This quick guide is designed to help you learn how to trade Bitcoin and other digital currencies with confidence and control. We will address a range of fundamental, psychological, and technical trading techniques that will help you to master short-term trading in one of the most volatile and emerging marketplaces.
Before we start, however, it’s important for you to understand that trading cryptocurrencies, be they Bitcoin, Litecoin, Ethereum, Ripple, or any of the other liquid digital coins, is not suited to everyone. The skills and techniques shared in this guide are, however, fully transferrable to any other asset class, whether they’re indices, currency pairs, or commodities.
Why Do You Want to Trade Bitcoin and Other Digital Currencies?
This question, although simple, is important for you to consider and answer honestly. The cryptocurrency market is still in its very early stages but has gathered more press coverage than any other asset class in just two years. You hear about the doom and gloom, bubble bursting predictions, to stories about instant millionaires, people buying fancy new cars and private jets. You should ignore them all.
Any individual planning on trading in this area needs to understand that when they enter an unstable marketplace like this they need to set primary short-term objectives. Think short-term trading and long-term investing. Think of yourself as a part-time trader but a full-time investor, someone who is learning how to trade and become comfortable with how volatile it really can be.
Be Comfortable with Yourself and The Market
If you want to be both confident and comfortable with the market you need to learn, practice, and continue using bitcoin throughout your trading journey. Practice certainly breeds more success and it also shows you what you are doing wrong. There’s a reason there is the saying ‘practice makes perfect’, and that’s because an element of it is true. There are plenty of online trading academies that could be a valuable resource when it comes to information to utilize throughout your journey.
Think about opening a demo account before you commit any of your money into the market. This way you can apply and practice different technical trading techniques and market analysis before you are risking any real money.
While learning, adapting, and finding the right techniques to use, you need to make sure you keep an in-depth recording of all your winning and losing trades, the reason you entered the trade, why you set your loss and profit limits, why you put that level of money at risk and your evaluation of how you think it went. You need to be as honest as possible with these recordings, otherwise, you aren’t going to learn from your mistakes, and ultimately aren’t going to be successful Bitcoin and other digital currencies trader.
Also, while recognizing the technical details that need to go into learning how to trade Bitcoin and other digital currencies, you need to think about the mental side of it. If you’re in a bad mood, are rushed or feeling unwell, try not to trade. These kinds of feelings can lead to making decisions that you wouldn’t normally make if you were in a better head space. This market is ever-changing, and one impulsive mistake from a bad mood could spell disaster for all your hard work. Always make sure you are in the right frame of mind before settling for a trade.
The Marketplace Is Extremely Volatile, But This Is A Good Thing
One of the biggest attractions for people learning how to trade Bitcoin and other digital currencies is the volatility. The price fluctuates constantly and rapidly and is said to be highly volatile. This volatility is one of the main drives for short-term and day traders as it gives them the perfect opportunity to get in and out of the market with haste, hopefully with a few gains.
Liquidity is a must-have for day trading and should be a massive influence on not only the type of cryptocurrencies that you choose to trade, but also the marketplace you choose to trade them. Currencies like Bitcoin, Ripple, Bitcoin Cash, and Ether all have market capitalizations in excess of $20 billion, this provides any trader an ample source of liquidity. You need to make sure you always keep an eye on the market size and coin size in order to track the liquidity of the currency you are choosing to trade.
Choose Your Provider and Marketplace Carefully
In addition to the liquidity, the marketplace where you are trading is just as important. There have been many times that cryptocurrency exchanges have suddenly closed with their clients losing some or all their investments. This means that choosing your marketplace carefully is an important factor to consider and research. Make sure things like market regulations, reliability and liquidity are all at the top of your list.
Remember Discipline Is Key
When learning how to trade Bitcoin and other Digital Currencies, it’s very important to know and understand why you have chosen to trade cryptocurrencies and what you are looking to get out of it. Set goals and stick to them. You need to identify your entry price, your loss level, and your target price.
Stick to your goals and don’t let the market bully you into trading when you do not want to. You shouldn’t enter a trade without a loss level. If you can find a provider who can offer you a guaranteed loss level, this is even better than monitoring it yourself. Because the market is unstable, it can be easy to experience a straight through stop-loss, also known as slippage, which can leave you at the mercy of your provider and stop you from getting the goals you want. If you’re not sure how to use this tool, it’s best to leave it alone, and monitor your trades yourself. This already explosive marketplace is hard to tackle at times, so make sure you’re not drawn in and trapped by gimmicks that can cause you a loss.
Enjoy Your Trading Journey
It’s important for everyone to find satisfaction with their choices, and this goes for trading too. You are going to spend hours each day monitoring and reviewing your trades if you’re a full-time trader, including things like researching and updating your fundamental techniques. This full-time job needs to be given the same commitment and dedication as any other profession. If you are trading for personal choices, you want to enjoy the trading journey and get the most out of your digital trading choices