• Skip to primary navigation
  • Skip to content
  • Skip to footer
StoneX®

Trade Futures, Spreads and Options with Confidence.

Top Navigation

  • Open a Futures Account
  • Sign Up
  • Log in
  • 1.800.800.3840

Primary Navigation Menu

  • About
    • Who We Are
    • Services
    • Risk Disclosure
    • COVID-19
  • Trade
    • Broker-Assisted
    • Self-Directed / Online
    • Request Pricing
  • Hedge
    • Ag Marketing Plan
    • WASDE Analysis
    • Grain Resources
    • Livestock / Dairy Resources
    • Request Pricing
  • Invest
    • Automated Strategies
    • Managed Futures
    • Request Pricing
  • Advisories
    • GENERAL / FUNDAMENTAL
      • DT Newsletter
      • Insider Market Advisory
      • Turner’s Take Newsletter & Podcast
    • TECHNICAL ANALYSIS
      • The Cullen Outlook
      • Data Feed Trade
      • Jarboe Trading Journal
      • Trade Spotlight
    • AG MARKETING
      • Cattleman’s Advisory
      • Technical Ag Knowledge
      • Turner’s Take Ag Marketing
    • THIRD-PARTY RESOURCES
      • CFRN
      • Moore Research Center, Inc. (MRCI)
      • OptionWorks®
      • TASMarketProfile.com
  • Education
    • CME Group Resource Center
    • CME Group Offers
    • Small Exchange Resources
    • Guides
    • Frequently Asked Questions
    • Order Entry Handbook
  • Blog
    • Futures 101
    • Ag Marketing
    • Tips & Strategies
    • Trading Advisories
  • Resources
    • Trading Software
    • Quotes and Charts
    • Futures Calendars
    • Contract Specifications
    • Margin Requirements
    • Futures Calculator
  • Accounts
    • Apply
    • Access My Account
    • Funding
  • Contact
 

5 Key Bitcoin Trading Tips

December 11, 2017 by Daniels Trading| Futures 101

Bitcoin Trading Tips

Without question, 2017 has been the year of bitcoin. Its explosion in popularity has created a global buzz among consumers, traders, and investors. Transaction speed, low fees, value increases, and other factors have persuaded people from around the world to make Bitcoin one of their primary modes of exchange.

As a result, large groups of traders have capitalized upon the boom in bitcoin trading in the spot, CFD, and futures markets. In an environment that is best described as “turbulent,” discipline and dedication are two indispensable prerequisites for success.

Here are five tips for turning the inherent volatility of Bitcoin trading in your favor:

  1. Become fluent in technical analysis
  2. Adopt a sustainable pace
  3. Stay aware of news items
  4. Implement stop losses
  5. Use prudent leverage

Let’s look at each of these in greater detail.

Bitcoin Trading Tip #1: Become Fluent in Technical Analysis

The nature of Bitcoin makes it an outlier in comparison to other asset classes or currencies. There is no central bank or governing body to influence its valuation. News events can have unpredictable impacts, and other financial instruments exhibit sporadic correlations. In fact, Bitcoin pricing models are largely speculative, ignoring a great deal of traditional financial theory.

Understanding the basics of technical analysis is an absolute must before entering the Bitcoin markets. In many ways, price itself provides the only dependable clues pertaining to Bitcoin’s future value. The lack of relevant market fundamentals places an impetus upon analyzing pricing charts, applying indicators, and reading price action.

Bitcoin Trading Tip #2: Adopt a Sustainable Pace

Trading is a marathon, not a sprint. One of the most important tasks facing Bitcoin market participants is establishing a schedule that is sustainable over the long haul. Putting in extraordinarily long hours on a daily basis leads to burnout and subpar performance.

The market hours for Bitcoin are long:

Venue Business Hours
Cash market 24 hours a day, 7 days a week
CFD 24 hours a day, 5 days a week
Futures 23 hours a day, 5 days a week

No one can trade effectively 24/7. The best practice is to adopt a manageable schedule by outlining the optimal times to trade and focus on those periods exclusively.

Learn more about Bitcoin futures options here.

Bitcoin Trading Tip #3: Stay Aware of News Items

Bitcoin is unique in that typical news items do not have a predictable impact upon the markets. There are no scheduled GDP releases, WASDE or EIA inventory reports to boost participation and skew pricing.

However, unexpected news items are capable of greatly influencing Bitcoin price. Recent examples include:

Date Event Bitcoin Value
9/14/ 2017 China announces ban on cryptocurrency exchanges -9.3%
10/10/2017 Russia announces ban on Bitcoin exchanges -12.5%
11/1/2017 CME Group announces Bitcoin futures launch +3.8%
11/21/2017 Hack of virtual currency system Tether -5.3%

  

If you’re going to start trading Bitcoin, it’s a good idea to have access to a live news feed and keep an eye on it.

Bitcoin Trading Tip #4: Implement Stop Losses

Consistent volatility is an attribute of Bitcoin markets that is particularly attractive to active traders and investors. Valuations regularly fluctuate between 5 percent and 10 percent daily , creating opportunities for traders with an appetite for risk.

No matter if a trader is engaging the cash, CFD, or Bitcoin futures markets, using stop losses is a must when trading Bitcoin. The wide swings in pricing are certainly ripe for profit, but the potential for catastrophe does exist.

It’s absolutely imperative that you use a stop loss somewhere in the market — the exact placement will vary — to protect any open position.

Bitcoin Trading Tip #5: Use Prudent Leverage

It’s a cliché, but leverage is truly a double-edged sword: It boosts gains but magnifies losses. Too much leverage promotes reckless money management and will lead to blowing out your trading account. Too little can hinder performance because premium trades may not perform up to their capabilities. Ultimately, effectively managing leverage is a balancing act that a Bitcoin trader must conduct.

Bitcoin futures products may help you manage leverage because they place an extra emphasis on proper leveraging. The offerings of the CME Group and Chicago Futures Exchange (CFE) are priced at $25 and $10 per tick, respectively. To say the least, it can be capitally intensive to take multicontract positions.

A simple way to define position sizing is the 3 percent rule. Under its parameters, a maximum of 3 percent of the trading account may be assigned to a single trade. This ensures the proper alignment of risk to reward with respect to position sizing and stop loss location.

Getting Started

The Bitcoin futures markets offer a secure, regulated venue to trade Bitcoin. If you are interested in becoming active in Bitcoin, be sure to visit Daniels Trading’s Bitcoin Page for more information.

Related Bitcoin Articles

Trade Statistics: Can a Market Be Due? - Whether you prefer to buy something that’s up 100% or down on the year can say a lot about you as a trader. It’s the classic contrarian vs trend follower debate, and it’s playing out in spades among two of this decade’s most novel markets: cannabis and crypto.
Energy Futures A Complex Grounded in Crude Oil How to Make Crude Oil Smaller - This question can plague many attempting to act on what the data tells them, and it’s especially justified for volatile commodity markets like oil and natural gas. Thankfully, crude oil has been around for a while, and there’s enough data to both display an opportunity and measure the risk around it.
Bitcount Trading Tips Bitcoin: Buy or Sell the Highs? - It’s time to sideline your opinions of crypto and take advantage of the unique opportunity in front of you. An asset class worth trillions of dollars has sprouted up and developed before traders’ very eyes.

Filed Under: Futures 101

About Daniels Trading

Daniels Trading is division of StoneX Financial Inc. located in the heart of Chicago’s financial district. Established by renowned commodity trader Andy Daniels in 1995, Daniels Trading was built on a culture of trust committed to a mission of Independence, Objectivity and Reliability.

Risk Disclosure

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

© 2023 StoneX Group Inc. All Rights Reserved

Subscribe To The Blog

Footer

Site Navigation

  • Frequently Asked Questions
  • About Us
  • Customer Reviews
  • Contact Us
  • Futures Blog
  • Open a Futures Trading Account
  • Media Resources
  • Fund Your Account
  • Legal Notices

Contact Us

StoneX Financial Inc.
Daniels Trading Division
230 South LaSalle Suite 10-500
Chicago, IL 60604
+1.312.706.7600 Local / Int'l
+1.800.800.3840 Toll-Free
+1.312.706.7605 Fax

Connect with Us

Trustpilot
Risk Disclosure

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

© 2023 StoneX Group Inc. All Rights Reserved

  • Risk Disclosure
  • Privacy Policy
  • California Residents Privacy Notice
  • Terms of Use
  • Back to top
 

Loading Comments...
 

You must be logged in to post a comment.