A lot of traders have managed to capitalise on this boom in bitcoin trading.
Bitcoin trading offers great profit earning potential. But if you are trying it for the first time, you will see that the losses can also be huge, if you are not too careful. Here are a few tips that can make your journey smoother:
Understand the basics of technical analysis
When compared to other currencies and asset classes, Bitcoin is an outlier with no bank or body governing it. Largely speculative, it hardly follows any principles of the traditional financial theory. So, if you want to make money through bitcoin trading you will have to get fluent with technical analysis. You will have to understand how to analyse pricing charts, apply indicators, and read price action.
Trade as Per Schedule
Bitcoin trading is something that has to be done at a sustainable pace. You can’t expect great results by putting in more number of hours. Find out the optimal times to trade and make sure you focus only on these periods. Maintain a convenient schedule so that you will be able to trade effectively.
Look for News Items
Bitcoin market is very different from the stock market. Typical news items may not have a predictable impact on this market. Yet if these news items are unexpected they may influence the price of the Bitcoin. So make sure you keep an eye on the live news feed at all times.
Always use Stop Losses
There is a high degree of volatility in the Bitcoin market. The valuations fluctuate regularly from 5 to 10 percent. If you have an appetite for risk, this might seem really attractive to you. But make sure you always use stop losses so that you minimise chances of losing money.
Use Prudent Leverage
Using leverage is quite tricky when it comes to bitcoin trading. It might boost your gains; but it will also magnify your losses. While too much leverage can lead to bad money management, too little leverage would mean trades not performing up to their maximum capabilities. As a Bitcoin trader, it is very important for you to do the balancing act when it comes to managing leverage effectively.
There are many platforms that you can use for Bitcoin trading. They might provide you all the tools that you may need to manage your trading effectively. Nevertheless, you will have to spend time doing your research so that you can gain the knowledge and experience that is required for Bitcoin trading.
Ask around and go through reviews if you want the answer to your questions. Make sure you understand your risks and rewards before getting into any trade. Focus on position sizing as well as stop loss location. Know your risk appetite and determine your goals before starting out on bitcoin trading.
If you are new to the Cryptocurrency world and would like to open an account we recommend Cex.io.