In the past, bitcoin mining was a very lucrative venture. That was when mining was still within the realm of common personal computers, and the price of bitcoin was at all time highs. Currently however, mining is not going to be profitable for the average person. Perhaps the only way to earn money from bitcoin mining today is to do it on a large scale. The problem is, that it requires a huge investment in terms of equipment and then there is the high cost of electricity to operate such a large scale operation.
Holding on to your Bitcoin in the hopes that its value will rise to unprecedented levels is not a good idea either. Like prices in the stock market, Bitcoin value is unpredictable and volatile. It can rise or dive within a very short time-frame, compared to traditional stocks. This volatility makes Bitcoin a high risk asset, and you must not keep money that you can’t afford to lose in such an asset.
If you want to consistently earn from Bitcoin and take advantage of its price volatility, the best way to achieve that is through Bitcoin trading. The idea is to buy bitcoin at a low price, and sell it at a higher price within a short period of time. While investing in Bitcoin comes with inherent risk, it can be minimized if done with proper caution.
How to Successfully Trade Bitcoin
The more you trade Bitcoin, the more you will understand it. The virtual currency does not only change the way you think about money. It offers a new way to trade with currency.
Trading Bitcoin may make you feel like riding a roller-coaster – with its never-ending price fluctuations. But, when you see the profit margin that comes with your trades, you will be enticed to do it more often.
So, how do you increase your chances of successfully trading Bitcoin? Here are some tips to keep in mind.
- Invest only with a set amount. – With the wild price fluctuation of Bitcoin over a short period, bear in mind that you can possibly lose or gain a lot of money from a single trade. It is therefore best not to invest an amount of money you cannot afford to lose. If you lose one trade, it will not wipe out your entire investment fund.
If you’re a novice trader, it is a good idea to begin trading with just a small amount of funds. This way, you can slowly build up your confidence and reserves as you learn the ropes. You can then increase the value of your trades as you gain more experience and skills.
- Trade with set goals in mind. – A lot of traders tend to panic when they see the Bitcoin price plummeting. They immediately sell their Bitcoin – even at only a fraction of what they could get if they wait for the price to stabilize.
When trading Bitcoin, set your trading goals, and trade only based on these goals. For example, the set amount you’ll trade with, the number of hours you’ll be trading, and when to close a particular trade. You can also commit to closing the position if the price goes down to a certain level.
As long as you trade with a set amount, you will not lose your entire investment fund. You can always come back to make sound trading choices in the future.
- Pay attention to trader stop-loss options. – A stop-loss option is an automated process in trading wherein you sell you Bitcoin if your loss reaches a specified amount or level. If you trade with a stop-loss, and you make an unprofitable trade, you will lose only up to the set limit.
Your position is immediately closed once it reaches the stop-loss point. This prevents you from incurring a bigger loss. This is great for traders as it will ensure they will not lose everything with a single losing trade.
- Read trading charts. – Understanding the terminology, descriptions, and charts can help you make sound trading decisions. Analyzing Bitcoin market trend charts can help you make educated predictions on where the price will go. You may find it daunting at first, but everything will become easier the more you trade.
- Take the leap of faith. – Many people doubt the soundness of investing on cryptocurrencies like Bitcoin. But, a lot of financial experts expect Bitcoin to last, and change the way trading is done in the future. Adding Bitcoin to your portfolio now is a good way to get a step ahead of everybody else, and get ready for the future.
Pros and Cons of Bitcoin Trading
Following are the pros and cons of Bitcoin trading. Weighing the advantages versus the disadvantages of Bitcoin trading will help you decide if it is the right investment opportunity for you.
Pros
- Convenience – You can buy and sell Bitcoin anytime of the day. As it is international in nature, you can trade in across different countries and time zones. This allows you to take action at a moment’s notice.
- Mobile Trading – You can trade Bitcoin on the go. This way, you can take advantage of every opportunity to turn in a profit, anywhere you may be in the world.
- Fluctuating Rates – The price of Bitcoin is very volatile. Savvy day-traders take advantage of these frequent swings to turn in profits on a regular basis. That is, if they constantly keep their eye on the market.
- Growing Acceptance of Bitcoin – Today, even known brands like Microsoft and PayPal are accepting Bitcoin as a mode of payment. The more recognition Bitcoin gets from the mainstream, more brands will join the bandwagon.
Cons
- Possible Government Involvement – Because of the rapid rise of Bitcoin in the mainstream, crooks may take advantage. This may force the hand of governments to step in. When this happens, the downfall of many traders may happen. This is because stricter regulations may be imposed that can restrict use and traceability of the cryptocurrency. While this is unlikely to happen, there is a possibility.
- Impossible to Keep a 24-Hour Watch on the Market – There is constant movement in the Bitcoin market. You can’t be awake round the clock to watch the market movement. Thus, it is likely that you will miss some major market movements as you sleep, causing you to lose money or fail to cash in on significant profits.
Final Word
Gone are the days when simple Bitcoin mining made people rich. Today, things have changed. Making a lot of money through Bitcoin mining has become very difficult, and quite expensive. To make money, you must be prepared to make a huge investment. However, this is not to say you cannot make money from Bitcoin anymore.
Bitcoin trading is the best way to earn money from Bitcoin today. This simply means buying Bitcoin at a low price, and selling it at a higher price. Follow the tips provided in this post to improve your chances of success.