Essential Tips for Trading & Investment in Bitcoins: There are several important tips that you need to follow while you are trading and investing in Bitcoins. Therefore, let's explore some of the important facts in the light of this matter to get a better insight into it. 1. . Bitcoin trading can be extremely profitable for professionals or beginners. The market is new, highly fragmented with huge spreads. Arbitrage and margin trading are widely available. Therefore, many people can make money trading bitcoins. Aug 13, · The best bitcoin (BTC) trading strategy is one that is perfectly aligned to your own individual goals, risk appetite and available capital. However, there are a few strategies that have become popular with bitcoin traders.
Bitcoin tips tradingImportant Bitcoin Trading Tips for Beginners! | Codecondo
With the mining process, new coins come into the market. Another factor is news, which depicts a perception of Bitcoin. The right method for trading: Whenever you step into the Bitcoin world either to buy coins or other things, it is crucial to be familiar with the right method to trade.
When planning to invest in Bitcoin, you can buy it by the cryptocurrency exchange. You get the ownership of the whole coins in your hands and store them in your digital wallet. You keep the coins stored, thinking that the price might rise someday, and you can make a profit by selling it. One must know that it is not a simple process when you want to open an account for exchange purposes. Frame a plan for trading: Before you begin with your tactics or strategies, it is wise to frame a trading plan.
For this purpose, you can define your goals in the plan. Goals must include the aims you can achieve can turn out to be a motivation. Another key thing to consider is style since trading can be performed in multiple ways.
It just depends upon your trading option, so you need to include it in your plan too. Rely on saying no to losses: This is something that can help you stay ahead in the competitive world. In case you are losing money while trading In Bitcoin, stop losses will trigger the automatic liquidation of the money in case you lose your money in Bitcoin Trading.
It actually stops you from losing any more money from your counterpart. In the case of Bitcoin trading, the chances of price fluctuation and risk are very high. You must close the unprofitable and leveraged position within 24 hours if you think your trading in that zone may result in losses.
It will save you from future losses if you face the same if any. While being brave and taking risks is one thing, you need to be rational to cut losses. This is why most experts state that there is a fine line between being brave and reckless.
If you feel something is not working out, you need to put an end to it. Therefore, it will help you develop the right strategy if you have made the proper analysis of the market scenario. It will help you to clarify all your doubts regarding the investments in Bitcoin.
Make sure that you make your investments in the right direction. Home Tech News How To? Tags Finance. Facebook Twitter. Popular Posts. Instead of holding Bitcoin over a long term, as with investment, trading deals try to predict certain price moves through studying the industry and price graphs holistically.
Beware of giving into fear or greed 5. Learn the lessons 6. Know and analyze Bitcoin market trends 7. Plan a long-term goal 8.
Know the risk factors 9. Correct use of leverage The use of programmatic strategies. The price of Bitcoin can be analysed by using two methods namely fundamental analysis and technical analysis. Fundamental analysis involves the evaluation of mainly both economic and financial variables along with several others. The purpose of this is to determine the true value of a security. In doing this, investors can see, for example, how scaling challenges may affect the value of Bitcoin.
Using fundamental analysis in evaluating Bitcoin may be complex and it has taken the development of a new set of metrics to refine the art thereof which resulted in the starting point for Bitcoin fundamental analysis being the supply and demand that derives prices. User adoption is important as it is crucial to the long-term viability of cryptocurrency, and the driving force behind user adoption is the fact that money has various uses.
Money is not only a store of value but a medium of exchange along with being a unit of account. Bitcoin has never quite been used as a unit of account, but it has, however, managed to gain significant traction as a medium of exchange due to the increasing acceptance since its inception.
There has been a steady increase in the number of confirmed transactions per day with transactions surging in with a steady rise to more than 7, transactions per day. Despite the informative nature of such data, it is unfortunately not the best indicator when applying fundamental analysis. This is due to blockchain transactions which are generated by automated systems and therefore cannot represent actual economic activity. Traders rather face having to figure out which transactions consist of an actual participant sending to or accepting Bitcoin from another person.
When considering that the demand for Bitcoin is a complex study, supply appears to be a lot more straightforward as there is a set amount of Bitcoin; 21 million, and the rate of new supply is subsequently determined by Bitcoin protocol.
In weighing Bitcoin to conventional monetary systems, it contrasts sharply as central banks possess the ability to print money whenever they want or need. Despite this, it is, however, important to note that some caveats exist that affect the supply of Bitcoin.
The fact that the creator of Bitcoin, Satoshi Nakamoto, supposedly holds around 1. Traders need to leverage fundamental analysis on Bitcoin as it provides them with a better sense of the true value of the cryptocurrency and subsequently it allows them a better sense of when it is a good time to buy and when they should consider selling. Fundamental analysis is strongly criticised as it reflects more what a security should be considered in its worth than what the actual market price for it is.
There should not be too much reliance placed on fundamental analysis and technical analysis should be done alongside fundamental analysis. Technical Analysis in Bitcoin trading requires traders to read charts and it is an essential skill in trading Bitcoin successfully.
Although it may seem intimidating and daunting at first, with time and practice it begins to make a lot more sense. Bitcoin trading is like stock trading with the difference being the asset itself. Both use the same fundamentals and traders are advised to spend some time studying some of the greatest stock traders in the world to provide some edge. The most important thing is to understand the psychology associated with the market and this requires research into existing strategies of established traders who have mastered their trading skill through the years.
The biggest benefit with conducting a timely technical analysis in Bitcoin trading is that it aids both investors and traders in being able to predict the market. It also helps investors and traders determine when the best and most profitable entry and exit points may be. When approaching a Bitcoin technical analysis, it is imperative to note that there are various groups of chart patterns with the most well-known patterns occurring on all timeframes. Bullish patterns on a chart indicate the likelihood of a trend going upwards while a bearish pattern indicate that the price is likely to move more downwards.
The third pattern involves reversal patterns which signal that the predominant trend is about to end and a price breakout in the opposite direction can be expected. Despite these distinctive patterns, they cannot fully guarantee certain market behaviour as they only show the likelihood of movements that can be expected. Technical analysis and chart analysis can be used by traders to create their trading plan in advance which can be based on the analysis on where orders should be set depending on what the trader expects the market to do.
Among an array of analysis tools, Fibonacci retracements are often used in conjunction with chart patterns as they indicate the likelihood for certain reversals and breakouts of price. There are numerous ways in which Bitcoin can be traded with two of the most predominant ways being the trading of Bitcoin and other cryptocurrencies on Forex and thus through a Forex broker , or by trading through a cryptocurrency exchange platform.
There are numerous Forex brokers who allow traders to deposit, withdraw and trade on a Bitcoin-based account. There are, however, some legal implications involved for some traders, such as Americans, as CFDs are not allowed in the United States. Bitcoin CFDs are traded on a variety of trading platforms that are designed for just the purpose, with the most popular being MetaTrader 4.
It is one of the best trading platforms which provides traders with an array of tools such as:. A lot of traders may prefer to make use of a Forex broker that offers cryptocurrency trading as a tradable financial instrument for various reasons, one of the main reasons being that regulation.
Bitcoin and cryptocurrency trading are, for the greater part, unregulated and this means that client funds cannot be secured. Forex brokers, through regulatory requirements, must keep client funds in segregated accounts. In doing so, the funds may only be used for trading activities and it must be withdrawable at any given time. Cryptocurrency exchange platforms do not keep client funds, although some make provision for proprietary hot and cold wallets.
A hot wallet is a type of storage which is kept online while cold wallets can be kept and managed offline. When considering that cryptocurrency platforms often fall prey to hacking attempts, traders are not advised to make use of hot wallets to store great amounts of funds, but rather to keep enough funds in these wallets for everyday purchases.
Cold wallets are recommended as they are more secure and traders are, in addition, not advised to easily make use of wallets provided by exchange platforms due to the level of security threats that they face frequently. Numerous Forex brokers have started making provision for the trading of Bitcoin by offering cryptocurrencies as a financial instrument in their portfolios of assets offered.
But before traders can start with selecting a broker, there are some key points that need to be considered in choosing the right broker namely:.
Both these ways in which Bitcoin can be traded have distinct differences such as:. When trading Bitcoin through a Forex broker, traders must not only pay attention to the price of Bitcoin, but to that of the fiat currency as well and this involves fundamental knowledge of how fiat currency prices are affected and by which factors. Trading cryptocurrency and trading Bitcoin as a CFD does not mean that the trader owns the asset, and this is where there is a distinct difference between trading and investing.
Trading only allows traders to benefit and profit from price movements. After selecting a Forex broker to facilitate the trade in Bitcoin and other cryptocurrencies, traders can follow the following steps to start trading Bitcoin:.
Bitcoin and Cryptocurrency exchanges allow for the sale and purchase of Bitcoin. It can either be bought or sold through regular, or fiat, currencies, or it can be done by using cryptocurrencies. To select a cryptocurrency exchange, a similar process has to be followed as with selecting a Forex broker and this involves key factors that must be considered such as safety, transparency, record, user experience, and the fees involved.
Cryptocurrency exchange platforms are not regulated by regulatory entities as Forex brokers may be and thus client funds are not held or secured by the exchange. It is imperative for traders to test and rate the level of security that the exchange platform offers along with seeing what their record is in terms of hacking attempts and how they mitigate and manage such attempts. It is important to gain insight into the experience of other users when considering a platform as it may highlight any issues that other traders have, or have had, with a platform.
The fees involved need to be considered and it is imperative for traders to first understand their own trading needs and any financial limitations that they have as they have to compensate of trading and non-trading fees along with any losses that they may suffer.
Traders must know what their budgetary needs and requirements are before they start trading Bitcoin. This needs to be laid out in their trading plan as it provides a good idea of how much can be put towards trading. In addition, it also helps traders avoid spending more than they can afford along with compensating for any losses which may occur.
Should traders put more on the line than they can afford to lose, they risk losing everything and there is always a chance that the trading account can go into a negative if the trader does not have negative balance protection.
Learning to trade in small amounts and to control position sizes is a key element that beginners need to learn from the start. It would be detrimental for traders to start trading blindly as there is no framework provided for the needs and objectives of the trader and essentially traders also have no idea where their entry and exit parameters are. Traders need to formulate a trading plan to ensure that they know when and were to buy, and when and where to sell, or exit a trade, to lock in profits and minimize losses.
Earlier in this article, hot and cold wallets along with the issues surrounding security on exchanges was discussed. Traders are cautioned in never leaving funds on an exchange that they are not actively and currently trading with.