How to Trade "Rising Bitcoin" Profitably

Hop on board Bitcoin, the wildest rollercoaster in the west! Bitcoin has made some crazy moves lately, and today it is on the rise. In, "How to Trade 'Dying Bitcoin' Profitably", we talked about how to make money when Bitcoin (and similar cryptocurrencies) is on the downfall. Now Bitcoin is on it's way up, and I need to make sure we make money, not lose it.

First of all, let's establish why we know Bitcoin is finally making its way back up. Take a look at the photo below.

This chart shows the price action in forms of candles, and I've drawn lines to point out very important price points. The top and bottom lines (horizontal) show a key price level. The top is the highest Bitcoin has ever crossed, so if the price reaches it again, it will have resistance as it tries to break above it. If it does break above that level (around $20,000), we can expect a steep climb upward. The bottom line is a price level that Bitcoin has bounced off of many times. After a steep drop, like we saw yesterday, Bitcoin uses that level to stop its downfall and start heading back up. Yes, the price did go below it, but not for long. It's also important to understand "flat" numbers can also act as resistance. What I mean by flat numbers are major whole numbers such as 16000, 17000, 18000 etc. Sure there is no difference between 15965, and 16000, but the price level will have a much harder time breaking a flat number as sellers have created "price walls" at these flat prices.

Now let's talk about the diagonal lines. Bitcoin's last downfall had a trend shown by these two lines. It would fall down, bounce off the bottom line, and then climb up to the top line. It did this until the price finally broke out of the trend. Because bitcoin broke out of this crappy, downward trend, it is time to buy in.

Of course we can't predict exactly what Bitcoin will do, but we can make educated guesses. Bitcoin will never simply go straight up, or straight down, which is why we see trends like the one explained above. To guarantee profits in Bitcoin while it climbs up, we need to make a plan.

The first part of the plan is not to fall for the Fear of Missing Out. Because so much money can be made in such a small amount of time, your emotions will say, "Buy Now, or Sell Now!" Understand that patience is a key to making Humble Money. Bitcoin will have drops, and if it creates a new uptrend, it will come up eventually. The next part of the plan is to buy into these dips, and then set a stop loss/risk level under it. Let the picture below teach you where to place this stop loss at.

This is Bitcoin's new uptrend. Your goal is to buy on the bottom line, and set a stop loss below the line. Set your stop loss at a level far enough below the bottom line so that you don't get "faked out" by a quick drop in price. However, you need to set your stop loss close enough to the line so that if Bitcoin "dies" again, you don't lose too much money. When you get out is up to you. If you are an active trader like myself, you may want to get out once Bitcoin reaches the top line, and repeat the process again. You will make many, small, consitent profits. If you want to play Bitcoin for a longer term, hold your investment until Bitcoin clearly breaks the uptrend.

Don't overthink this. Your goal is to buy low, sell high. However, you don't want to buy at all when Bitcoin continues to drop. With Bitcoin creating a new uptrend, now is the time to hop on. If you do hop on, remember to set a risk level, and plan when to get out. Having a plan is a major key to profiting, and making Humble Money.