Bitcoin has become a valued commodity. With a lot of media attention and speculative hype, the founding cryptocurrency seems to go from strength to strength with little in the way to stop its path to success. With mining now pretty much impossible, crypto enthusiasts are turning to the opportunity to buy Bitcoin and trade it, with the ultimate vision of making a lot of money in a fairly short space of time.
This beginner’s guide will talk you through the dos and don’ts of Bitcoin trading and help you make the most of them.
Protect Your Investment
The key strategy with any investment is to protect it as much as possible. If you are trading in cryptocurrency, you need to make sure you have the right procedures in place to ensure that your crypto remains safe and out of reach of hackers who will do anything in their power to remove your hard-earned Bitcoin from you.
To protect your Bitcoin, it is highly recommended that you purchase a hardware wallet. These store your Bitcoin externally from your computer system and keep it away from an internet connection that hackers use as a window of opportunity. The top 3 hardware wallets for Bitcoin are:
Ledger Nano S
This is a great all-round hardware wallet designed to hold Bitcoin, Ether and many other altcoins. Connecting by USB, this wallet keeps your crypto securely and double checks any transactions being made out of the wallet when it is hooked up to an internet connection.
The Trezor wallet acts as a multifunctional platform for security. It stores your Bitcoin along with any passwords you may want to keep securely. It also has a recovery seed built in to allow you to recover any Bitcoin that is stolen if you’re unfortunate enough to fall prey to hackers.
Like the Ledger Nano S, this hardware wallet has been developed over a number of years to help store your crypto securely. It makes use of both USB and Bluetooth technology to give you easy access to your currency when you need it.
There are many good software wallets, but be aware that these are not as secure as an external hardware wallet. Software wallets are free and allow you to store crypto on your computer.
Don’t Expect Miracles
While the success stories of Bitcoin are commonplace and many people have made a fortune trading Bitcoin, it is best to go into any investment with a conservative and realistic attitude. Bitcoin is expensive to buy, so when you make your initial purchase you will likely see a big amount of money going from your bank account.
Bitcoin can be volatile, so be prepared for sharp drops as well as sharp rises. The important thing about Bitcoin is to try and spot trends or patterns and prepare yourself to sell on a rise rather than a fall. Don’t expect to become an overnight millionaire through Bitcoin trading, it takes time and perseverance as well as courage to hold onto your Bitcoin long enough to see those kinds of returns. Often those that have made such figures have held onto the currency for a number of years.
Buy Lower, Sell Higher
The key here is not to wait for Bitcoin to drop further in value before you buy; if you wait for this, you could miss a prime investment opportunity if the market turns sooner than you expected. Conversely, you shouldn’t wait until the coin has reached a peak before selling; oftentimes a Bitcoin peak is followed by a sharp fall as investors scramble to sell the coin quickly. It is best, instead, to sell as the coin is rising and not hold out for a bigger payday.
Over the years many investors have been stung terribly by waiting too long for a rise to sell, and when they have decided to cash out they have lost significant sums of money. Be prudent with your buying and selling for the best overall results.
Don’t Believe the Hype
Bitcoin, as well as crypto in general, has a lot of hype surrounding it. Much of this is perpetrated by crypto founders or investors looking to boost the value of their own investments. Take anything you read with a pinch of salt; as with many things in life, there is always a reason for a story, and it likely isn’t designed to benefit you.
Be wary of taking investment advice unless you are absolutely sure of an individual’s credibility. Some Bitcoin traders have previously bought currency on exchanges recommended by “investment gurus” only to find that they have been swindled out of a lot of money.
Have an End Goal
Set yourself a target and stick to it. Once you have reached it, put your Bitcoin trading aside. Bitcoin, like many other commodities, will have an upper limit, so setting yourself a target you will be happy with means that when you have reached your trading goal you no longer need to worry about your investments.
Failing to set realistic trading goals often ends in misery as you will find yourself in a cyclic pattern of continually chasing a profit.
Verify the Credibility of Exchanges
A brilliant exchange to use is CEX.IO. They provide a user-friendly, transparent and low-fee trading service (0%-0.25%), which gives Bitcoin traders freedom to operate in relative security. CEX.IO also offers many tools for traders to derive maximum benefit from their activity; they include API solutions for automated trading, cross-platform capability, stop-loss order functionality and margin trading. Other exchanges are also good, but be wary of exchanges that have little requirements to registration or are not well known.
Internet forums and review websites are often a good sounding ground when selecting an exchange to trade on, and many seasoned users and traders offer insight to novice traders.
This guide should hopefully see you have a lot of Bitcoin success, but remember to keep your money safe!