Bitcoin is a well-known cryptocurrency that is being traded around the world. It made its first appearance in 2009 and since then it is encountering exponential growth. While its millionaire-making heyday is estimated to have gone up, it remains the most traded digital asset that carries considerable profit prospects for savvy traders.
Nevertheless, Bitcoin trading should be inclined with alertness. As a decentralized currency, it is highly hypothetical. It’s not like an exchange market where values are controlled by a centralized government, financial activity, and worldwide events.
While the value of Bitcoin and other cryptocurrencies depend on supply and demand. Such unpredictability and security problems make bitcoin trading risky. And, it is considered the most important factor in the bitcoin trading strategy.
However, the following are the tips that will help you in bitcoin trading and lower your risks.
- Start on a Small Scale
The first tip for trading bitcoin is starting small with a relatively low amount. You must be cautious if you’re trading for the first time. Although it’s a significant market that offers profits in a short time. But it’s not easy to trade-in and there’s a huge risk entailed. Therefore, start with the small amount that you can afford to lose.
- Choose a Safe Wallet
A bitcoin wallet is a holding pen for digital assets. Therefore, it’s significant to choose wisely. This will ensure safety and easy access. What we recommend is to choose a reputable wallet such as Bitcoin Compass. You can use the wallet that the broker provides. However, you’ll have to select the type of wallet. There are two types:
- Hot wallet is connected to the internet and it is accessible for hackers.
- Cold wallet stores the assets offline and it is generally safer.
- Research the Market
The authentic way to excel in bitcoin trading is to do your homework and research the trading market. It’s not a simple process but it’s highly significant. You can do these two things to know more about the market.
- Do a technical analysis. Take out time to read charts and identify patterns to know the trading schemes.
- Never take advice from other traders and be diligent yourself in trading.
- Decide on a Trading Strategy
Before you start trading, decide on what type of trader you want to be. This will depend on the amount of time you can commit to trading activity. There are typically four categories:
- Scalpers are the greatly active traders that make numerous trades every day and gain small profits.
- Day traders come and leave the market in 24 hours and take advantage of the short-term market activities.
- Another type is swing trading that’s based on in-depth technical analysis to examine trends in the market.
- Lastly, it is a passive trader that hold on its position and trade for long term profits
- Diversify With Other Cryptocurrencies
New traders develop a fetish with bitcoin’s potential and fail to deal with the downfalls. When you trade other cryptocurrencies, you fluctuate your investment. In that manner, you can gain profits. Do not dilute your amount and invest the right amount. You need to maintain a balance that increases the profit potential and minimizes the disclosure to other cryptocurrencies.
No matter what type of bitcoin trading strategy you are adopting, you must take safety and risk-management measures.
As it is such an unstable market, the probability for both profit and loss is lofty and first-time traders should never trade money more than they can afford to miss. Therefore, follow these bitcoin trading tips with other trusted resources to confirm you have a decent grip of the market and its ambushes.