Do you want to make a living online trading bitcoin? Do you want to know the mistakes one can make and be smart enough not to make them? Do you want to be always on the greener side of the grass? You are at the right place. Know about some of the essential information that you ought to know before you go ahead with placing your first order.
Read the article to know about the tips to turn the volatility of Bitcoin in your favour and not make the mistake of losing your valuable Bitcoins.
1. Invest as much as you can afford to lose
Do not invest more than what you can afford to lose if by chance something wrong happens. No financial investment is a fool-proof or sure shit return giver, loses are part and parcel of an investment. Bitcoin is a very volatile investment, and you can see significant gains as well as drops. A successful investor has a diversified portfolio, and if you put a lot of money in 1 asset only, it will increase the risk. Also, if you are investing more than you can afford to lose, then this will lead you to panic state and reduce your ability to make right decisions.
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2. Don’t trade without setting a goal
When you are trading in Bitcoin it is vital to set a limit when you take out on profit as well as loss side. It helps to take an informed decision and not get swayed by emotions and avoid experiencing sadness when the market crashes or become greedy when it is rising.
3. Learn some basic technical skills
It is not a one-day task to learn the technical skills required for Bitcoin trading but still understanding the necessary technical analysis is a must before you even think of entering this trade market. If you don’t know the basics, you will not be able to read the charts, apply some indicators or read how the price is acting. Learn about candlesticks which help in giving information like the opening and the closing price, price direction, highest and lowest price, and the trading range. Also, learn about the order book and logarithmic scales to increase your chance of getting profits by investing after having knowledge.
4. Be aware of what is happening around
You ought to be mindful of the news which can have a direct impact on the price and value of Bitcoin. E.g. A ban announced by Russia in October 2017 led to a fall of 12.5% In the amount of Bitcoin. To save yourself from any such loses or to take advantage of the rising price surety, you a have to keep yourself aware of the news and keep an eye on the news live feed.
5. Place stop losses correctly and with care
Bitcoin is such a volatile investment and placement of stop losses is a must. When it is the time of profit you might not feel the use of placing a stop loss but what about the downside which can lead to disastrous losses. Protect your position by proper placement of stop loss when trading Bitcoin.
6. Know the power of cryptocurrency
Before entering into investment in Bitcoin make sure that you understand what Bitcoin and other cryptocurrencies are. It is a decentralized currency and not stocks. Read more about it and the underlying technology before jumping into making any investment.
7. Know the types of cryptocurrencies available
There are a lot of cryptocurrencies available in the market although the most famous and familiar is the Bitcoin. Know about them and the market before you invest in Bitcoin. Some of the cryptocurrencies available are:
- Litecoin: It is considered to be the Bitcoin’s closest rival at present and is being used for doing smaller transactions at a faster speed. Unlike Bitcoins which requires a lot of power for mining, it can be mined using a standard computer.
- Ripple: It was launched in 2012, and just like Bitcoin it is both a payment system and currency. In contrast to Bitcoins, it allows faster transfer of funds.
- MintChip: It is a smart card created by government institutions unlike other cryptocurrencies and is backed by Canadian dollar.
There are thousands of alternate currencies flooded in the market these days. Try and know about some of them too!!!
8. Try to determine a strategy
This will help you maximize your profits. You need to analyse and decide that how often do you wish to buy and sell. There are people who are dealing with Bitcoin trading as day traders while there are others who make only long-term investment. Decide what you wish to do and strategize accordingly.