Elementary Strategies of Bitcoin Trading — Part 1: Linear Trading

Linear trading is one of the basic strategies used for medium — long-term Bitcoin and crypto trading. A prerequisite for success of this strategy is a trust in the value of the trading asset and its subsequent ongoing evaluation. In the case of Bitcoin and cryptocurrencies, it is constant reduction of the average price (long-term when constantly opening DC contracts) even below 0.

First one needs to identify a trend and theoretical long-term convergent average price. For accelerating assets, it is needed to create the trend line better (using Fibonacci fans, etc.).

The next important step is to adjust the trading to the goal we are trying to achieve (low — lower risk, high — high risk asset valuation).

High risk (i.e. closest Fibonacci retracement) is trading on narrower price range, where just the last trend movement is valuated and Bitcoin is bought in % the same, in every price range defined by the Fibonacci replacement. In practise, there is a situation, when we bought the whole intended amount in the price range of 5–15 %.

This strategy is widespread not only where Bitcoin and cryptocurrencies are concerned, but also in global stocks (esp. stock markets).

Lower risk (i.e. full price assets) is trading on wider (whole) price range, where we evaluate the price of assets according to market psychology (points of turnover — display of trend bands, total capitalization — market capitalization graph, price per unit — by 1 K, size of margin positions — bitfinex, 3M futures contracts.

To be continued..

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