Bitcoin trading can be intimidating, especially if you’re new to the scene and don’t yet understand the “rules of Bitcoin trading.” As with other investment classes, you should start small and work your way up as you gain more experience. As you begin your Bitcoin trading investment, you might have many questions about whether there are rules involved in the game. The truth is, there are rules in Bitcoin trading that would help you take your trade to the next level. The good news is that we have you covered! We’ve compiled a list of golden rules to help you on your trading journey.
Invest What You Can Afford to Lose.
Being in this market is not fun if your livelihood is at stake. You may have seen some investors take out loans to invest in Bitcoin. While this has worked for some, it is not for everyone, and if you are thinking about doing so, consult with a registered financial advisor first.
The Bitcoin market is a two-edged sword. The high volatility can propel you from zero to hero status. Selling during a market crash means you might lose your entire investment. Furthermore, crypto trading is vulnerable to another impact of government regulations and security breaches. You must know that you shouldn’t get into debt for Bitcoin. Invest the amount you are ready to lose.
Don’t Let Your Feelings Mislead You.
You might easily get caught up in the excitement of a winning streak or depression caused by a string of massive losses. The result in both cases is the same: it leads to careless trading based on emotion, which can be costly in the long run.
Do not trade if your mind is cloudy or full of other things when you open the trading charts—trading when you are not mentally in the game will only harm your trading strategy. The market will devour you and spit you out as a more unfortunate individual.
Conduct Research before Investing
Do not Invest in Bitcoin-based on rumors or information you get from a fourth or fifth party. Instead, conduct extensive research to find the best trading platforms that fit. You need to know how to invest in Bitcoin to avoid making losses or getting scammed. Bit-iq.de is a trusted and legit site you can use to trade Bitcoin. There are many Bitcoin trading sites, but not all are legit. Therefore, you need to land on one that has a good and legit review.
Never Put More Than 5% of Your Trading Capital at Risk.
Inexperienced traders fail to thrive in the Bitcoin market because they do not employ “correct” money and risk management principles. If you put too much money at risk, your career in Bitcoin trading may be cut short.
Nobody ever wins every trade. The less than 5% risk rule helps keep losses to a minimum, mainly when a trader deals with volatile market conditions while allowing maximum returns.
Prepare for extreme Volatility
The best way to learn about cryptocurrencies is to invest in them. However, it is a high-risk, high-reward game, and you must be able to handle extreme volatility. As the May crash demonstrated, an overnight drop of 70-80 percent is also possible. Only invest when you can stomach such fluctuations.
Final Tip
Bitcoin trading is a strategic game, not a gamble. You should calculate every move before executing it. Formulate a trading strategy and follow it to the end. Knowing these rules, you are a step closer to making a good Bitcoin investment.
