Learn About Bitcoin Contract for Different Trading Strategies

Bitcoin has been traded for some time and here we look at the CFD trading strategy and its relevance to bitcoins trading.

Bitcoin CFD Trading Strategy

CFD stands for Contract for Difference, which means that one trades a derivative product of the underlying asset. This trading allows one to make profits due to changes in prices of underlying assets without actually owning them. CFDs have a few characteristics, for instance, they allow one to make money from rising prices of an asset and, in addition, don’t trade on exchanges that are mostly liquid. Online companies such as ForexTime have packages that allow their clients to practice Bitcoin CFD trading as well as with other cryptocurrencies.

What Is Bitcoin CFD Trading

Bitcoin CFD allows a person to speculate on a change in the price of the cryptocurrency. When someone feels the price of Bitcoin will go up, he or she can open an account at a CFD broker and go long on the bitcoin CFD. If the Bitcoin price surges, the person will win against the broker. Bitcoin CFD trading is available for clients in many countries with active stock exchange markets such as Nigeria.

Trading Strategies

When one decides to go into stocks’ markets, it is necessary to study the strategies so as to take care of the finance and resources they invest in Bitcoin.

1. Long vs Short

When active investors purchase a digital currency or any other asset, it is commonly referred to as a ‘long position’. This requires an expectation that currency, in this case – bitcoin, will gain value over the trader. Contrary, a short position occurs when an investor trades the bitcoin at a certain level with the intention of buying it back at a later date. In bitcoin trading, short positions are quite rare since it has a frequency of rising price and falling making long CFD trading more common.

2. Wallets

Virtual wallets allow to improve security when trading and more so when participating in Bitcoin CFD trading. Over the years, there have been breaches and hacks on the digital cryptocurrency, and the introduction of wallets has helped to improve the situation. Bitcoin investors and brokers can help insulate their currency holdings from hacks.

3. On-Balance Volume

This is basically an indicator of bitcoin day trading and is used to analyze the total money flow in and out of an instrument (wallet). Frequently referred to as OBV, it uses a combination of volume and price activity and tells one how much money is going in and out of the market. This strategy is commonly used in the South Africa Bitcoin CFD trading system.

If bitcoin is trading up and, at the same time, the OBV was trading down, it is simply an indication that people are selling into the rally and this can be improved with the help of the CFD trading strategy. The above theory is also applicable in reverse.

What every investor expects to see is the OBV moving in the same direction as the bitcoin price, bringing the CFD idea into perspective. In this regard, most bitcoin investors use on-balance volume to apply this information together with the cryptocurrency trading strategy.

Among the best strategies for Forex trading, there is an 85% price action strategy and a 15% cryptocurrency trading strategy, thus, making the OBV strategy very essential in assisting Bitcoin CFD trading.

Bitcoin CFD traders are more or less both traditional stock investors with a digital currency advantage making them more flexible and have higher levels of profitability. Through the above strategies, traders gain in a relatively short period of time, plus the ability to use CFDs opens up more trading opportunities.

Guest Post