The classic way to trade any asset, and especially cryptocurrencies; is to "buy the dips". In other words, buying in when an asset price is settled at a low. It is important to note that this does not mean "buying when the asset is going down", but buying when the asset truly seems to have settled at a certain low. This can be determined through various techniques of technical and even fundamental analysis. Another way to look at "buy the dips" is to “buy when the price starts recovering"; and this is solely because prices in Cryptocurrencies never settle for that long. All of this makes it very clear that strategy is key when trading Cryptocurrencies, with an extra special emphasis on timing and buying in just at the right time. Faulty timing could lead to losses at the very worst, or lack of ability to make maximal profit at the very best. The other half of this strategy is, of course, to sell at peaks after the price settles again. Alternatively, the asset could also be sold while the asset is still going up while on a good streak, or when the prices are just starting to come back down again.
To sum up - the strategy of "buying the dips” means aiming to buy as low as possible, which is always followed with the latter half of the strategy which is “selling high.”
Going deeper into this strategy, we discover two variations. One can “buy the big dips” (buying when the price has fallen much below the average and then settled) or we can “buy the little dips” (buying when the price has fallen from wherever it last was then settles). Then, we can aim to sell back on the spot, or we can calculate the dollar cost average and build a longer-term position to hold over time.
This strategy isn't a promise for profits (like any strategy), but it certainly is the best bet. Any trader making money from Cryptocurrencies no doubt uses this classic strategy. What is needed for this strategy is a basic understanding of the markets, how the prices interact, understanding of technical analysis and a knack for timing.
The benefits of trading Bitcoin and Cryptocurrencies
- Markets never close – Trading 24/7, 365
- Leverage available
- Extreme volatility – Large gains available
- Flexible capital requirements – Start small or large, up to you
- Recycle knowledge – Standard indication for assets also works with Bitcoin and Crypto
- Algo-trading, arbitrage trading, signals and other “robots” can be used to generate profits