Tips to enact successful cryptocurrency trading

In Summary

• The hype, buzz, and misconceptions all rank high when it comes to Bitcoin. However, there is scope for gaining a substantial amount of money.

• But, the plethora of pitfalls and traps can prevent you from becoming a successful Bitcoin trader.

A representation of virtual currency Bitcoin is seen in front of a stock graph in this illustration taken January 8, 2021.
A representation of virtual currency Bitcoin is seen in front of a stock graph in this illustration taken January 8, 2021.
Image: REUTERS

Are you just entering the world of cryptocurrency?

The hype, buzz, and misconceptions all rank high when it comes to Bitcoin. However, there is scope for gaining a substantial amount of money.

But, the plethora of pitfalls and traps can prevent you from becoming a successful Bitcoin trader. It is particularly daunting for those who have just entered the market. 

11 Tips to gain success in Bitcoin trading

There are numerous pointers that can help you in making improved decisions. Keep in mind that some losses are inevitable. But it is vital that you understand those mistakes and remember them for the future. Check out the tips listed here to garner a considerable amount from Bitcoin trading. 

Save a significant amount

The foremost tip is that you must save a considerable amount of money if you want to indulge in Bitcoin trading through platforms like bitcoin compass. It is not necessary for you to amass a huge capital for trading here. Moreover, it is recommended that you do not put all your money in. if you suffer losses, it will cause you serious financial woes. 

Be alert of events and news

There are various factors that can influence Bitcoin prices. You must be aware of the latest news and events occurring across the globe. It is vital that you remain up-to-date about various political, financial, and other situations.  If you can predict the price movements, then you can make well-informed decisions. 

Start small tradings initially

If you start high volume tradings on the very first day, you could suffer losses. That might, in turn, shatter your confidence. Not to mention the loss of financial amount. That is why it is recommended that you start small and then rise through the levels. If you start small, then you can understand the market better. Moreover, it diminishes the risk of loss too. Once you gain some confidence, you can then increase the volume of daily trading. 

Research the Bitcoin market

Are you dreaming of garnering huge profits from Bitcoin trading? Well, you have to do the legwork to get the reward. It is vital that you conduct extensive research on the market. You can start by taking note of the previous trends and comparing them with the current ones. Also, blogs, articles, etc., by experts are a huge help. If you are unable to interpret technical charts, you need to look up to the professionals. 

Make an efficient trading plan

While trading strategies are utterly crucial, trading plans are equally vital. You need to construct a firm trading plan and follow it rigidly. If you deviate, then you have the risk of suffering financial losses. For making the trading plan, you must first set goals. Make sure that these are realistic. You obviously cannot become a millionaire overnight. Moreover, you also need to understand the risks. 

Think about the trading strategies

There are various types of trading strategies that you can opt for as a trader. You can choose – scalp trading, day trading, swing trading, or automated trading. For beginners, the best option is automated trading. Here, the bots do all the heavy-lifting, and you just have to set the limits. It is particularly beneficial when you don’t have much knowledge about the market. 

Opt for risk management

The Bitcoin market is extremely volatile, and as such risks, are part of the investments. It is vital that you devise risk management plans before committing to Bitcoin trading. Some of these strategies include stop-loss orders and limit-close orders. These will close your trading positions and prevent any extensive financial loss. Moreover, be careful with the amount you are investing in. You must not risk the amount that could financially devastate you. 

Explore different trading platforms

There are numerous trading platforms that are readily accessible nowadays. You just have to follow some simple steps to create a trading account. However, you must be careful while choosing the platform. There are many scammers waiting for opportunities to dupe you. That is why you must be very careful before investing any significant amount. Select the change platform that caters to your needs the most.

Understand your own objective for trading

Are you interested in Bitcoin trading because your friends are also doing it? Or do you see yourself as a long-term crypto investor? It is vital that you understand why you want to indulge in Bitcoin trading in the first place. If you have a clear objective, then you can make strategies and plans accordingly. 

Learn to control your emotions

Emotions are an imminent part of us, and sometimes they can get in the way of making a calculated trading decision. The two most preeminent emotions that often rear their heads are fear and greed. Both are destructive and can result in financial losses. You might have heard the term "panic selling". It is actually true and happens frequently. 

Understand hot and cold wallets

Simply trading in Bitcoin is not enough. You must also know more about the wallets – hot and cold. Hot wallets are the online ones that store your private key into devices connected to the internet. However, in the case of cold wallets, the private key is stored in offline devices. To be safe, it is better to have cold wallets for long-term storage and hot wallets for daily tradings. 

A word of caution

Though the market of cryptocurrency seems enticing with staggering profits, you must understand the risk. The volatility and unpredictable price movements can devastate your finances if you are not careful. That is preciously why risk management is crucial. Moreover, try not to make the same mistakes twice. Also, never stop researching the market. 

Wrapping it up

There are a plethora of tips that you can follow to gain success in Bitcoin trading. However, keep in mind that the learning curve is steep, and losses are bound to occur at times. But, that must not deter you from the path or your end goal. You have to ride out the loss and keep moving forward towards the profit. That is the only way to become an accomplished Bitcoin trader.