Bitcoin is one of the most promising ways to make money out there. As a result, about everyone wants a piece of it. That means there is a lot of interest in the cryptocurrency and many millionaires are being minted by the minute. Unfortunately, however, most beginners haven’t a clue about where to start or what to do. Here is a list of five important things to know before you dive into the world of bitcoin trading. You can think about it as a special kind of BitCoin Loophole Review that shows you the secrets to being a good bitcoin trader.
1. Technical Analysis
Bitcoin isn’t like nondigital currencies. Its value isn’t influenced by any central bank. There aren’t any scheduled news releases either and the impact of breaking news is often unpredictable. Bitcoin pricing models also do not strictly follow traditional financial theory, and it doesn’t correlate very well with other financial instruments.
The only way to get ahead in such a market is to know how to read price action and perform technical analysis on it since price action is the most reliable indicator for such a highly speculative market. It’s important, therefore, to have a deep understanding of technical analysis before you begin bitcoin trading. Get familiar with all the terms and strategies and practice as much as you can before you ever risk a single dollar. The payoff will be much greater when you do.
2. Work Slow
Trading isn’t a sprint; it’s more of a marathon. When you begin your career as a bitcoin trader, you need to pick a schedule and stick to it for the long run. The bitcoin markets run for 24 hours. You can hope to run for 24 hours as well. If you try to, then you won’t last very long as a trader.
The most important thing to try and avoid as a trader is burnout. If you put in too many hours, your performance will dip, and you won’t make as much as you would like to. Instead, pick your best times to trade and stick to them religiously to maximize your chances of success.
3. Keep up with the News
Bitcoin certainly is both unique and lucrative. However, it doesn’t have a predictable news schedule. There aren’t any scheduled gross domestic product (GDP) releases, world agricultural supply and demand estimates (WASDE) reportsor press briefings for bitcoin. Instead, there are sporadic news events that have unpredictable impacts on the market. A good example is the 2017 announcement by the Russian government to ban all cryptocurrency exchanges.
If you want to stay on top of the markets and avoid being caught unawares, stay on top of the news at all times. Get a reliable live news feed and keep it on at all times.
4. Use Stop Losses
Volatility is part of the financial markets. However, it is, even more, a part of bitcoin and other cryptocurrencies than any of the traditional financial markets. The value of bitcoin fluctuates on a daily basis, offering traders various opportunities to make money. It also offers a lot of risk in the process, and traders who do not have stop losses will soon lose all their capital.
As a bitcoin trader, while you take advantage of the wide swings in the price of bitcoin, you should also cover your downside by implementing tight stops. That way, you keep your losses small and your profits large.
5. Use Leverage Prudently
It’s a well-known cliche that leverage can boost your profits. It can also boost your losses, however, and using too much of it could adversely affect your financial management skills. Too little and you won’t have much profit to show for all you’re your hard work as a trader.
One way to manage your leverage and use it prudently is to implement the 3 percent rule. Never invest more than 3 percent of your total capital in a single trade. That way, you size properly in terms of the risk-to-reward ratio and keep any single trade from putting your capital in jeopardy.