Bitcoin trading and important tips when trading in volatile markets

Mohammed Abdelkhalik
March 6, 2021

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Education article: Bitcoin trading tips

On December 17, 2017, Bitcoin reached its peak and was valued at about $20,000. All the media were talking and writing about it, and it seemed that the early investors became rich overnight, and some experts predicted that its value would reach $1,000,000 before the end of the decade.

However, it did suffer huge losses in 2018, It moderately recovered in 2019 and later witnessed high volatility in 2020, dropping its price to $3800 in the month of March. It then recovered again, but this time it made unexpected big jumps, surpassing its record value above 20000 Dollar, and continued its upward momentum with the beginning of 2021 until it reached a historical level near $60,000.

Despite the pessimistic predictions of many, Bitcoin did not really die out after the big price drops. It managed to recover very quickly, however, similar price fluctuations continue to occur.

Cryptocurrency markets are a lot like the destructive waves rising high before they are crushed. Depending on your target and experience, market conditions may be favorable or dangerous, while shifts between highs and lows can range from the two lowest to massive gains.

Market volatility is a feature present in all financial markets to varying degrees, yet the Bitcoin market is one of the most volatile markets. This is the reason why digital currencies such as Bitcoin can swing from $ 19,000 to $ 22,000 within minutes.

While seasoned traders rejoice at large daily price movements and enable them to achieve large daily gains, for less experienced traders, sharp spikes in volatility can create more challenges than opportunities for less-experienced traders.

Bitcoin market fluctuations

Take advantage of trading during periods of volatility by following the following tips:

  • Trade contracts for the difference

Unlike traditional online trading, CFDs allow traders to benefit from rising and falling markets where a trader can open “long” and “short” positions.

  • Stop loss and take profit

Expand your stop-loss orders and take profit targets to avoid exiting the trade too early. A volatile market may run hundreds of pips in either direction before changing the trend, so expanding targets will enable your position to hold for longer and take profit.

  • Focus on market movements

Minimizing losses comes by focusing on current market movements. If the market is moving in a chaotic manner within a smaller price range, it may be better for you to tighten your profit taking and stop loss before the price breaches.

  • Look more deeply into the Bitcoin market 

You should have a deeper and clearer view of the market. While the market may experience high volatility, looking at price movements over a longer period can help you understand the overall price support and resistance levels of an asset.

  • Use Bitcoin twists to your advantage

Although volatility is not a problem in and of itself, we have to be realistic about it and realize that it comes with additional risks. This means that you need to evaluate your strategy and know how much risk you are willing to take before you invest.
Keep in mind that when you deal with high-risk investments, a bad investment can wipe out gains that have been maintaned for months.

Author Mohammed Abdelkhalik

Professional Trader and Analyst, economist in Financial and Forex market since 2004.holds an MBA from the American University in Egypt. Mohammed works as an economic writer and technical & fundamental analyst for many international Forex and financial trading companies in both English and Arabic on a daily basis.