How to Trade Bitcoin in a Volatile Market

Alex Shelton, Trading Specialist

Trading bitcoin

Bitcoin is the world’s leading cryptocurrency and is known for its volatility. Decentralised and powered by blockchain technology, bitcoin’s instability stems from its fluctuation with fundamentals, including industry trends, regulatory updates, politics and global events. Its volatile nature was magnified during the outbreak of the COVID-19 pandemic, when the crypto markets crashed and bitcoin lost all its 2020 gains.

Bitcoin trading is extremely challenging and it requires both skills and courage to become a competent bitcoin trader. For those who already have the latter, this article will show you some of the best ways to trade bitcoin and help you maximise your potential gains.

Strategies for Bitcoin Trading

Before we start talking you through the different trading strategies you can adopt, let’s first deal with the basics: what is bitcoin trading?

Bitcoin trading revolves around your predictions on the fluctuations of bitcoin price. During bitcoin CFD trading, traders take a position in the cryptocurrency according to their speculations on the future price movements of bitcoin. Whilst doing so, they agree to pay the difference between opening and closing prices resulting from the fluctuations of bitcoin value.

In other words, if a trader’s prediction is accurate, they will earn profit from the price difference. On the contrary, if a trader fails to predict the movements of the value of bitcoin, they will be paying the difference to traders who succeed in their speculations.

Day Trading

Day trading is a highly popular bitcoin trading strategy. Opening and closing a position on the same trading day, day traders aim to make a profit from minor price movements. This strategy allows traders to use the volatility of bitcoin to their advantage. You can also avoid overnight market exposure and the subsequent funding charges.

However, the high volatility of bitcoin means an unforeseeable price surge may surprise you even within a limited time frame. This can be detrimental for day traders. Therefore, day trading can be rather challenging for beginners to handle.

Swing Trading

In contrast to day trading, swing trading focuses on the simultaneous trading of several cryptocurrencies over a period of several days to a couple of months. Swing traders pay constant attention to the ever-changing market trends and adjust their positions accordingly from time to time.

They open and hold a position after speculating the direction of bitcoin, aiming to take a good amount of profit home. For example, a swing trader will open a short position if they predict that bitcoin will hit a local high. If their speculation is that bitcoin will soon be ‘oversold,’ they will change their position and go long.

Once succeeded, swing traders usually move on to the next opportunity rather than hanging around.

Swing trading is less time-consuming than day trading, and it allows traders to focus only on technical analysis.

Nevertheless, adopting this strategy will expose you to overnight and weekend market risk. To minimise potential losses, swing traders tend to trade with smaller position sizes.

After deciding which trading strategy to go with, you can start trading bitcoin CFDs using a reliable trading platform, such as MetaTrader 4 and MetaTrader 5. Exness MetaTrader 4 is available on both desktop and mobile devices. Featuring both instant and market execution, Exness MetaTrader 4 enables you to perform technical analysis using a variety of scripts and indicators. The trading platform is also available in a range of different languages.

Best Hours for Bitcoin Trading

Unlike the stock market, the cryptocurrency market is open 24 hours a day. Bitcoin traders can technically trade at any time from anywhere in the world.

Yet, it is always more beneficial to trade bitcoin when global market activities are the most frequent. Active global markets generate a large number of successful transactions. This intensifies price fluctuations, hence bringing about a larger spread that is likely to bring more profit.

The New York/London Overlap

The several hours when multiple markets across the world are active simultaneously are the ‘golden hours’ for bitcoin trading. The New York/London overlap, which takes place daily between 8 am to 12 pm (New York time) is amongst the most significant time slots.

Statistics suggest that over 70% of trades occur within these couple of hours. There is also a strong correlation between the opening of the New York Stock Exchange and bitcoin volatility. Adding to the mix, the Frankfurt market is active during these four hours, making them even more lucrative.

Hard Skills of Experienced Traders

The success of experienced bitcoin traders lies in both their hard and soft skills. Whilst soft skills may take a long time to cultivate, let’s have a look at some of the hard skills seasoned traders possess that contribute to their gains.

The Use of Stop-Loss Limits

Thanks to the volatility of bitcoin, there is always a chance that the market can go lower than anyone expects. Therefore, seasoned traders often put stop-loss limits in place to prevent catastrophic losses.

When the price of bitcoin drops below what you can tolerate, a stop-loss limit can automatically close your order to cut your losses.

Setting Trailing Stops

Other than stop-loss limits, trailing stops are another risk management tool commonly used amongst experienced traders. Trailing stops follow favourable price movements and will only close your position when the latest, prevailing bitcoin price drops more than your set percentage amount.

The clever use of trailing stops can help you maximise your profits whilst limiting your downside risk.

Frequent Mistakes Amongst Beginners

Can’t wait any longer to embark on your bitcoin trading journey? Don’t forget to avoid the following common mistakes when you start trading.

Emotional Trading

Humans are emotional animals, and many beginners let their emotions guide their trading decisions. The reality is that your emotions do not necessarily have a positive impact on your trading success. Making emotional, irrational trading decisions often leads to unnecessary losses.

Weak Knowledge Base

Bitcoin trading is extremely risky. Building a robust knowledge base about cryptos and CFDs is therefore essential if you are looking to succeed in the bitcoin trading world. Trading bitcoin without sufficient understanding of the market will inevitably result in losses.


Patience is the key to many kinds of success, including bitcoin trading. Many beginners quickly become agitated after opening a long position at the bottom. They start anxiously watching the price movements every few seconds, waiting for it to skyrocket. Eventually, they surrender to the immense stress and end up selling at the wrong time.


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