Bitcoin has inspired an entire cryptocurrency industry, now valued at over $1 trillion. Many industry leaders and corporate giants are increasingly adopting Bitcoin as a safe and lucrative way to diversify their investments. Investment companies and independent investors rapidly convert their cash reserves into Bitcoin to better hedge against market fluctuations.
Bitcoin trading is one of the most common uses of Bitcoin, which works similarly to stock trading. However, Bitcoin is a decentralized, digitized currency whose price and value depend on public perception. As such, Bitcoin trading can sometimes be a risky venture for traders. The following are some of the tips to help you ensure successful Bitcoin trading.
Secure Enough Capital before Trading
Bitcoin trading has the potential for substantial investment returns, but you should not use all your savings to trade Bitcoin. Bitcoin’s price is highly volatile and, even the slightest signs of negative perception could rapidly drive the costs down. However, volatility also means Bitcoin’s value could surge quickly in a short duration.
Most people trade Bitcoin based on speculative information, which can be risky. Today, established Bitcoin trading platforms such as the trustpedia site have trading robots that offer up-to-date crypto market forecasts and price movements and allow users to trade on autopilot. Nevertheless, you should only purchase an amount that you will be comfortable losing.
Set a Limit for Losses and Profits
Bitcoin prices can rapidly surge or decrease and, you cannot always be sure of when that would happen. Thus, setting your limits for losses and profits is the best way to avoid making impulse decisions whenever Bitcoin experiences high volatility. The first strategy is to determine and set a price that you are willing to cut losses and take profits before trading. That will cushion you from making emotional decisions when prices start to spiral downwards or upwards.
Conduct Technical Analysis
Amateur traders only focus on speculation and sentiments when trading. However, savvy traders recommend you should also learn about the technicalities of Bitcoin trading to develop the best strategies for success. Learning about the various Bitcoin trading volume charts, tables and patterns can enable you to make strategic decisions for maximizing profits. Some of the standard technical terms include Candlestick and Order book.
Candlesticks resemble rectangles and lines, showing daily price ranges, including opening, closing, highest, and lowest prices. An order book contains a list of volumes and prices that traders are willing to sell and buy Bitcoin. You will likely find more Bitcoin trading terms, charts, and tables as the crypto market grows.
Stay Updated on Crypto Market Events and News
The technical analysis will indeed enlighten you on a lot of things regarding Bitcoin trading. However, it would be best to keep tabs on the current events and news about cryptocurrency trading. The primary reason for that is that those stories influence the public perception of Bitcoin, which often impacts its price and value. Besides, that news and events could also inspire creative Bitcoin trading strategies to enable you to avoid potential risks and increase returns on investment.
Focus on the Brighter Side
Significant losses can easily discourage investors from Bitcoin trading but, risks are inevitable in every aspect of life. Even the most experienced and savvy traders make mistakes from time to time. Instead of reminiscing over lost opportunities, successful traders learn from their mistakes and maintain a positive attitude. Those losses and errors should challenge you to re-evaluate your trading strategies and develop better approaches to making the most of every trade.
These guidelines can help you get started and become a successful Bitcoin trader. However, it would be best to do further research from reputable Bitcoin exchanges and other crypto traders to learn more about sharpening your Bitcoin trading skills.