If you, like so many others, are getting interested in trading bitcoin, you need to be smart about it. If you want to make money off of bitcoin, you must have both knowledge and a good strategy. Get an introduction in this beginner’s guide.
There are many ways to make money from cryptocurrency. It is a market on the rise with incredible potential. If you want to start trading bitcoin, there are several ways to do it. But you need to learn the ropes of the market and have a clear strategy. Otherwise, it’s easy to get lost and end up losing money instead of your trading. Read a few tips on how to approach bitcoin trading as a beginner.
Do your research on what influences bitcoin’s rates
First of all, if you want to be a trader, you need to understand which factors are influencing the rates of the market you’re in. Therefore, you should do your research on what influences bitcoin’s rates. There are several factors to be aware of like the bitcoin supply which is capped at 21 million. The limited supply means that demand could increase in the following years.
Other factors could be things like the bad press that can have a massive impact on the market. Successful integration into other payments systems and big events in the world is also something worth following. You can stay updated on the latest news on bitcoin.
Choose your own bitcoin trading strategy
One of the most important things as a trader is to have a clear strategy. You can be a day trader or trend trader for example. You could also go for a HODL or a hedging strategy. The possibilities are endless and as a beginner, it can be hard to navigate. That’s why you can read everything you need to know about trading with bitcoins and develop a strategy when you have the appropriate knowledge.
You should consider whether you want to go short or go long. Going short means that you’re expecting the price of bitcoin to fall while going long means that you’re expecting the price to rise.
Set your limits and stop
One of the most essential tools in your trader toolbox is stops. This is a very important risk management tool. You can choose between several different types like a trailing stop, normal stop, or a guaranteed stop. No matter which type of stop you choose, you need to always make sure that they have the wanted effect on your trading. The stop and limit tools will differ depending on which type of platform you choose to trade from.
Figure out at which level you’re comfortable and when to close your position. This is important to make sure you don’t lose more than you can afford to. Sometimes when you close your position you will cut a loss and other times you will take the wanted profit. Prepare for every time you trade.