It was in 2010 when the first bitcoin exchange was opened and started its operations. At that time, bitcoin was valued at just about 3 cents a unit. In the same year, many more cryptocurrency exchanges were established around the world. Within just a few days, the price of one unit of bitcoin had increased to a couple of dollars. The liquidity in the market was relatively low back then and its price continued to increase exponentially.
Today, bitcoin, along with a number of other cryptocurrencies have gained massive popularity. Billions of dollars worth of bitcoins are traded on the financial markets on a daily basis.
Traders have been able to generate massive returns from their investments in bitcoin. Actually, it is the monetary incentive that is the biggest reason for the increasing popularity of bitcoins.
But when it comes to trading today, it can be quite challenging to achieve success in the industry. Times have changed a lot and the volatility that is experienced in the markets have become significantly higher.
Bitcoin trading is indeed attractive but understanding the basics of how it works is very important.
When you get started in the industry, you should already have the knowledge of how things work and what you can do to reduce the risks and optimise your results. Becoming familiar with the technical aspects can really help you minimise your losses. There are basically three crucial factors that you will need to familiarise yourself with. Let’s take a look.
There is no harm in thinking about generating substantial wealth as a result of investing in bitcoin. But, what is the point of accumulating massive wealth when there is a risk of the coins getting lost or stolen.
Bitcoin is powered by a system which is extremely secure. However, you cannot prevent bitcoins from getting stolen when they are in your possession. As long as the bitcoins are on the blockchain, they cannot be lost or stolen. Once, they are with you, the security risks increases.
You must understand what security measures you must take and how you must store your coins to keep them safe and secure. Your wallet and private keys must be secure, because if they are not, someone can easily steal your coins.
Bitcoins are best stored in cold storage. If you use the services of an exchange, you must only keep on the exchange what you need to. The rest of the coins can be stored in a hardware wallet if you are going to use them on a daily basis for investment purpose.
Hardware wallets are convenient and secure and they will keep your coins protected even if your computer is hacked. There are various options available which you can check out. However, it is crucial to read reviews and find out which one is the absolute best before you trust them with your bitcoins.
When you are starting out with bitcoin trading, you will obviously need funds to buy the coins. There are a number of ways you can purchase bitcoins for trading. Here’s what your options include:
- Exchanges – many exchanges allows traders to purchase bitcoins with fiat currency or credit cards. Although this option was not available some time back, it has now become a convenient and easy method of buying bitcoins and other cryptocurrencies.
- ATM – did you know that there are automated machines in some of the major cities in the world which allow you to purchase digital currencies through them. these crypto-ATMs may not be available everywhere, so it is an option for only those who live in an area where the service is available.
- Projects – there are some sites on the internet which allow people to work for cryptocurrencies. So when you complete projects and tasks on their site, you will be rewarded in bitcoins which you can use for investment purpose.
- Trading Robots – you can also get started with a trading robot like Bitcoin Compass and trade digital currencies with fiat currencies, funded through your credit card. Using a trading software is a convenient and easy way to become a part of the crypto industry. Investments are secure and withdrawals are processed in a timely manner.
Preparing yourself for the industry
It is crucial that you prepare yourself both mentally and financially before you take a step into the industry. Having a prepared mind will help you make the right decisions and stay calm when things are not working out in your favour.
Bitcoin trading comes with risks. The industry is profitable, but requires you to make wise decisions as well. You must also use caution and take measures that will help you reduce the risk factors. Let’s take a look at how you can prepare yourself for the industry.
There are many brokers and trading platforms which allow you to set up a demo account before you can actually enter the real markets which require you to invest real funds. With a demo account, you can use virtual funds to become familiar with the platform and its features. You can learn trading using the platform, improve your skills, test strategies and prepare yourself for the real market.
Just like acquiring skill, education is also important if you want to stick in the industry. You can make use of resources on the internet and learning materials to educate yourself. Remember, your knowledge will give you an advantage in the industry and the more knowledgeable you are, the better your chances of success in the industry.
Learn to control your emotions
It is not easy to master your emotions, but if you learn to do so, you will be able to approach trading in a much better way. It will not be possible for you to stick to your strategies all the time because of your emotions, but it is essential that you learn to control them and keep them away when you are making trading decisions.
Have a small budget for trading
When you are starting out, you must set aside a budget that you can afford to lose. You should not invest more than you plan to lose. Plus, you must never invest more than 10 percent of your total investment capital on a single trade. You must always start out small and increase your budget when you have gained some experience and seen the real results.
Compile your data
You must always keep a record of your data when you make trades. Later on, you will be able to use the data and ascertain which strategies work for you and which ones don’t. So based on your analysis, you will be able to incorporate strategies which have proven to be profitable for you.