From around $17.4k to $3,800 a year later and then again back up to reach over $50,000 in February 2021, prices of Bitcoin (BTC) have taken everyone for a roller-coaster ride. This high volatility in the BTC prices has made early investors and traders fortunes overnight.
Yes, the profits associated with trading and investing in cryptocurrency are huge. But, they also come with additional risks. Therefore, it is important that you make smart and educated choices and strategies when investing your funds in cryptocurrency.
However, it is easier said than done. This is why it is suggested that you follow expert strategies using PrimeXBT’s Covesting module to make decisions for you until you feel confident.
Take Advantage Of Bitcoin’s volatility.
Let’s look at how you can make money on Bitcoin volatility using some popular strategies.
- Going Long On Bitcoin’s Price
Going long on Bitcoin refers to buying it at a low price, waiting for the prices to rise before you sell it to earn profit. This strategy is most suitable for people who want to make money in a bullish market. In this case, the difference between your buying price and selling price will be your profit.
- Going Short On Bitcoin’s Price
Going short on Bitcoin refers to selling a Bitcoin at a higher price to repurchase it when the price drops. In contrast to going long, going short is for traders counting on a bearish market trend. In this case, the difference between your original selling price and your new buying price is your profit.
Let’s try to understand these positions with an example.
Suppose you bought 1BTC for $15,000 and want to go long. So, you’ll wait for the BTC price to rise before selling. In this case, when the BTC price reaches $30,000, making your overall profit is $15,000.
- Value of Bitcoin = $15,000
- Selling price = $30,000
Total Profit = Selling Price – BTC Value = $30,000 – $15,000 = $15,000
Suppose you open a short position or sell your BTC at $20,000 in February (You can open a short position at 0.01 BTC because of available 1:100 leverage).
Now, you wait for the price to fall so that you can repurchase it, like in March for $15,000. In this case, your profit will be $5,000 that will be transferred to your wallet or account, and you can use the bitcoin to repay if you used the leverage.
- Selling Price – $20,000
- Buying Price – $15,000
Profit = Selling Price – Buying Price = $20,000 – $15,000 =$5,000
Using PrimeXBT’s Covesting Module
Crypto-trading, like trading in the share market, comes with many technical jargons and technical aspects that take time to learn.
Instead of waiting for months to do your own research, you can use PrimeXBT’s Covesting Module that allows you to mimic the trading activities of different top strategy managers. This will allow you to earn a similar profit ratio as the top investors.
How To Choose The Right Covesting Strategy For Success?
Let’s consider some things that you must consider while choosing the right covesting strategy for success and profits.
- Do Your Research
It is important that you do your research and determines the consistent performers from the pool. No matter how skillful or experienced you’re, every trader loses some money at times. But, how they’re able to manage their losses while protecting the capital is more important.
- Massive Gains Requires Massive Risks
Some strategies might offer quicker and exponentially more gains when compared to others. But higher the gains a strategy offers, the higher the risk of losing your money.
- Check Manager Equity
Every strategy page offers you insight into how much equity the strategy manager has vested into the strategy. More equity means that the manager will be careful about the actions he takes.
- Look At Historical Margin
Each strategy offers a historical graph showing the margin between 0% to 100%. This graph will help you determine the risk involved with the strategy.
Remember, the higher the number, the lesser the risk and vice versa.
- Secure Your Profits
One day, you’ll see the Bitcoin prices soaring high and the next day dripping to the lowest limits. No matter how consistently a strategy is performing, your money is always at risk.
So, it is better to secure your gains when you make a profit and reinvest later again.
- Re-Evaluate & Diversify Strategies
It is wise to reevaluate your decisions after periods to understand if the strategies are still performing or not. Keep an eye out for other options and managers. It’s because what was not working yesterday might be working today, and your consistently performing strategy might start incurring losses.
Moreover, never put all your eggs in one basket.
Is PrimeXBT’s Covesting Module Risky?
All these strategies are managed by humans and can result in losses. Needless to say, the moment you invest your funds with the hope of gaining profits, they become vulnerable to market uncertainties and hence losses. As a thumb rule, always invest that amount you can afford to lose without hurting your lifestyle.
However, doing some research and investing your money with managers who have remarkable track records is the right way to go.
It takes time to gain experience and understand the minute details associated with investing in cryptocurrency, especially Bitcoin. But, it doesn’t mean that you need to wait for months before actually making any profit.
Short and long positions are two options to go about Bitcoin trading. Or, you can select from a pool of expert traders to follow their strategies and earn profit along with them. However, if you decide to do the latter, don’t forget to do your research as markets are unpredictable and can result in losses rather than profit.