Bitcoin, one of the most volatile cryptocurrencies, has taken the world by storm while bringing together developers and innovators in the fields of IT, finance, entrepreneurship, and retail from all over the world. Together, these specialists work hard to advance Bitcoin-related activities, including mining, trading, spending, and storing. Bitcoin has a lot of potential and, for this reason, financial experts often compare Bitcoin mining and trading to “the gold rush” of the XXI century.
The history of this cryptocurrency is short but rather vivid. As most of your already know, Bitcoin was created by Satoshi Nakamoto in 2009 and has significantly changed in value over the five years of its existence. Due to the volatility of Bitcoin, the market price of this digital currency can suddenly rise or decrease. This creates an extraordinary speculative environment for commodity trading.
Bitcoin is generated through “mining” — a process that uses computing power to solve complicated algorithms called “blocks.” As a reward for successful mining, the miner receives a prize in the form of Bitcoin. Bitcoin mining has significantly been evolving in order to keep up with the mining difficulty that gradually increases. Bitcoin trading suggests buying and selling coins or mining power, GHS, and can be accomplished in several different ways — on an online exchange, via local traders, or through a Bitcoin ATM. Regardless of what trading method you choose, here are some well-known trading rules that will help you make a fortune.
Rules of Bitcoin trading
Always have a trading strategy
A trading strategy is a set of rules, which regulate when to enter or to exit the market, as well as what money management guidelines to follow. It is crucial to stick to the plan after it has been developed and well tested. Disregarding the plan is considered as poor trading, even in case of profit, as it might have interfered with the expectations of the original plan (like – ‘Buy Bitcoin When There’s Blood in the Streets’. Trading methodology, which is based on facts (not hope or feelings), carries great importance.
Never put all eggs in one basket
It is wise to trade several cryptocurrencies at the same time since if the investment situation of one coin becomes unfavourable, financial balance might be regained by trading other coins.
Never invest what you cannot afford to lose
Trader should be ready to lose the investment at any moment and, therefore, entrusting funds allocated for college tuition or mortgage payment is a terrible mistake. Traders must never think of “borrowing” money from another important responsibility for the sake of trading.
Trading is a competitive business, and, therefore, one should take full advantage of the technology in order to gain maximum profit. The real-time data available on many exchanges will allow you to analyse the market thoroughly to make a profound trading strategy. Charts and graphs available at your fingertips through high-speed Internet on various mobile devices (i.e. tablets, smartphones) will improve your trading performance.
Knowledge is power
Understanding the market is a continuous process and requires a lot of time, attentiveness, effort, and persuasion. It is crucial to do research of the financial market and to be up-to-date with the current economic trends and events. Exchanges offer Bitcoin traders useful tools and practical features which serve profitable trading. Remember, the cryptocurrency ecosystem is incredibly dynamic, and the situation changes easily and frequently.
Know when to stop
There are two obstacles that can get in a way with trading success — an inefficient trading plan or an ineffective trader. An inefficient trading plan usually implies misuse of certain trading instruments or misperception of the plan’s outcomes. It is important to stay focused, unemotional and professional in this situation. In this case, the trading plan should be adjusted. An ineffective trader is a person unable to fulfil his or her trading plan. Pressure, bad habits, inattentiveness, lack of physical activity might be the reason for poor performance.
Focus on the big picture
Being focused, but, at the same time, keeping a perspective is vital. A trader should keep in mind that losing, just as much as winning, is an integral part of trading. It is the cumulative gain that counts.
All traders should follow the changes of the Bitcoin price in order to make the most appropriate decisions on when to buy or sell Bitcoins to maximise the profit. The best way to track the market price is to use the service of a commodity exchange. It is crucial to check the credibility and reputation of an exchange when choosing one.
CEX.IO is the first and leading commodity exchange that allow simultaneous Bitcoin trading and cryptocurrency mining due to shared credentials with GHash.IO. The exchange accepts bank transfers and card deposits and withdrawals in USD and EUR; it is also constantly working on expanding the variety of trading pairs.
And which rules do you follow while trading? Please share in comments.