Trading Bitcoins is very much similar with any other forms of trading. The risks can range from mild to extremely damaging. You need to be careful when you are trading Bitcoins as a little greed can go a long way. The idea behind this is to ensure that you have your safety nets before jumping off the cliff with your new-found investment. Here are some safety tips.
First things first, if you are trading Bitcoins (or any other forms of trading), you need to:
- Put 100% focus into this
- Don’t get distracted and put in enough hours to learn
- Understand that trading might not be everyone’s cup of tea and hence know when to exit
- Remember that you can get burnt very easily if you are not careful
Then, consider the following tips.
Have an objective
You need to have a reason when you trade. Before starting, know why you are starting the trade so that you can formulate the right strategy. Your strategy should have room for times when you are not earning. The concept here is to know that there are times when you might not be earning. You cannot win every time but not losing might just be a good strategy.
Know when to stop
Set a target and make sure it is clear. If you are taking profit, then you need to have an exit strategy. Read this! You must know when to stop when you are making money. You cannot earn them all. Then there is the other side of the spectrum. If you are losing, you need to know when to cut the loss. The high and low levels must be clearly identified before starting your trade. This will give you space to calculate how much you are ready to lose and how much you could potentially earn. Once you reached those points, stick to it!
Find pockets to earn
The best strategy is to go for small profits. You can never find the peak of the movement so what you want is to build your profit based on accumulation. By managing your risk wisely, you get to earn more in the short to middle term. Bear in mind that Bitcoins are very volatile. Look for other markets that have a direct or indirect effect on Bitcoins and then work your way up.
This should be the same theory you would have heard in most investment engines. Think before acting and more important, be practical about your investments as well as the processes that you intend to go into.
- Charges – You do realize that there are some form of charges involved when you trade. This means that the more you trade the more you have to pay. So, think about reducing your costs before its too late.
- Decision making – Ultimately, you should be the one making the decision whether to trade, to cut off or to stay silent. You do not want to be pressured into making decisions that might benefit you in any way.
- Setting your goals – A lot of traders lose sight of what they set out to do in the first place. If you know you have to stop after earning a certain amount, factor that in from the start and stick to it. There will always be other opportunities. You cannot let this one spoil what’s coming in the future.
- Get market scoops – If there are news reported by major news sites, then there is a high chance they are true. Maybe its time for you to pull out of that trade and re-strategize for your next move