Basic rules and guidelines for new Bitcoin traders
Constant price variations provide a chance for an investor to benefit from Bitcoin trading. You can make money through Bitcoin trading either as a short-term, speculative trader or a long-term investor.
There has been an ongoing protracted debate on Bitcoin's actual identity. What's more, most people aren't sure whether Bitcoin is a commodity or a currency.
Nevertheless, both sides of the debate support the inherent characteristics of Bitcoin. A considerable segment of this ecosystem believes that Bitcoin should be considered a commodity and a currency.
Regardless of the definition of Bitcoin, constant price variations provide a chance for investors to profit from trading this cryptocurrency. Sites like bitcoinprofit app even explain how investors can purchase Bitcoin in different ways. People are earning from Bitcoin trading and investments, either as speculative, short-term traders or long-term investors.
About Bitcoin trading
If you purchase Bitcoin at a low price and sell it at a higher price, your profit is the difference between the two Bitcoin prices, minus the commission you may have paid. But, if the price drops after you purchase Bitcoin, you make a loss. Alternatively, you can opt to hold your Bitcoin, hoping that price will eventually go up. In the unfortunate event, the cost can continue to drop, and this would increase your losses.
Types of Bitcoin traders
You can be a long-term Bitcoin trader or a short-term trader. Each of these Bitcoin traders is classified based on the duration they hold onto their trade position.
Long-Term Bitcoin traders
A long-term Bitcoin trader studies the long-term price trends first. This study forms the basis of purchasing and holding Bitcoin over a long period, hoping that price will go up. The goal is to sell Bitcoin at the highest price possible for a profit. Since Bitcoin is in the developmental stages, most experts recommend buying and holding.
The assumption is that with more adoption and increasing Bitcoin usage, demand will go up. What's more, the associated technology will keep advancing. And, this will create more demand for this cryptocurrency and boost its value. Perhaps, the surge in the price of this cryptocurrency, which coincides with a market capitalization boost and trade volume, gives a glimpse of this.
Short-term Bitcoin traders
A short-term Bitcoin trader analyzes Bitcoin price intra-days' behavior and seeks to benefit from the price swings. This trader thrives in the Bitcoin market's volatility. And this factor is an inherent characteristic of this cryptocurrency.
Bitcoin price swings were huge in the early stages because there was little activity in the crypto space. Essentially, the small event didn't have a severe impact on crypto prices. But as this cryptocurrency stabilizes and adoption grows, price volatility has been reducing considerably. It's for this reason that experts recommend trading cryptocurrency at this time.
Bitcoin trading rules
Bitcoin trading is profitable when a trader plays their cards well. The profitability of this activity depends on the movement pattern of the market. Nevertheless, your trading activity should be guided by the following rules if you want to maximize profits.
- Start small and break down your investment into bits.
- Don't invest all your money or savings in Bitcoin because a significant loss can drastically change your life.
- Take advantage of technology to research and analyze the Bitcoin market.
- Take your time to understand the market and current trends that can affect Bitcoin price.
Making profits and losses is part of the Bitcoin trading process. Nevertheless, you need to pay attention to events in the crypto market and analyze them carefully. That way, you will always make informed decisions that will boost the profitability of your venture.
Keep up with the top stories from Reader’s Digest by subscribing to our weekly newsletter.