3 important things to note when trading Bitcoin
Trading Bitcoin, like any other financial assets, is all about making money. You buy low, sell high, profit from the spread, and repeat.
Trading Bitcoin, like any other financial assets, is all about making money. You buy low, sell high, profit from the spread, and repeat. Sounds easy right? Not all traders, however, have been able to achieve their investment goal trading the pioneer cryptocurrency.
One trader once described the Bitcoin market as juggling too many balls, alluding to the erratic nature of the market.
One moment Bitcoin is trading at $10,000 and the next you wake up to see the coin under $9,000.
The opposite trend was observed very recently as Donald Trump’s tweeting recently sent price to $12000.
If you are interested in trading, and not holding, your Bitcoin assets, these 5 tips would help you succeed.
Follow the news
There’s a not-too-popular phrase advising to “follow the money”. In the Bitcoin world, you have to follow the news. You would find that information received in real-time can be the difference between cashing in mega profit and losing in a trade.
News about the USA and China trade war, the Senate hearing on Facebook’s Libra, the move by JP Morgan to create its coin and the likes have a profound impact on your ability to take in profit from Bitcoin.
Imagine increasing your Bitcoin holding moments before a 30 percent surge in price, or selling down some stake before the price crashed from its all-time high in 2017.
Well, some of the major fluctuations in Bitcoin have been triggered by events reported in Media.
Try as much as you can to keep abreast on the latest information on cryptocurren
cies and related technology. You can follow news platforms on social media and blogs too. A good application to get this information is coin news.
Sharpen your Technical skills
Making money is never easy. It involves big risks, good instincts and of course, studying charts that let you understand market sentiment and trading patterns.
Even though it could be confusing at first, technical skills are important for trading- especially for day and intra-day trading.
Some technical indicators such as Simple Moving Average (SMA), Fibonacci Retracement, Stochastic Oscillator and many others can let you know the best time to take or exit a position in any cryptocurrency and make the most gain.
Youtube and an abundance of online courses can help you master technical analysis.
An extra tip: A successful trader explained that trading altcoins can allow crypto-traders to gain more bitcoin with their profits.
Know the technology
Like stocks, fixed income and real estate investing, understanding the underlying technology or driver of growth enable holders of such investment make better returns.
For example, good stock investors rely on knowledge of an industry to assess prospects in a stock. In the same way, bitcoin traders have to understand the technology driving growth in cryptos.
While the long term gain would be staying ahead of the curve-like the early birds in Bitcoin when it sold very cheap- short and mid-term benefits would be knowing how to maximize the most from each coin type.
Blockchain, the technology behind Bitcoin and Ethereum networks, is increasingly finding its way into mainstream financial services and other industries.