Singapore Bitcoin Trading Strategies
Written By: BOSS Editorial
Reading Time: 7 minutes
Day Trading vs. Long-Term Holding
Bitcoin is a dominant topic for people entrenched in financial circles in Singapore, and it’s easy to see why.
This cryptocurrency has undergone massive upswings and downswings in recent years. Even a short-term view of the crypto reveals relatively large swings on a day-to-day basis when compared to movements in the traditional stock market.
While not as volatile as lesser-known cryptocurrencies, the dynamic nature of Bitcoin’s price movements has brought about two camps: one that believes in day trading to reap profits from the crypto and another that’s all about the HODL.
Which one makes the most sense? Is there one approach that outclasses the other?
Let’s take a closer look at both strategies and evaluate their pros and cons. This will then guide you to find the investment approach that best fits your style.
Let’s jump right into it!
Bitcoin and Day Trading
Day trading is an investment strategy that involves buying or selling an asset class (in this case, Bitcoin) within a single day through an exchange platform. This can be a transaction done by a minute, an hour, or a couple of hours—all of these transactions are valid and fall under the classification of day trading.
The goal of day trading is to profit from short-term price movements. Day traders look into the upward and downward price movements of Bitcoin, use a combination of technical and fundamental analysis to decide when to buy or exit a position, execute the potentially profitable trade, and use any remaining profits to continue investing.
How to Day Trade Bitcoin
To start day trading Bitcoin, investors must:
- Choose a reliable trading platform: Search for local and regulated exchange platforms. Make an account in a local exchange platform, deposit or convert funds to crypto, and enter a position in Bitcoin. See how to invest Bitcoin in Singapore.
- Learn to read charts: Learn how to read chart trends and patterns, specifically minute-by-minute charts. Create plans of action based on emerging chart patterns.
- Set up a trading plan: Create a SMART goal based on your financial circumstances. To do so, define entry and exit points, as well as profit targets. Set up a stop-loss to prevent a complete loss of a position.
- Monitor the markets: Day trading is a full-time commitment. Prices can shift within seconds, so it’s essential to stay focused. Get ready to make quick decisions.
Ideally, you should start small and practice with a low amount before you deposit bigger and bigger amounts. This helps you build confidence before you scale. Furthermore, track your daily trades and evaluate how you can refine your trading skills.
It’s a fast-paced and emotionally-taxing job, so be prepared for everything and set your expectations accordingly.
Pros of Day Trading Bitcoin
Quick potential for profit
One benefit of day trading is the ability to profit quickly if you time your transactions right. Bitcoin’s prices fluctuate rapidly by the minute, and it’s possible to gain a streak of profit in a single day if you make good decisions after good decisions.
Of course, to be able to profit sustainably, you would need to have a good grasp of technical analysis terms and techniques. So, for people looking to enter a high-risk and high-reward environment, day trading may be the superior option.
Crash course to market awareness
By day trading, you’ll always be on top of the latest updates and developments in the crypto space.
You’ll also become more adept at reading charts and interpreting trends due to your constant exposure to the markets and the charts. This can give you an upper hand in understanding market movements and the crypto space in general.
Cons of Day Trading Bitcoin
A high-risk and stressful job
Day trading is not for the faint of heart or beginners. It’s an environment that will expose you to constant stress and potentially massive losses. A series of bad reads can lead to distress, burnout, and financial anxiety.
If you’re an emotional person, this trading strategy may take its toll on you. Holding for the long-term would be a better choice for your personality trait.
Time-consuming task load
Another con of day trading is its time-consuming nature. If you want to be an effective day trader, then you can’t afford to miss an hour of looking at Bitcoin’s charts.
You’ll need to constantly look at the charts to ensure that you make the most rapid and profitable investment decisions within a given timeframe. This way, you’ll maximise your chance of finding a profitable entrance (or exit).
Bitcoin and Long-Term Holding
Long-term holding, or “HODLing” for short, is a simple strategy of keeping Bitcoin in your wallet for the long term—that is, months to years—regardless of the state of the market.
This approach is ideal for investors who want a low-maintenance investment strategy. It’s also ideal for believers in Bitcoin’s long-term growth potential.
Typically, this strategy involves setting aside a fixed amount of capital per month on Bitcoin, regardless of its current price. Long-term investing, just like the day trading approach, requires investors to pay close attention to fundamental and technical indicators.
How to HODL Bitcoin
To get started with HODLing Bitcoin, here’s how to do it.
- Sign up on a trusted local exchange: Singapore has many local resources and crypto exchange platforms that can facilitate long-term crypto holding.
- Know your why: Determine the timeline of your investment period based on your overarching financial goals.
- Buy Bitcoin on a fixed schedule: Use the dollar-cost averaging (DCA) technique every week, month, or period to increase your crypto portfolio.
- Store Bitcoin safely: Put your newly purchased Bitcoin in a cold wallet or a secure mobile wallet for safety. Make sure that you have access to the passwords and that your wallet is safe from malicious actors.
- Make adjustments accordingly: Don’t be afraid to pivot if circumstances deem it necessary.
- Exit when goal is met: Exit your position by selling your Bitcoin to actualise your goals.
Once you get the ball rolling, HODLing is a fairly simple and straightforward task. That said, you need to be committed to the long term to fully reap the benefits of it.
Pros of Long-Term Holding
Hands-off strategy
Once you’ve got your desired goal set, you can simply invest in Bitcoin without the daily stress of looking at chart movements. The short-term volatility is nothing but noise, making this investment trading strategy suitable for busy people and beginners.
Long-term growth potential
Bitcoin has been increasing in value if you zoom out on the macro level. This price increase is due to a combination of factors, such as its scarcity, increased institutionalisation, and periodic halving.
The historic long-term growth of Bitcoin presents a good opportunity for people who are in the space for years to come.
Cons of Long-Term Holding
Slow growth
If you like the exhilaration of getting money quickly, then you can’t do so with this strategy. HODLing requires a strong sense of patience, and if you lack that or need funds urgently, then you may not be well-suited for the slow growth integral to this strategy.
Emotional resilience
With global economic landscapes shifting dynamically over the past few weeks, it’s expected to feel a sense of greed or FUD depending on the happenings of the present-day news cycle.
While staying up-to-date with financial developments is generally good, it’s important to drown out that noise when HODLing Bitcoin if you want to profit from Bitcoin in the long term.
Which Bitcoin Investment Style is the Superior Approach?
Bitcoin investing is all the rage, and you’re very likely to come across someone in Singapore who is several thousands of dollars deep into this digital asset. That said, it’s important to recognise that what works for others may not necessarily work for you.
Day trading is a great opportunity to reap quick profits. However, this strategy requires an expert ability to read charts, analyse trends, make decisions quickly, and keep a constant eye on the Bitcoin charts.
Long-term holding (or HODLing) is ideal for people looking to hold Bitcoin for the long term. This investment strategy is a good way to guarantee growth (historically), but it can be time-consuming and not quick enough for people who require wealth in the short term.
In any case, the best approach is something that’s uniquely personal to you, your lifestyle, and your financial goals. It’s important to know what exactly you’re aiming for and base your investment strategy off of that. You should also consider talking to a licensed Singaporean financial advisor or expert to help you out.
All the best in growing your wealth!
