When you’re thinking about cryptocurrencies, you’re probably thinking about the hype surrounding them. Many Bitcoin trader have become interested based solely on the fact that digital money is a popular asset to add to your portfolio. However, approaching it unknowingly is unwise. This is due to the fact that Bitcoin and all cryptocurrencies, in general, record high levels of volatility. Checking the BTC price provides you with some valuable insight in this regard. But when learning how to buy Bitcoin, you must also be aware of all the minor details that make trading a successful endeavor.
Since Bitcoin is not without its risks, mainly observed at high volatility levels, with prices changing rapidly almost daily and with variations amounting to thousands of dollars, it’s essential to create a solid strategy before embarking on investment ventures in crypto. While the decentralized market offers many benefits, including increased anonymity for investors and censorship resistance, this characteristic also makes it highly speculative and solely dependent on supply and demand levels. This makes Bitcoin so changeable, which is why you need to be careful when you begin your trading career.
Here are some aspects you should keep in mind:
Starting small
If you’re taking your first steps into the crypto world, you might be tempted to make some big decisions immediately. It’s not difficult to be swept away by the hype. Crypto is one of the most popular assets in the world among traders, and its fame has led to many impulsive decisions. You’re likely to notice different trends, such as when most owners seem to gather together to purchase or sell large amounts. This is usually due to predictions made by members of the community, who may or may not be accurate.
When you’ve just become a trader, you should steer clear of such situations. The fear of missing out can be pretty severe when you’re dealing with cybermoney, and you may be worried that by holding back, you’re missing out on some stellar opportunities to improve your finances. However, the thing you’re most likely to do is protect your capital and avoid squandering it.
Opting for small-stake trades allows you to handle the crypto market with minimal risks. Don’t trade with more than you can afford to lose; if you feel uncomfortable investing a certain sum of money, trust your instincts, even if other investors hold a different opinion. Since it’s your own money at stake, you want to be the only one making the decisions.
Securing a wallet
One of the leading causes of concern among Bitcoin traders is that the wallets used to store crypto are frequently the target of hackers. While the fact that the blockchain cannot be modified or altered after a transaction has been completed is typically regarded as a positive aspect since it reduces the likelihood of fraud, it also has the main disadvantage of meaning that once crypto is stolen from a wallet, it remains lost forever. The only way a transaction can be reversed is if the recipient returns the coins on their own accord, but such a situation is impossible in the case of cyber-criminal actions.
Therefore, investors are aware that the best way to have a successful career dealing in Bitcoin is to ensure that their digital wallets are as secure as they can be. While you have the option to store your crypto on the exchange where you perform your transactions, this leaves it highly vulnerable in the event hackers target the platform. That’s why choosing a different wallet to store your funds is important. Hot wallets that come equipped with an internet connection are usually more accessible, but their connectivity also makes them more vulnerable. Moreover, they’re not the most feasible option if you plan to store a significant amount of crypto.
Picking up a cold wallet is the way to go. Since it isn’t connected to the internet, the risk that a hacker could access your Bitcoin or tokens is substantially reduced. You must, however, be mindful of the computers to which you connect your wallet. If they are not properly secured, your bitcoin might be targeted. Hardware wallets are the more secure option, so choosing them over the software option is always a good idea.
Create your strategy
As a Bitcoin trader, you have several options when it comes to trading strategies. Some of them include the following:
1. Passive trading: Holding on to your position and focusing on long-term profit is the basis of passive trading. This means that you don’t have to concern yourself with price fluctuations and market timing.
2. Swing trading: Based on an in-depth technical analysis of the market meant to capture trends, this strategy is more appropriate to try after you’ve gained some insight into the world of crypto and have a better idea of how the swings are likely to occur.
3. Day trading: This method aims to exploit short market movements for gains. As a day trader, you enter and exit the market within a 24-hour timeframe.
4. Scalpers: This trading strategy gets its rather violent name because it allows you to perform multiple small trades every day to achieve numerous small profits.
Profit targets and stop-loss
Since Bitcoin has a reputation for volatility, you don’t want to start trading without a strong, predetermined strategy in mind. After you’ve created a plan, it’s essential to stick to it and only make alterations if you have reason to believe your current strategy won’t bring you the desired revenue levels any longer.
Before opening a position, setting your stop-loss levels right from the start is vital. Omitting this step in your strategy leaves you vulnerable to potentially devastating financial situations. Being strict with your targets ensures that you can minimize your overall risk and avoid pitfalls.
Becoming a crypto trader takes a lot of work and research. While Bitcoin is generally recognized as much safer compared to altcoins, it is still subjected to significant levels of volatility, so you must practice caution when approaching it to perform successful transactions.
