7 Crucial Tips for Trading Bitcoin in 2021

At the time, Bitcoin is the most popular Cryptocurrency. Nowadays, learning how to trade Bitcoin is a skill that is good to possess. In this article, we will attempt to discuss seven crucial tips you should know in order to be a successful Bitcoin trader. 

1. Research the Market

As we all know, before entering any industry, you should always conduct research about the market you intend to attend. The crypto industry is similar, but there is one difference: the news and predictions that you may read online or offline are not always right because Bitcoin’s price is unpredictable, thus no one knows how much will the price increase in the future. However, it is beneficial to have a general understanding of how Bitcoin works and what it’s all about.

2. Use Stop Losses

Stop losses are a great method to get started in trading. Stop-loss is a basic skill that most experienced traders believe you must have if you want to trade Bitcoin or any other cryptocurrency. Simply said, a stop loss is a method of preventing a trader from losing more money than he initially invested. Stop losses can be utilized to obtain either minimal or maximum gains, and after attaining that target, take your profit and exit the trade. For example, if you invest $5000 in Bitcoin, you should set that price as the threshold at which you should withdraw your investment if something goes wrong or the price of bitcoin falls. The same can be applied if the price of Bitcoin rises and you make a profit, you should specify a maximum point at which you wish to withdraw your money and terminate the deal. This is an excellent strategy for trading Bitcoin since it stops you from losing more money than you first invested, and allows you to generate a decent profit. Stop-loss is a wide topic, if you want to learn more in detail what it is and how it’s implemented, you can check here.

3. Choose a Reliable Trading Platform

When you first start trading with Bitcoin, the first thing you should do is establish a wallet where you can store all of your cash that you intend to invest in the future as well as any profits you earn. Today, there are several online trading platforms that provide services for storing your money such as Binance, Coinbase, Kraken, and so on. However, you should choose carefully when deciding which wallet to use because some of them may not be legitimate and may charge you expensive fees which you should always avoid when becoming a Bitcoin trader.

4. Be Cautious of Scammers

With all of the benefits of Bitcoin as a digital asset, there are some drawbacks. For starters, because Bitcoin is a relatively new business, it offers an ideal environment for scammers to participate. 

The first and most popular technique used by Scammers is to create phony trading platforms. This is extremely hazardous for traders since scammers may take all of your personal information and, more crucially, all of your trading profits. So, when you first start trading, a great piece of advice we can provide you is to select a legitimate trading platform, which can be easily verified if you just do some researches about the platform you are planning to join, this way you will see their history and what other people say about using it. However, even if you use a legitimate Crypto wallet, scammers may utilize malware to get into your wallet if it is not secure enough. As a result, in addition to determining whether the platform is trustworthy, you also need to determine whether it is secure enough to prevent hackers from stealing your data and profit.

5. Don’t Be Controlled by Your Emotions

Aside from the technical deficiencies that a trader may possess, emotions may be a major impediment, especially for newbie traders with little experience. Emotions are considered trade barriers since they can lead to poor judgments. For example, when traders earn a large profit in Bitcoin trading, they generally become very excited, which drives them to acquire more and more Bitcoin without stopping, and this temptation could lead to losing more money. So instead of being controlled by your emotions, you should only trade when you are relaxed and not excited or mad.

6. ” HODL”

HODL is a phrase commonly used by Bitcoin and other cryptocurrency traders. Essentially, “Hodling” is a trading technique that entails purchasing Bitcoin and holding it for an extended period of time, generally a long period of time. This approach has shown to be advantageous since it stops traders from overtrading or trading excessively. “Hodl” is most of the time used by passive traders who don’t want to analyze when to trade or how so they just buy bitcoin and hold it for a long time.

7. Start with Small Investments

An important piece of advice that most traders can provide you if you are new to trading Bitcoin is to always start with small investments. Beginners sometimes enter trading believing that if they spend a large sum of money in their first trade, they will make a lot of money quickly. While this approach may work in certain cases, it is best to start small. Most traders would encourage you to start small because if you invest a small amount of money in Bitcoin, even if you lose it, it won’t be a huge problem because it’s not much. 

Money can be lost in the first trade in a variety of ways, including the time you choose to buy Bitcoin; newcomers have a tendency to buy Bitcoin at a high price and sell it at a low price, which is incorrect; and you can lose money even while learning how to use your wallet, which can be complicated at times.

Conclusion

The above tips are not all to become a successful Bitcoin trader. However, new traders also make basic mistakes, so you should keep in mind to do as much research as possible before you start Bitcoin trading. Bitcoin is a volatile asset, so if trading is done in the right way then success will be inevitable.