What Is Bitcoin Trading And Should You Do It?
Every day, almost 300,000 Bitcoin transactions occur across the world. Bitcoin is the most successful cryptocurrency to date, giving it a lot of potential for increased market value. Bitcoin trading in Australia, as the name suggests, involves buying and selling Bitcoin with the view to make a profit.
While the potential reward is lucrative, trading always involves taking calculated risks, with some investors winning big if they have the right strategy and discipline to carry out the strategy. Bitcoin, as an investment asset, is still considered to be quite volatile. Succeeding as a trader will depend on how you approach your trades.
This Bitcoin trading guide will tell you everything you need to know to start trading Bitcoin successfully.
BITCOIN TRADING TIPS
Before you get started with Bitcoin trading, it’s important to know a few Bitcoin trading tips and skills that you will have to develop. If you have never traded on the stock market before, this may be a completely new area for you.
1. SET LIMITS FOR PROFITS OR LOSSES
Before you even start trading Bitcoin, set limits on the price that will indicate where you cut your losses or where you cap your profits. If the market keeps falling and it reaches your exit point, sell your bitcoins instead of waiting and hoping for things to get better. The same applies to setting a profit-taking limit.
This is necessary because the value of Bitcoin can change quickly and can reach extreme highs or lows. The key is to trade profitably without opening yourself to the possibility of suffering a huge loss. The cryptocurrency market is known as being more volatile than the traditional share market, so get ready to embrace the rollercoaster ride!
2. LEARN TECHNICAL ANALYSIS
Technical analysis is the process of evaluating what you know about the market and using that knowledge to identify trends. When you have a better understanding of market trends, this will allow you to make more accurate predictions and trade more wisely.
If you truly want to become a successful trader, you have to be willing to spend some time studying the Bitcoin market. It may seem like a challenging skill to develop, but practice makes perfect. Keep learning and you will begin to spot some trends you can use to your advantage.
3. TAKE CALCULATED RISKS
Don’t throw away your savings or your wins by putting all your eggs in one basket. Risking your Bitcoin by trading them all at once or by engaging in risky trades can make you lose everything you have gained in the past. This is why setting limits is important. Remember, do not risk more than you can afford to lose.
Bitcoin trading, as with any other trading activity, can result in huge losses if you don’t allocate your resources wisely. Understand the market, set limits, then stick to them by only taking calculated risks.
4. STAY UPDATED ON BITCOIN NEWS
Even if you have already figured out how to use technical analysis, it is always recommended to be up-to-date with the latest news regarding Bitcoin. This information will impact the value of Bitcoin whenever they are released, so being aware of them will prevent you from being surprised by sudden swings in the market.
DIFFERENT TYPES OF BITCOIN TRADING
Planning for Bitcoin trading in Australia? There is a wide range of Bitcoin trading strategies that people deploy. If you are just starting out, it is a good idea to test the waters and try the different trading methods to see which one works best for you.
THESE ARE SOME COMMON EXAMPLES OF BITCOIN TRADING STRATEGIES.
As a day trader, you will buy and sell Bitcoins throughout the day and may close all your trades at the end of the day. These trades rely on small changes in the course of hours that will affect the value of Bitcoin.
Day trading will involve focusing on the market throughout the day, because there may be small price swings that will only last for a short period of time.
Scalping occurs in an even shorter time span than day trading. With this strategy, you are making a trade every few minutes, so your attention is solely on what is happening in the market at any given point. This is a strategy you can use to earn small and quick profits.
Swing traders are more of the big-picture people, placing trades over the course of a few days or even a few weeks. You start by choosing a position and check in when you anticipate a price move.
As a swing trader, you will use technical analysis to figure out the daily or weekly market trends. The goal is to trade at the moment of a price move, where there is a sudden change in the market value. This allows you to maximise the profits you receive by ‘riding the momentum’ of the mood swings of the market.
WHY BITCOIN TRADING IS THE FUTURE?
Bitcoin is growing increasingly popular and is almost synonymous with the rise of cryptocurrency. Bitcoin trading has a huge potential of raking in the big bucks, which is why many are interested in joining the action.
With a huge possibility of success, however, comes the huge possibility of failure. Bitcoin’s volatility means that you can experience a big win only to have it all crash a few hours later. The best way to ensure that your trading experience is profitable is by keeping in mind the different tips, skills, and strategies discussed in this article. Remember, practice makes perfect!