitcoin trading strategies. And the core here is to trade using two moving averages or MA’s to analyze the markets and spot trading signals. And the signals are either for short or long trades.

In Technical Analysis, Golden Cross or Death Cross Occurs at Intersections of MA 200 and MA 50.

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In technical analysis, the moving averages (MAs) use mathematics and computer science to arrive at an average crypto asset’s price of an underlying asset over specific periods or time frames. The strategy follows two benchmark MA’s, the 50 and 200 periods MA’s. What investors look for are the points of intersection between the two MA’s.

It’s worth pointing out that: Once a Golden cross happens when the 50 period MA crosses to the upper side of the 200 periods MA. Conversely, whenever the 50 period MA crosses the 200 MA from the upper side, it’s a Death cross. In other words, a convergence witnesses the 50Ma crossing above the 200 MA as the Golden crossing. A divergence or Death crossing occurs where the 200 MA crosses above the 50 MA.

Trading this strategy involves monitoring the MA’s for a long time, more than 18 months, and beyond. Therefore, it’s a simple and effective long-term strategy. And what matters most is the information investors derive from the two events: Convergence and Divergence.

A convergence is a Buy signal

It infers short-term momentum overpowering the long-term momentum. In simpler words, buyers are in control of a market. Hence they drive prices higher.

A divergence equals a sell signal

Or a scenario where short-term momentum lags behind long-term momentum. In this scenario, many sellers are disposing of assets and leaving the market. Therefore, supply pressure overpowers buyers, and prices tank lower within subsequent time frames.

One great point here is the fact that MAs are freely accessible tools for traders/investors. They are accessible from any charting tool. Of course, charting software allows other tweaks like timeframes and the Moving averages or the MA’s. Also, another good hint here is to use one chart window and project both MA’s on a single chart. It makes it easier to compare and monitor the directions of the projecting MAs.

While trading the strategy, you’ll come across some drawbacks. Crossings are meant for investors looking to capitalize on the volatile nature of asset prices across timeframes. While the convergence and divergences happen quite frequently across the markets, there are times things get rare. When markets consolidate, it gets challenging for traders to spot the opportunities with MA’s and substantial crossovers.

Of course, there are rare moments when the crosses happen and draw false positives instead. On other occasions, there’s a high frequency of long and short signals. And instead of account growth, drawdowns reduce the capital in proportion to the losses made.

 It’s quite rare to experience long spells of low volatility in the crypto markets

When taken up well, traders can gain more than the losses. Moreover, it’s worth counting on this as a long-term strategy with periods of no less than 18 months. From a broader point of view, trading MA crossings get enrichment when traders combine other value-adding indicators to better sharpen trading strategies.

#3. RSI Divergence

RSI stands for the Relative Strength Index. Investors taking on the markets with the RSI Divergence indicator have to level up with a steep learning curve to comprehensively grasp the fine details.

However, it’s one effective indicator for spotting trend reversals as they build up at the extremes of a current trend. Investors have to be aware – the RSI – indicator comes free with charting software like MT4s.

In finer detail, the RSI indicator is a momentum monitor. By default, it picks from the gains vis-a-vis losses over a period counting 14 days. Typically, an RSI shows as a line graph oscillating between the confines of zero to 100.

Applicable Scores for RSI Indicator:

According to market risk inference, an RSI value of more than 70 shows that an asset’s price is within overbought territories. Else, if it drops below 30, it shows an asset is oversold. RSI helps sniff trend reversals where prices stagnate while trending in one direction before changing course. RSI detects both reversals: for uptrends and downtrends.

Investors who are able to notice the transitions are at a greater advantage in capturing impending reversals and bagging good returns. As part of the inferences, investors concentrate on two areas: RSI above 70 or below 30. The middle part does not help with this strategy.

Also, as RSI above 70 shows overbought, markets tend to correct themselves when prices shift lower. Also, at RSI below 30 – oversold markets are correct by prices rising consistently. So it works with traders selling high and buying low in that order. Experts guide that the RSI applies for timeframes not less than the 4-Hours. Therefore, the indicator is helpful for traders hunting for moderate to long time frames.

On most occasions, RSI trends in the same direction as the price.

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Therefore, traders look for discrepancies, where RSI moves in a direction opposite to the price. As such, selling or buying volumes change as the reversal potential builds up.

One key aspect we need to highlight with more emphasis to traders regards the occurrence of false positives with the RSI indicator readings. And a well-applicable scenario is where RSI says -Overbought. Of course, a potential sell signal, yet the prices keep shifting to lower levels over time. And the reverse also applies for a false buy signal when RSI shows- Overbought conditions.

Therefore, it’s best to combine RSI with another indicator that helps identify the false positives. It will give more accurate data whenever traders confirm with a second layer of information about the market movements. By and large, that’s the model way to approach markets realistically by building on the tools available for speculation.

Best Crypto and Forex Trading Course

Ezekiel Chew's Biography
Photo: asiaforexmentor.com

The best Forex trading course is the One core Program by the Asia Forex Mentor. Trading Cryptocurrencies has no difference from trading Forex or the stock markets. The only unique and prominent factor with cryptocurrencies is their volatility. And volatility, aside from being risky by itself, presents opportunities.

One Core Program is a three-tier approach that often is the last stop for traders looking for the correct ways to trade profitably for a lifetime. At the apex of the course, traders are able to hand pick very few trade setups that hit six figures following a risk-free model. The analytical process towards that is a mathematically proven formula that protects profit and helps grow ROI in an almost hassle-free approach.

Correct trading concepts apply across the markets, and the One Core Program benefits retail traders or institutional traders looking to take their skills from novice to pro. If you are looking for a course that will forever change your trading, fast track your progress with the One Core program.

Across the board, One Core Program refines your approach to markets by transforming your trading psychology and the correct way a trader is to approach the markets. It’s a course with a core emphasis on in-depth market analysis. And as part of the analytical approach is the use of various market indicators.

Confidence is a key factor for a trader, and that’s what One Core Program inherently builds in a trader. The next bit falls into focus with trade-set-up selection. The aim of the One Core Program is to pick very few plus highly probable ones. Of course, with an aim to cut losing trades at the earliest chances.

Lastly, the One Core Program helps you upscale confidence to a superior level. And traders hit that level via the pre-planning of trades approach and the mentorship phase – all of which culminate in the indoctrination as Lifestyle traders. Lifestyle traders are in a pro-category that goes on with ordinary life hustles bank bigger ROI than a Day trader in the long run yet.




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Conclusion: Bitcoin Trading Strategies

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The Dollar Cost Averaging,-DCA, Golden and Death Crossings, and the RSI indicator are the three simplest trading strategies Novice traders can apply as BTC trading plans for starters. Carefully implementing the three will help traders will starters experience rake in some incomes trading crypto-assets.

Investors are free to explore more from online forums like Cryptocurrency Strategy Reddit as well as digging deeper via the BTC trading plans PDF that’s online. Once they get more comfortable, there’s more room to explore more complex and equally more profitable strategies to trade Cryptocurrencies.

And we need to lay a fact very clear here: there’s really no known most profitable strategy for trading crypto-assets.

Feasible strategies are reliant on market conditions which are not regular occurrences. However, the three trading plans via this post are helpful enough- of course, with others are trading building blocks in place.

Traders find themselves in varying investor situations. Probable you plan to get into a full-time crypto-assets trader, and in that order, it requires more complex trading plans. As part of the complexity, an investor may want to explore strategies featuring crypto-asset futures. As a part of caution, full-time trading crypto-assets are an entirely different category of risk-taking. And it equally requires advanced risk mitigation strategies for the investors.

Crypto-trading is a whole lot of complex plane, and investors are not limited in exploring the strategies. Agreeably, just as normal trading goes, traders can release their exploratory inspirations at grabbing, experimenting, and refining whatever strategies the online forays have to share. And essentially, trading a good way involves grasping the basics yet going overboard with refining what works at the individual levels.

Bitcoin Trading Strategies FAQs

What is the best trading strategy for Bitcoin?

Truthfully putting it into words, there’s no best strategy for trading Bitcoin as a highly volatile asset. Sometimes, marketing-oriented traders may sweeten your crypto trading bait with that false promise about the crypto market, a killer trading strategy, and the trading volume.

And best, being brutally honest – no trading strategy in crypto trading will get you rich in a day.

On the flip side, Bitcoin traders can deploy ordinary indicators to analyze markets and trade crypto. To be real, they use a combination – where if one indicator misses a metric, another highlights it. In the cumulative approach, pro-traders tweak strategies that suit individual case scenarios to help them bank profit where an ordinary trading strategy would fail.

Can I Get Rich From Bitcoin Trading on Cryptocurrency Exchanges?

Yes, you can. The first is to appreciate that Bitcoin is a highly volatile digital asset. And regarding that, planning to get rich from trading Bitcoin is a huge reality that calls for a foolproof strategy from crypto investors. New traders go for greed or better dive in once and most probably with a large amount of capital – a recipe for disaster.

However, they can strive hard to become quant traders or advanced traders in the crypto market who ride high-frequency trading volume by targeting cryptocurrency options.

Across the board, a strategic Bitcoin trader will do more analysis than you can ever imagine. And yet very cautious with the approach they make. First, they’ll ride on a documented strategy – not hope. For instance, the DCA approach may take them over a decade. Else, take micro-lot transactions that they hold for long enough to benefit from the volatility – selling the highs and buying the dips on their way to riches by trading Bitcoin.




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Wilbert S

Wilbert is an avid researcher and is deeply passionate about finance and health. When he's not working, he writes research and review articles by doing a thorough analysis on the products based on personal experience, user reviews and feedbacks from forums, quora, reddit, trustpilot amongst others.

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