The ‘HODL’ bitcoin strategy involves buying and holding bitcoin. Its name derives from a misspelling of ‘hold’ on a popular cryptocurrency forum, and it is now often said to stand for ‘hold on for dear life’. However, this phrase shouldn’t be taken too seriously – you should only buy and hold bitcoin if you’ve got a positive outlook on its long-term price. If your research or trading plan indicates that you should sell your positions to take profit or limit loss, you should – or you could set stop losses to close your positions automatically.
Hedging bitcoin means mitigating your exposure to risk by taking an opposing position to one you already have open. You’d do this if you were concerned about the market moving against you. For example, if you owned some bitcoins but were concerned about a short-term drop in their value, you could open a short position on bitcoin with CFDs. If the market price of bitcoin falls, the gains on your short position would offset some or all of the losses on the coins you own.
Trend trading means taking a position which matches the current trend. For example, if the market is in a bullish trend, you’d go long and if the trend was bearish, you’d go short. If this trend started to slow or reverse, you’d think about closing your position and opening a new one to match the emerging trend.
Day trading bitcoin means that you’ll open and close a position within one single trading day – so you won’t have any bitcoin market exposure overnight. This means that you’ll avoid overnight funding charges on your position. This strategy could be for you if you’re looking to profit from bitcoin’s short-term price movements, and it can enable you to make the most of daily volatility in bitcoin’s price.