With the recent explosion of interest in Bitcoin, cryptocurrencies and blockchain technologies, it’s no surprise that many people want to jump on board the Bitcoin trading wagon and reap the profits from this new investment opportunity. The fact of the matter is that there are a lot of people out there looking to make money trading Bitcoin who don’t really know how to do it safely, effectively or correctly. Here are five ways you can trade safely and profitably with your Bitcoin investments.
If you’re new to trading, it’s a good idea to start small. You should only invest money that you can afford to lose and only trade with what you have. The last thing you want is to get in over your head and end up losing all of your savings. The best way to do this is by putting a set amount of cash on the line each day and letting the profits grow over time.
Do Your Research
Bitcoin trading is a difficult market to break into, with high volatility and potential for massive losses. So it’s important that you do your research before investing any money or time in this space. The cryptocurrency has been around since 2009 and is one of the best-known alternative currencies on the market. As of today, there are over 100 different types of cryptocurrencies in existence, with bitcoin being the most popular by far.
Don’t Over Trade
Bitcoin trading, like any other type of trading, is not a get-rich-quick scheme. You will have good days and bad days. But in order for you to make any money, you need to hold onto your bitcoin for longer than one day. The more you trade your bitcoin the less likely it is that you will see any profit. As such, if you want to take advantage of short term fluctuations (like sell when there’s a dip), then invest only what you are willing to lose. In addition, do not risk more than 1% of your portfolio per trade.
Know Your Limits
Make sure you know how much money you are willing to risk before trading. It can be tempting to throw all your savings into a trade, but it is important to keep some in reserve, just in case the market moves against you and all your funds are lost. Plus, if you plan on trading more than one account, make sure that they don’t both have the same funds allocated – this will create a conflict of interest. The BTC price has gone down significantly since its peak in December last year, but as always with bitcoin there is no way to predict what may happen next.
Some believe that the recent decline has been caused by Chinese investors taking their bitcoin out of circulation to avoid higher taxes and strict regulations.
The bitcoin market is volatile and trading bitcoin for profit can be risky. Five ways to make money trading bitcoin are buy and hold, day trade, trade with leverage, short sell, and develop a strategy that works for you.