By
Steve Muchoki
April 19th, 2024
By keeping a few things in mind when trading Bitcoin, you can eliminate some risks and enjoy the journey more.
Bitcoin trading has the potential to make you earn big amounts of money. At the same time, you also risk losing your investments due to how volatile cryptocurrency is. The fluctuations can be hard to predict and it’s important to do your research before getting started. A lot of beginners make the same kind of mistakes when entering the cryptocurrency and bitcoin market. Here are some common mistakes to look out for and how to avoid them.
How to Make Profit in Trading Bitcoin
Just like the stock market, trading Bitcoin is about correct timing, patience, keeping calm, making predictions, and staying up to date with the market. Your chances to earn a profit and make secure trades increase significantly when you know how the system works and which common mistakes to avoid. Unaware trading could quickly make you lose interest and faith in the crypto market when you watch your money disappear.
If you’ve lost money from bitcoin trading, you’re far from alone. Relying on luck, and trial and error will only take you so far before things start to spiral downwards. But there are also plenty of traders out there who have started out making mistakes, losing money, and then managed to improve their game and make money from bitcoin trading.
Common Mistakes in Bitcoin Trading
We learn from our mistakes, but we can also learn from the mistakes that others have made. By keeping a few things in mind when trading Bitcoin and other cryptocurrencies, you can eliminate some risks and enjoy the journey more.
Investing More than You Can Afford to Lose
Don’t use money that you can’t afford to lose. It might be tempting to take high risks at the start, with hopes of making a huge profit just like the success stories you’ve likely read about. But trading with money that you need for living is never a good idea. Some traders even take loans which is, of course, their personal choice but also comes with a big risk. If you have a good amount of savings and feel comfortable using a lump of that money for bitcoin trading, then go on.
Emotional Bitcoin Trading
Staying calm and cool-headed is always ideal in trading, whether you’ve just witnessed a 50% crash or a 180% increase.
Buying High and Selling Low
Sounds simple, doesn’t it? Yet, a lot of traders make this mistake, both in cryptocurrency trading and on the stock market. When there’s a dip, it’s easy to panic and sell off your currencies to try and avoid losing even more. If you change your mindset to long-term trading, you realize a crash it’s the best time to buy bitcoins. Simultaneously, it’s best not to buy bitcoins when the prices are high, even if that might be tempting because of the headlines and hype when the value has already increased. Most likely, it will fluctuate and go down again, which is the best time to invest.
Trading Bitcoins without Stop Loss
Using stop loss is vital for risk management. Most crypto trading platforms offer the ability to set a stop-loss, which lets you decide how much you are willing to lose in a trade.
Finally, make sure to use a reliable digital wallet (hot wallet) for your Bitcoins. Choose a popular wallet with a good reputation to make sure you keep your bitcoins secure. You can increase safety by splitting up your coins into multiple wallets, like a cold wallet and a hot wallet.