HomeCrypto/ForexUse These Advices to Buy Bitcoin

Use These Advices to Buy Bitcoin

The bitcoin market, like any other cryptocurrency, is volatile. Because of this, a lot of investors are wary about putting their money into bitcoins. But, with proper research and strategies, it is possible to make a good profit in cryptocurrencies. You may like or dislike leading and oldest cryptocurrency, but it is hard to ignore them. For the last few years, cryptocurrencies have taken the world by storm. With more companies accepting cryptocurrencies as a payment option, the demand and market value of bitcoins are increasing. Bitcoins, being digital assets, are free from centralized control and are not subject to the oversight of any financial institution.

What affects the bitcoin price?

The following are some of the elements that influence the price of bitcoin:

  • Bitcoin supply: The bitcoin supply is limited. It has an upper cap of 21 million. The limited supply means the price of bitcoins would increase if demand increases.
  • Bad press: if there is news concerning the value, security, and longevity of bitcoins, it can negatively affect the market price of bitcoins.
  • Key events: security breaches, changes in cryptocurrency regulations, etc., can also affect bitcoin and other cryptocurrency prices.

Bitcoin trading style

Bitcoin traders can take up different strategies for bitcoin trading. They are:

  • Day trading: In this trading mode, the trader will open and close a position within a single trading day. So, there is no overnight bitcoin market exposure. If you are looking to make profits from short-term price movements of bitcoins, this is the best option.
  • Trend trading: Traders using this method place positions in line with the direction that the market is currently moving in. The trader will short the market if the current market trend is adverse. If the market trend is bullish, the trader will go for a long. If the trend becomes slow or reverses, the trader may think about closing the current position.
  • Hedging strategy: This is the strategy taken by the bitcoin trader to mitigate the risks and take an opposing position.
  • HODL: This is the strategy when a bitcoin trader buys and holds bitcoin. It is usually done with a long-term goal. An expert trader can use his/her market research skill and go for the HODL bitcoin trading strategy by taking a trading plan.

Buying bitcoin through an exchange

Traders who use the bitcoin exchange for trading are those who go for the HODL strategy. When you buy bitcoins through exchanges, you have direct ownership of bitcoins, and they expect the prices to rise.

Long- term or short-term

Bitcoin traders should also decide whether to go for long-term or short-term bitcoin trading. Long-term means the trader is expecting the market to rise and are looking for long-term goals. Short-term investments mean the trader is expecting the market to fall.

Setting stops and limits

Stops and limits are important tools for managing bitcoin trading risks. You can choose normal stops, trailing stops, or guaranteed stops. With normal stops, a trader can close the position at a definite level, but there could be slippage if the market price changes very fast. Trailing stops are put into place in order to lock in profits based on favorable movements in the market. These can also shift depending on how the market is doing. The trader is able to exit the position at a predetermined price point regardless of the state of the market because guaranteed stops are not sensitive to price fluctuations.

Some important tips

  • Diversify investment: Bitcoin investors should not invest in only one type of cryptocurrency. Diversification of investment can fetch better profits and also reduce the risks of loss.
  • Do not buy because the price is low: Bitcoin traders should not buy bitcoins because they find the prices affordable. The investment decision should be affected by the affordability, but it should be dependent on the market cap.
  • FOMO: Many bitcoin traders fail because they miss out on FOMO, the Fear of missing out. The fear of missing out may prompt you to take a haste decision, and you may end up losing a huge amount.
  • Set profit targets: You should always set up profit targets and use stop losses in your bitcoin trading. When you use stop losses, you are less likely to be carried away by your emotions.

Conclusion

Whether you are new to this industry or have been trading cryptocurrencies for years, a cryptocurrency trading app such as bitcoinsmarter.org ensures better decision-making and smooth and secure trading. Backed by artificial Intelligence, online trading platforms for cryptocurrency trading are helpful for traders and investors of all levels. 

Audrey Throne
Audrey Throne
Audrey Throne has an ongoing affair with the words that capture readers’ attention. Her passion for writing dates back to her pre-blogging days. She loves to share her thoughts related to business, technology, health and fashion.

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