DeutschMore and more investors, who otherwise tend to speculate on the “normal” investment market and on traditional stock exchanges, are jumping on the bandwagon of “crypto trading”. This is because the good prospects for returns are gradually getting around. The fact that there are increasing regulations for trading in digital currencies in many countries is also having a positive effect on general interest. Switzerland is a good example of the opening up to Bitcoin and Altcoins. How can you trade Bitcoin correctly to be successful? At this point, we would like to give you a first insight into how trading works and what you should pay attention to from the start.
Trading Bitcoin Correctly: Trading Won’t Work without a Thematic Understanding
The right and targeted Bitcoin trading is not magic. However, a basic understanding of how and where trading can be done safely and efficiently is still necessary. Because the success of cryptocurrencies automatically leads to black sheep who are out to commit fraud. We want to concentrate on the “correct” trading with some of the most important rules. Speculation with derivatives, in which developments in the Bitcoin price are bet on without a physical purchase, should only be touched on in passing. With a few basics, getting started with “trading Bitcoin correctly” should be quick and without major risks. Of course, the important reference to volatility (range of fluctuation) should not be forgotten early on. No matter how well prepared you are to start trading, as trading is also called. Cryptocurrencies such as Bitcoin, Ethereum, Ripple and all the others are still subject to sometimes significant fluctuations. Such movements can also occur within manageable time frames.
But this is precisely what can offer opportunities that you will only encounter so acutely in rare exceptional cases on the stock market and other sectors of the financial sector. Let’s now take a look at the announced important rules for starting Bitcoin trading. If planned correctly, you can quickly collect considerable income after the first investment. It is obvious that the rules mentioned here can only be a selection of many. The opinions of real crypto professionals vary as to which are the essential tips. Professionals can usually agree on a few aspects.
Rule 1: which Trading Variant is the Best for Me?
What sounds simple is often less simple in practice for beginners than it seems at first glance. This is because the emergence of new financial products in the area of crypto derivatives such as Bitcoin futures or options (as well as comparable offers based on Altcoins such as Ethereum) is currently attracting many institutional investors. But the approach can also be profitable for private investors. The direct purchase of coins and tokens requires a certain budget. Even if investors only acquire fractions of currencies – for example in the form of Satoshi units of Bitcoin. It takes a lot of patience for minimal investments to turn into pleasing returns. Instead of trading Bitcoin directly via crypto marketplaces or exchanges, options and other derivatives can be a faster route to success. Binary options and contracts for difference (CFDs) in particular are interesting.
Here, Bitcoin can often be traded with very little capital. The movements of the crypto rates are speculated on or “bet” on. Many platforms even allow this with leverage, so that a multiple of the actual budget can be invested in positions. However, the risk is correspondingly high, which is why beginners should take this path with caution. Some BTC traders are active in both areas. This is because derivative products can hedge “physical” purchases, which is also referred to as “hedging” in technical jargon. Targeted speculation on falling prices can offset losses from actual price declines.
Rule 2: Find the Right Exchange/Trading Platform
The crypto market has now become huge, and providers from all over the world are vying for customers from all over the world. But not every platform is suitable for every crypto trader. If you want to trade Bitcoin correctly, you need a serious and transparent partner. This does not necessarily have to be an exchange. Many platforms obtain their rates from various exchanges and thus always promise the best current prices for buying and selling digital currencies. Operators who are licensed, regulated and/or controlled by the state are recommended. A deposit guarantee for the available customer capital on trading accounts should be given in the event of losses due to the fault of the providers. Of course, your own fault cannot be insured. In general, transparency is essential, especially with regard to fees due for BTC custody in an account with the provider and for active trading.
Good portals also offer analysis tools that can be a great help to you when trading. A good customer service should be guaranteed, especially for beginners. In addition, beginners usually want to start cautiously and with little capital. A low minimum deposit amount as well as low minimum investment amounts are useful in this context. You can gain experience particularly quickly and with little risk with a free demo account, as some exchanges and platforms provide. In this way, beginners learn how Bitcoin trading works correctly and which strategies can lead to success.
Rule 3: Know the most Important Influencing Factors for the Price of Bitcoin
Anyone who has already gained experience on the traditional stock exchange knows about the many possible influences on price developments. In order to trade Bitcoin correctly, you should also know which risk factors and positive features there are. Unlike stock trading, cryptocurrencies can be traded around the clock. The BTC price can therefore also change at any time of the day or night.
These aspects can affect crypto rates:
- Supply & demand
- the current market capitalization
- Reports from politics & economy
- Industry news
Under the umbrella term “industry news”, for example, headlines on further implementations of Bitcoin, innovative blockchain developments, regulatory innovations, reports on hacker attacks, increasing Bitcoin interest as the industry and much more information can be included. Media reports on political and economic developments are relevant not least because Bitcoin is gaining recognition in the real world ever faster.
Rule 4: Find the Right Wallet for your Bitcoins and Define Secure Access Data
In the past, there have been repeated reports that traders should not keep their reserves in digital wallets offered by exchanges and platforms themselves. The reason for this is repeated news of hacker attacks with subsequent economic damage for providers and customers. External wallets are often recommended. Here there is a large selection between models Paper wallets, cold wallets, app wallets or hardware wallets. There are differences in terms of possible one-off or regular costs. There are always security risks – you should handle access keys and other important data for the wallet with care. Do not pass on the data to third parties without further ado. Passwords and private keys belong only in the hands of the wallet holders.
Rule 5: Define Suitable Strategies to Trade Bitcoin Correctly
Many trading strategies can lead you to your goal. But not all of them work equally well for beginners and advanced users. A popular strategy is day trading. Everything takes place within a trading day. Scalping sometimes works with even shorter periods, but above all it speculates on small fluctuations in rates. Automated Bitcoin trading is also increasingly finding fans among investors. It relies on software that trades independently based on predefined analysis features without you having to do anything manually. You will often come across the term “trading Bitcoin correctly” in guides on the subject “hodlen”.
Hodlers acquire cryptocurrencies and hold them for the long term and do not sell stocks again early. The equivalent from normal stock trading is the saying “Buy and hold”. This also speculates on long-term price increases. A trading plan can be useful in any case. Without a fixed goal in mind, crypto trading quickly becomes a pure game of chance. Defining your own return targets, risk appetite and the appropriate chance-risk ratio will help you avoid losses beyond your individual pain threshold. From a professional point of view, it is appropriate not to take full risk, so to speak, right from the first transactions. Feeling your way around usually proves to be a good way to trade Bitcoin correctly.
Setting suitable goals for yourself also prevents ill-considered decisions. There will always be temptations in the form of unexpectedly clear rate fluctuations. You should weigh up subjectively as well as objectively to what extent you can and want to afford to participate in a run. In order to trade Bitcoin correctly, you have to know your limits. However, this also applies in the event that prices fall dramatically. Anyone who threatens to lose their head in such moments should consider giving preference to less volatile areas of the financial market. Whereby here as there, above all, the so-called “big fish” decide on the fortunes of the market.
Rule 6: Learn to Live with Losses
Anyone who wants to trade Bitcoin correctly must be aware of the risks. An important realization of many beginners after some time is: Losses are part of everyday life. Thanks to the high volatility, experience is needed. Initially, but not only then, you should not lose your nerve when threatened with losses and sell the entire stock of your wallet directly if a minus threatens. Many guides mention that returns are achieved on average with about a fifth of all trades. In this area, profits simply have to be so high that they compensate for the losses of the possibly 80 percent successful positions or still achieve a profit.
Rule 7: Don’t just Trade Bitcoin and Altcoins out of Boredom
It doesn’t work without motivation. Hardly anyone would come up with the idea of investing money on the stock market purely for entertainment. It takes interest and the willingness to keep an eye on the above-mentioned influences and developments surrounding the leading cryptocurrency Bitcoin and its countless competitors from Ark to Zcash. Always remember: Every one of your losses is another trader’s gain. Either you really get involved in the crypto market with all its opportunities, risks and special features, or you prefer to look for investments elsewhere where successes are associated with less effort and time. However, anyone who is prepared to embark on the adventure of Bitcoin and Altcoins with comprehensive preparation will become part of a growing community and a market that offers many exciting opportunities, especially in problematic phases of the global economy.
With increasing acceptance in trading and regulations, the sector continues to grow rapidly, which will result in further products. And so you can trade Bitcoin correctly in ever new ways.
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