Bitcoin has undoubtedly been through ups and downs. However, its popularity has exploded and created a buzz globally among investors, traders, and users. Low fees, transaction speed, and value increase, among other factors, are some of the reasons that have convinced people to use Bitcoin as their primary exchange medium.
Consequently, large trader groups have capitalized on the Bitcoin trading boom in CDFD, features market, and spot. However, Bitcoin's volatile price has made some people fear trading it. Most people describe the crypto environment as turbulent. For this reason, dedication and discipline are indispensable prerequisites for anybody that wants to excel in Bitcoin trading. Here are the critical tips for trading Bitcoin that should guide you.
1. Master Technical Analysis
Bitcoin is inherently volatile. As such, this virtual currency is an outlier when compared to other currencies or asset classes. No governing body or central bank influences the valuation of this digital currency. Factors like news events may have unpredictable effects on this cryptocurrency. What's more, other financial instruments show sporadic correlations. The pricing models for this cryptocurrency are mainly speculative. That means they ignore a great deal of the conventional monetary theory.
Therefore, knowledge of technical analysis is a must before venturing into Bitcoin trading. Bitcoin price provides dependable clues about the future value of this cryptocurrency in several ways. But, the absence of relevant fundamentals of the crypto market creates an impetus on pricing chart analysis, indicators application, and price action reading.
2. Maintain a Sustainable Pace
Most people describe trading as a marathon rather than a sprint. Among the essential tasks that participants in the Bitcoin market face are establishing a sustainable schedule that will last longer. Spending long hours everyday trading Bitcoin can lead to subpar performance and burnout.
Essentially, nobody can trade Bitcoin effectively 24/7. Therefore, adopting a manageable schedule that outlines your optimal trading times is the most effective approach. Also, focus exclusively on your most optimal times to trade this cryptocurrency.
3. Pay Attention to News Items
Bitcoin is different because typical news may not have predictable effects on the markets. This virtual currency doesn't have regular GDP releases, EIA inventory reports, or WASDE to boost pricing and participation. But unexpected news can significantly influence the price of this cryptocurrency.
Therefore, pay attention to news items if you want to excel in Bitcoin trading. You can even find a live news feed that provides the latest information about the Bitcoin market.
4. Use Leverage Prudently
Leverage can boost your gains or magnify your losses when trading Bitcoin. That's because excess power can promote recklessness in money management. Thus, you can end up blowing your account if not careful. Too little of it can hinder you from performing optimally because your premium trades might not perform fully. Therefore, you should manage leverage wisely.
Platforms like Oil Profit App provide loads of information about Bitcoin trading. Using such data can help you determine when and what to spend in crypto trading. That way, you can avoid blowing your account when using leverage. But, the 3% rule is always the best tip for managing a trading account. Essentially, assign every trade a maximum of 3% of the amount in your trading account.
5. Use Stop Losses
Consistent price volatility is a trait that attracts active investors and traders to Bitcoin. Valuations can fluctuate regularly between 5% and 10% daily. And this creates trading opportunities for individuals with a risk appetite.
Whether you engage CFD, cash, or Bitcoin futures markets, use stop losses when trading this virtual currency. Although the wide pricing swings are ripe for attractive profits, a catastrophe potential exists. Therefore, use stop losses when trading in the Bitcoin market.
Bitcoin is among the best cryptocurrencies to trade today. Follow these essential tips for trading Bitcoin to excel in crypto trading.