Key Takeaways
- Cryptocurrencies are back in the news, and their prices are likely to improve.
- Continuous learning about Bitcoin trading is essential to avoid costly mistakes.
- In addition to trading Bitcoin, you can choose to trade Altcoins, but take care to choose those that are stable, have stable communities, and have high trade volumes.
Bitcoin is back in the news – and it’s for good reasons, with the price of the digital asset trolling towards $100,000 for a single coin. As the headlines grow wild and more people start dreaming about trading Bitcoin for a piece of the piece, there are several essential crypto trading rules you should know before jumping on the bandwagon.
As the headlines about cryptocurrencies champion new heights following BTC’s breaking of many price records, the desire to participate in Bitcoin trading is currently a buzzword. Many more people are seeking out ventures to shape their pockets and create multiplication of their funds in times of scarcity. While there are many success stories of individuals who made huge gains while trading Bitcoin, you need to learn about the essential rules of crypto trading irrespective of your experience level. This is why we bring you important Bitcoin trading tips from experts to help you reach your financial goals.
Why Keep on Learning about Trading Bitcoin?
Over the last few years, cryptocurrencies have transformed themselves from an overlooked digital asset associated with the dark world to become a wildly popular investment. Just like you can only drive a car safely if you learn from an approved driving instructor, you risk losing your funds if you engage in Bitcoin trading without learning from experts. While crypto trading seems like the future of tomorrow for some people, the truth is that cryptocurrencies are poised to revolutionize our relationship with money.
Digital assets have taken the world by storm and offered new investment opportunities besides revolutionizing how we think about money. If you’ve not yet invested in Bitcoin trading and if there are reasons to learn before you plunge in, there are compelling reasons to do so. Nonetheless, we believe you shouldn’t enter this dynamic market minus a well-thought-out plan, hence the need to learn these basic guidelines. You are in good company if your ears are itching to grip the nuts and bolts.
Are you a Bitcoiner or a No-Coiner?
The simplest definition of Bitcoin would be a digital currency not controlled by a central authority such as a central bank or government. Miners create coins to process transactions using computers and specialized hardware to secure the currency and collect Bitcoin as compensation. Bitcoin offers the best security for online purchases, thanks to Blockchain technology that records transactions in a public digital ledger.
At only 15 years old, Bitcoin is the oldest and most trusted cryptocurrency of about 9,000 cryptocurrencies worldwide by October 2024. It may have had a controversial and rocky history, but it also has a high profile of supporters. Regarding cryptocurrencies, the world is split into two classes of people: no-coiners and Bitcoiners. No-coiners don’t have Bitcoin because they can’t understand it unless they own and use it. Better still, they may need to mine it and get a taste.
Expert Tips for Bitcoin Trading
If you are considering becoming a retail cryptocurrency investor to diversify your portfolio, you will be up against a volatile market. The cryptocurrency market is reeling under losses occasioned by hacking and confusion about regulation. From a high of $20,000 in December 2017, Bitcoin dipped to $3000 in 2018 before rising again to $69,000 in 2021 and is now trading at close to $87,753 at the time of writing.
Suppose a crypto investment bug has bitten you, and you plan to invest in Bitcoin or other digital currencies like Ethereum, Litecoin, Ripple, or any other. In that case, you want to remember that “safety rules are written with blood for soldiers.” You are not dealing with human life but can avoid losing your Bitcoin by avoiding expensive mistakes. You can avoid making mistakes when trading Bitcoin and other cryptocurrencies by internalizing the following six tips “written in blood.”
1) Look before leaping into each trade
Enter each trade only when you have an apparent reason for starting and a clear strategy. Trading is a zero-sum game, for everyone who loses someone else benefits. There are large whales that influence Bitcoin trading and can place considerable blocks in the Bitcoin order book. Like real whales, they thrive on the mistakes of innocent small fish. While it’s good to trade daily, you are better off doing nothing and not earning instead of diving into a storm and losing your valuable coins. Since there are days you can keep your coins by not trading Bitcoin, always look before you leap.
2) Set a Stop-Loss Level for Each Trade
Start with a precise profit target level for each trade, but set a stop-loss level to cut losses. A stop-loss refers to the level at which you lock out more losses. There are essential factors to consider when setting a stop-loss level: don’t fall head over heels for trading or the coin and fail. Hoping against hope, it will turn around when all signs show the contrary is letting your ego take control of you. Unlike stocks, where 2-3% of movements are regular, cryptocurrencies can easily dump 80% of their value within a few hours.
3) Confront the Fear of Mission out (FOMO)
There’s nothing funny about watching situations from outside, especially when you see a coin scaling heights like crazy within minutes. When people flood crypto exchanges and forums, an inner voice shouts, you are the only one missing out; hold on a little longer. Why? While some people may have grabbed the handle ahead of us, you want to remember that whales wait to swallow small greedy buyers trying to sell those bitcoins they bought cheaply. When prices are high, it’s a sign that those little fish are coin holders, and the next step will be a scramble to sell their entire order books.
4) Manage Risks Wisely
Ever heard the statement, “Small pigs eat a lot, but the big pigs get eaten?” That’s what happens in profit markets. A good investor will never salivate for the peak moment. You are better off taking small profits that build up slowly. As a wise investor, you don’t want to invest more than a manageable percentage of your portfolio in a high-risk, non-liquid market. Carefully choose your stop and target levels that are far from the buying level.
5) Always Consider Bitcoin’s Volatility
The value of most cryptocurrencies is pegged on Bitcoin’s market value. Bitcoin’s volatility is only relative to FIAT currencies. Always consider this during those days when the price of BTC is moving sharply. The value of Bitcoin is inversely related to other crypto coins such that when Bitcoin’s price is high, the altcoins lose their Bitcoin value. Similarly, when BTC is volatile, the condition for other altcoins becomes somewhat foggy. Just as driving gets affected during fog, and your vision gets hampered, choose only close targets for your trade or adopt a “wait and see” attitude.
6) Choose Altcoins Carefully
Learn what Altcoins you can safely hold for a long time as long as you have reason to make a trade. It’s an open secret that most altcoins will progressively bleed and lose value over time, sometimes rapidly. Choose altcoins carefully when you want to hold them over the medium and long term. Choose coins and projects like Ethereum (ETH), DASH, and Monero (XMR) with a broader community and high trading volumes since they have the potential for staying longer; follow the coin’s charts to determine their low and stable periods to know the right time to make your move.
Conclusion
When it comes to trading Bitcoin, you are safer leaving your ego aside. Your goal is never to be right but to make profits. You don’t want to waste your time and money proving that you made a mistake entering the crypto space. The bottom line is that every trader loses, at least sometimes. You are safer following these Bitcoin trading tips to make sure your total profits are higher than your total losses.
