This past year has been one in which the trading of cryptocurrency became a worldwide boom and since Bitcoin was introduced, its value has risen to over 1000%. Needless to say, cryptocurrency is volatile.
In the past, Bitcoin did not have a high level of volatility like it does now. These days the price of one Bitcoin may rise or fall by hundreds of dollars within a day, and anybody could suffer unexpected losses. However, traders still find a way around the volatile fluctuation and manage to continue trading while staying in the black.
In this article, we will be looking at 4 useful tips for successful Bitcoin trading.
1. Do not invest more than what you can afford to lose
There is no business that involves financial trading that cannot produce losses. Bitcoin is a highly speculative investment, and no one knows what will happen next. You could see huge gains on a single trade, but you could just as easily and see huge losses. As a result of this high level of speculation, you should invest only what you can afford to lose if there is a crash or dip in the value of Bitcoin.
There is a fact that you must have at the back of your mind—you cannot lose more than you invest, so you should not invest more than you can afford. This will also help you make the right decisions and avoid panic selling when there is a dip in price. You will be able to hold the fort and avoid buying back at a higher price when the value of Bitcoin rises again.
2. Set trade goals
To keep calm during periods of high volatility, traders should set a price at which they take profits or cut losses beforehand. This eliminates making trade decisions based on emotions or greed.
3. Bitcoin is Seasonal
In the last seven years, it has been observed that the value of Bitcoins and other cryptocurrencies stay mostly in a downtrend, but between September to December, the value stays in an uptrend. This is most likely a result of the high level of business activities after the summer and into the winter holidays.
4. Learn how to read charts
Bitcoin charts help show you how Bitcoin is doing over a particular period. You should be able to study the market trends to make better trading decisions. Technical analysis is of course not an easy skill to develop, but for the purpose of your Bitcoin trading business, as a new trader, you need to spend the necessary time to learn how to stay constantly informed.