Out of all new investment opportunities currently out there, perhaps none are both famous and infamous in the same way that Bitcoin investments are. There’s very little predictability in the market trends for BTC value, with what a single Bitcoin fetches at the market occasionally varying several hundred dollars over the course of a single day. This has made for many interesting trading opportunities as the mantra of ‘buy low and sell high’ can be applied to anything that doesn’t have a fixed value. Day traders in BTC are becoming extremely common. There are even multiple sites out there that work with automated trading systems such as bitcoin-revolution.co to help make the process simpler for any would-be investors. That doesn’t mean everything is sunshine and rainbows in the trading world, however.
Here are a few things you should always keep in mind when making your trades:
Understand the limits of your analysis.
Bitcoin isn’t controlled by any one entity. It’s considered a decentralized currency in that no banks or governments are in control of it in any way, shape, or form, besides maybe mining or owning some coins themselves. Because of this, it’s completely up to the whims of the market as a whole when it comes to shifts in coin value. A particular news article could rapidly inflate or deflate the value of Bitcoin, while sometimes, it varies for seemingly no reason at all. It should be understood that most technical analysis of Bitcoin is purely speculative and based on very shoddy information, if it’s based on anything even semi-credible at all. Because of this, one should never get too far in appraising their own BTC prediction skills.
Don’t fall for FOMO.
Any minor increase or decrease in the price of BTC usually causes a significant uproar within the trading community, with people usually saying it’s always a great time to both enter and exit the BTC economy based on their own personal views. This ties into the previous point in that you should also understand the limits of the analyses made by others. Don’t be pushed toward making risky trades just because that course of action happens to be the flavor of the week in the world of BTC. As much as your own insight has its limits, the insight of others shouldn’t always be taken at face value either.
Manage risk accordingly.
Since Bitcoin is an extremely high-risk market, it’s recommended that you don’t invest a significant percentage of your total investment budget into cryptocurrency. Investments made involving BTC should be considered as money already lost that has the potential of turning a profit, not as a surefire way to wealth and increased financial freedom. If you don’t manage your risk, you risk losing much more than you’re willing to.
Just because Bitcoin is volatile and fraught with horror stories, it doesn’t mean it should be avoided outright. In fact, most of the potential gains from Bitcoin lay in that very volatility. With proper trading etiquette and understanding of the limitations of BTC as well as any BTC analysis, losses can be kept to a minimum. This keeps you poised to capitalize big time when there’s a bump in coin value.