Published on May 15th, 2019 | by Sunit Nandi0
Must Read Tips For Trading Bitcoin
The year 2017 saw the exponential growth of Bitcoin as a cryptocurrency. It grew by almost 1400% which made early adaptors millionaires in the process. Even though the value has plateaued since then, investing in Bitcoin can still be lucrative if it is done right. If you’re thinking about starting to trade in Bitcoin, there are a couple of tips that could come in handy. Having knowledge of cryptocurrency will play a crucial role in successful trading. You can check out Bitcoin-revolution.io if you’re interested in investing in Bitcoin and looking for credible information about the industry. Here are some tips that could come in handy if you’re to be a successful Bitcoin trader.
Master Technical Analysis
The nature of cryptocurrency makes for unique trading proposition compared to other currencies and assets. There is no central body responsible for the valuation of the Bitcoin. Events and news could have a significant impact on prices. There are other financial instruments which could also have a sporadic correlation to the market conditions. For the most part, the prices of Bitcoin are speculative which goes against the grail of traditional financial theory.
It is therefore imperative that you understand the technical analysis aspect before you start trading Bitcoin. As it stands, it is only the price that can provide a clue on the future value of the coin. There are no marketing fundamentals which means the focus is mostly on analyzing the charts to try to make sense of the market thus the importance of technical analysis.
Adopting a Sustainable Pace
If you’ve been trading for a long time, you will know it is a marathon and not a sprint. One of the biggest challenges you’re likely to face when trading Bitcoin is establishing and developing a schedule that can be sustained over the long haul. You’re likely to burn out quickly if you put in crazy hours on a daily basis. It is not possible to trade effectively 24/7. It is recommended that you adopt a flexible and manageable schedule but identifying the optimal time to do the trades.
Don’t Focus on News Items
One of the reasons why Bitcoin is unique is that news items rarely have a predictable impact on the nature of the market. It should, however, be noted that unexpected news could greatly influence the price of Bitcoin. It might be a good idea to have access to cryptocurrency news feed if you’re thinking about starting to trade Bitcoin.
Implementing Stop Loss
Active traders find the consistent volatility of the Bitcoin market to be attractive. There are regular fluctuations in the valuation between 5% and 10% on a daily basis. This volatility has created opportunities for those investors with an appetite for risk. Using a stop loss is a must when trading and Bitcoin trading is no exception. There could be massive extremes with wide swings in profit but you could also suffer catastrophic failure if there is no stop loss. The exact placement could vary but is crucial that you have a stop loss system in the market.
Prudent leverage should be used carefully as it is a double-edged sword. It boosts your gains but magnifies the losses at the same time. You’re likely to be reckless with the trading and money management if there is too much leverage. Too little leverage could limit your performance as premium trades may not realize their full potential. A Bitcoin trader must find the balance of managing leverage in order to be successful.
The fear of missing out (FOMO) is an issue that affects a lot of new traders. There are those who start trading because of the hype. Such people will not have a strategy in mind and will give up as soon as they experience failure. A good investor acknowledges the fact that you can’t catch every positive move in the market. They will strive to strike when the market conditions are favorable without risking everything
To Sum it Up
As an investor, you will need to accept the Bitcoin is a volatile and high-risk trading opportunity. That does not mean you throw caution to the wind. The volatility is what scares away seasonal investors. You need to have a strict risk management strategy when trading Bitcoin. Diversification in cryptocurrency is one of the options you could explore. High-risk investments can always be turned into profitable ones with a proper strategy in place.