Bitcoin, a type of cryptocurrency, has piqued the interest of so many people. Because of the popularity of cryptocurrency, a market was born to specifically trade cryptocurrency. Since Bitcoin is the most known cryptocurrency, many people started trading Bitcoin online. If you want to become a trader as well, here are some Bitcoin trading tips you need to consider in order to be successful.
1. Have Enough Savings Before Trading
Before you even start trading, don’t use all of your savings to trade Bitcoin. That’s the number one rule to become a successful Bitcoin trader. The price behavior of Bitcoin can be very volatile. Most of the time, your decisions on Bitcoin trades will only come from speculations, which is high risk.
Because of this, you must only trade an amount that you’ll be comfortable losing. By making it a rule to trade only what you can lose, you won’t be very tense and worried when you’re trading Bitcoin since you can shoulder the losses. Taking away the thought of losing all of your savings will make you a better trader by preventing you from “panic selling.”
2. Set A Limit For Losses and Profit
As mentioned, when trading Bitcoin, prices can quickly go very high or very low. To prevent yourself from making impulse decisions when high volatility occurs, it’s very important for you to determine your limits. A tip is that you have to determine and set a price that you’re willing to cut loss or take profit before the trade.
Having a cut loss and a profit target price will help keep you level-headed in times of pressure during a trade. For instance, there will be a time when the prices start going down. Then, you start thinking that it’ll still go up and end up not selling. If the prices still keep going down, you’ll realize that you should’ve sold your Bitcoin. Having a cut loss target will prevent your emotions from getting in the way.
On the other hand, if you don’t have any target price for taking your profits, you’ll start becoming greedy as the prices keep going up. However, there will be a time that prices will suddenly go down. By this time, it’ll be too late to sell. So, it’s also important to set a target to take your profit. Setting a target, both buying and selling, will help you avoid acting greedy on a trade.
3. Learn Technical Analysis
Amateurs in trading only consider market sentiment and speculation when trading. If you want to become a successful trader, you must also learn to look at the charts and use technical analysis to strategize your trades.
Technical analysis is the skill to use patterns and studying volume charts to make calculated decisions regarding your trade. At first, technical analysis may seem very intimidating for a newbie. But, if you have patience and get the hang of it, you’ll find that it ‘ll be very useful.
Here are some basic terms and techniques you can use when you do technical analysis.
- Candlestick – Candlesticks literally look like candlesticks on the charts. These rectangles and lines resemble the range of prices during the day. One candlestick for the day quickly shows you the opening, closing, highest, and lowest price. Together in a chart, you can see the movement of prices in any range you pick.
- Order book – An order book is a list of volume and prices that traders are willing to sell or buy Bitcoin. For instance, the “asks” will show you the volume and prices traders are willing to sell. On the other hand, the “bids” will show you the prices and volumes that traders are willing to buy. Basing on the prices and volume, you can make a calculated decision on your trade.
These are just two of the charts and tables most commonly used in technical analysis. If you research and learn about technical analysis, you’ll find more terms, charts, tables, and strategies. All of these will aid you in making your decisions when you start trading Bitcoin. So, do your homework.
4. Be Updated With Current News and Events
Even if you already do technical analysis, it’s still very important to stay informed of news and current events. Many times, the price of Bitcoin is also affected by news regarding Bitcoin.
Make sure that you follow news websites to get the latest news on Bitcoin. Any knowledge that you get from news about Bitcoin will affect your decisions regarding your trades.
5. Don’t Ruminate on A Mistake
Making a mistake in trading is inevitable. Often, Bitcoin traders make the mistake of taking too much time thinking about that mistake. However, it doesn’t mean you failed if you started making mistakes.
To become a successful Bitcoin trader, you must not ruminate on a mistake. Instead, take a step back and evaluate what happened. Try to figure out what you did wrong. Then, use and learn from that situation and experience. Take your learnings and use them on your next trade.
There won’t always be wins, but if there are losses, you must be strong enough to rise above it and go on to the next trade. Don’t let your mistakes discourage you from becoming a successful Bitcoin trader. Use your mistakes for the better by learning from it and make you a stronger trader.
Conclusion on the Bitcoin Trading Tips
These are just some Bitcoin trading tips that can help get you started and become a successful Bitcoin trader. However, you must still do extensive research and studying on trading Bitcoin. There’s still so much to learn about Bitcoin and its behavior in the market to trade it well and earn from it.
It’s a bit more complicated if you’re just beginning to trade Bitcoin. But, with a little hard work and determination, you will be an expert in no time.