The past two years have been good years for bitcoin. The explosion of its popularity has spawned worldwide buzz among consumers, investors, and traders. Because of the speedy transaction, low fees, value increases, and a lot of other factors, more and more people from around the world are deciding to make bitcoin one of their primary modes of exchange, as well as try bitcoin trading.
As a consequence, large groups of traders have capitalized upon the buzz in bitcoin trading in the CFD, spot, and futures markets. In a backdrop that is best described as shaky and turbulent, discipline and determination are the two indispensible prerequisites to reach success.
In this article, we will talk about some useful tips that you can use in order to use bitcoin to your advantage and to become a successful bitcoin trader.
Bitcoin Trading: Learn Technical Analysis
Bitcoin is positioned as an outlier compared to other asset classes or currencies because of its nature. There’s no central bank or governing body to influence its valuation. News events can have unpredictable impacts, and other financial instruments can sometimes exhibit random correlations. In fact, bitcoin pricing models are mostly speculative, going against a great chunk of traditional financial theory.
If you understand the basics of technical analysis, you can feel more confident when entering the bitcoin market. In many ways, price itself gives the only dependable clues pointing towards bitcoin’s future value. The lack of relevant market fundamentals places an impetus upon analyzing charts, reading price actions, and applying indicators.
Bitcoin Trading: Determine Your Speed
Trading is more similar to a marathon than a sprint. One of the most important tasks that bitcoin market participants are facing is the establishment of a schedule that they can sustain over the longer term.
Putting in extraordinarily long hours on a daily basis can result to burnout and subpar performance. No one can trade effectively 24/7. The best choice is to adopt a manageable schedule by outlining the optimal times to trade and focus on those periods exclusively.
Bitcoin Trading: Keep Yourself in the Loop
Bitcoin is very much distinct from other asset classes in the manner that typical news items do not have any predictable impact upon the markets. There are no scheduled GDP releases, WASDE, or EIA inventory reports to bolster participation and skew pricing.
If you’re serious about trading bitcoin, you ought to be a good access to live news feed and keep close tabs on it.
Bitcoin Trading: Use Leverage Wisely
It has been said many times before and it still rings true today: leverage is a double-edged sword. It can improve your gains but it can also magnify your losses. Too much leverage encourages reckless money management and it may lead to blowing out your trading account. Meanwhile, too little leverage can stunt performance since premium trades may reach their full potentials.
In the end, wise and efficient leverage management is a balancing that a bitcoin trader (or any other kind of traders, for that matter) must perform carefully.