How to Make Profit: Basic Rules for Beginners in Bitcoin Trading
There has been an ongoing debate about the actual identity of Bitcoin, whether it should be considered as a currency or a commodity.
More and more people however are of the opinion that Bitcoin can, and should be regarded as both a currency and a commodity.
Irrespective of whatever whether it is considered a currency or commodity, our main concern is that the constant swing in price of Bitcoin offers an opportunity traders and investors to make a profit by trading the cryptocurrency, either as a long term investment or in a short term pattern.
What is Bitcoin Trading?
Bitcoin trading is simply the of process of attempting to buy Bitcoin at a certain price and selling at a higher price, the difference between the two prices being your profit from the trade. The major goal being to buy at a low price and sell when the price goes up. It is however important to point out that you could buy at a certain price after which the prices drops lower in which case you would be in a loss.
There are two major types of traders in the Bitcoin market, they are ‘long term’ traders and ‘short term’ traders. Each of these group of traders are classified by how long they may wish to hold onto a given position of trade.
Long term traders are usually involved in studying price trends over long periods of time. This informs their decision to buy and hold Bitcoin also over long periods with the hope of taking profit at a price higher than their original entry point.
On the other hand, short-term traders analyze the daily behavior of Bitcoin price and seek to take advantage of the swings in price. These traders make their profit from the constant daily change in market price.
In its early stages, the swings in Bitcoin price was usually so huge as every little event within the crypto space had very serious impact on the price of the cryptocurrency. As adoption grows and Bitcoin becomes more stable, price volatility has reduced considerably and experts think it is a better time to trade the cryptocurrency, compared to an earlier time.
Bitcoin trading can be extremely profitable if you follow a good strategy. It all depends on the market movement pattern.
So, as a newcomer to Bitcoin trading, you should follow these guidelines to help you better achieve your goals and get you started on a strong footing:
•Never put all your eggs in one basket. Your capital should be broken into smaller amounts to be invested in different coins. This way, when the price of one coin is going down, another will be going up and some your loss is reduced.
•Do not invest your life savings or money and do not borrow to trade either no matter how tempting it is.
•Take full advantage of available technology in order to gain maximum profit
•Understanding the market is a continuous process and requires a lot of time, concentration and effort. It is very crucial to do research and be up to date with current trends.
•Know when to cash in. It is important to stay focused, unemotional and professional.
•Traders should keep in mind that losing, just as much as winning, is an integral part of trading. It is the cumulative gains that count.
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