Bitcoin Trading Tips Nobody’s Going to Tell You!
Cryptocurrency trading has been becoming increasingly popular of late. A large number of people have begun to actively invest in cryptocurrencies – which includes a number of new and first-time investors. In the past, the crypto-trade was something that only fin-tech experts were into. However, over the past one year, it has become quite mainstream and practically everyone who has some spare cash lying around aspires to invest into cryptocurrencies. People are looking through various cryptocurrency guides, trading rulebooks and a majority of these investments go into Bitcoin.
However, many first time investors tend to make rookie mistakes which results in them losing their investments and incurring losses! While the cryptocurrency markets were on a constant high last year and soared like never before, Bitcoin prices have been falling in a downtrend over the past few months. At this point in time, it is critical for investors to know about certain Bitcoin trading tips and follow them to make the best investment decisions!
Best Bitcoin Trading Tips For Investors!
Let us take a closer look at some of the best Bitcoin trading tips that every person must know before they begin trading Bitcoins. These tips are applicable not just for Bitcoins, but for practically every cryptocurrency that exists in the market.
Don’t Invest More Than What You Can Afford To Lose
The primary, most important thing that needs to be kept in mind is a budget. Cryptocurrency markets are a high-risk investment and prices can rise or fall any time. When prices rise, currencies can record massive profits, but when they fall – the fall is equally steep! It is not guaranteed that every investment in cryptocurrencies would result in profit. Hence, it is critical to draw a line when investing. Never invest more than what you can afford to lose.
The money that you invest in Bitcoin trading must be such that it does not affect your daily life even if the entire amount goes to zero. While Bitcoin has shown immense potential for growth – there have been news reports where people have mortgaged their property to get a loan for investing into Bitcoins and ended up losing their home as well the money invested in cryptocurrencies – this is the wrong way to invest. The bottom-line is that Bitcoin investments are not a ‘get rich quick’ scheme and that a strict budget needs to be allotted and followed based on your income.
Choosing The Best Exchange/Platform
Before beginning active trading, it is essential to choose the right kind of a platform. Some cryptocurrency exchanges or trading platforms may not be based in your country and you may have to pay up a currency conversion fee and then a trading fee as well. An exchange or a platform based in your country would help you save on the conversion fee.
Moreover, the platform that you choose to buy Bitcoins from must also have a variety of payment options that suit your needs the best. Some platforms do not support Credit Cards and Debit Cards, while there are others which do not support PayPal transfers. If these are your specific requirements, you need to research various platforms and then buy your Bitcoins from the one that you decide.
Finally, a third aspect that needs to be kept in mind before you choose the best Bitcoin trading platform is that the platform needs to be very secure! Hacks are getting quite frequent and hundreds of millions of dollars worth of cryptocurrencies are being stolen! A secure platform can help you be safe from such incidents.
Set Targets and Stop Losses
Targets and Stop-Losses are very critical. This is a practice that is followed when trading for stocks in the share markets, but also implies to the cryptocurrency markets. Setting of targets helps ensure that you make a minimum profit for sure, even the price quickly falls below the targeted level. Stop-Losses ensure that you do not incur a loss during the trade.
These targets and stop losses can be moved forward or backward from time to time depending upon the price movement of the cryptocurrency markets. They help you ensure that you make a minimum desired profit and that you do not incur a loss. However, it is essential to set the stop losses and targets correctly. Targets must not be so high that they end up being achievable and stop losses must not be so low that you actually make losses on your initial investment. Targets, as well as Stop Losses, must be set and they must also be set in a realistic manner.
Understanding Charts and Historical Data
An analysis of charts and historic data can tell you a lot about the movement of cryptocurrencies. While many in the cryptocurrency trading industry do not believe that charts are helpful, the fact is that they do foretell certain events. For instance, the movement of Bitcoin on a graph dictates the movement of many other currencies. Moreover, there are certain time periods where a dip in the currency prices does take place every year – for instance, January and the early part of the year.
A study of the historic data, as well as charts, would also let you know if this is the right time to invest. It also indicates about how the people are feeling about Bitcoin at the moment. If the daily trade volume is increasing day-on-day, it means that there is a strong faith in cryptocurrencies at the moment while a decline would indicate a bearish market. Constant increase or constant decline could tell you the mood of the markets at large, thereby assisting you in making the right investment choice. A careful study of charts and historic data is quite helpful.
Keep following the news stories (sentiment)
Cryptocurrency markets are highly volatile and much of what happens here is often beyond the control of anyone. Sometimes unrelated international events can cause the markets to collapse. It is therefore advised to stay abreast with the news and to follow every cryptocurrency related update. For instance, when China decided to ban cryptocurrency exchanges, it resulted in a large-scale panic, resulting in Bitcoin prices falling. Moreover, such instances keep happening on a daily basis! The Indian finance minister’s statement during the budget session of the parliament resulted in prices momentarily falling to $4000 USD in Indian exchanges!
Keeping in touch with these cryptocurrency guides, news stories and updates can help predict the sentiment of the markets and tell you in advance if the prices are going to rise or fall. The US Trade Council and the Royal Bank of England being positive about cryptos is one such example which can boost crypto prices while social media banning cryptocurrency advertisements can lead to prices falling! Hence, following the news is critical as it may not be the best time to invest when the market sentiment is negative.