Were you aware that bitcoin is one of the most popular things to invest in?
Over the past several years, bitcoin has become a common subject in many conversations, even from those that don’t invest. As it continues to grow in popularity, more and more investors are trying to profit from it.
However, investing in bitcoin comes with many risks because its value is based on nothing more than speculation, like all cryptocurrencies.
While anyone can profit from bitcoin trading, having effective risk management will ensure you don’t lose all your money. We’ll go over everything you need to know to trade BTC effectively.
Here are 7 smart ways to improve your bitcoin trading strategy!
1. Follow the Trend
One of the best ways to improve your bitcoin trading strategy is to follow the trend. When we say to follow the trend, we mean to buy whenever the value is going up and sell when it’s going down.
While this isn’t always an effective method, it’s a great way to make small day trade profits without losing much. You can buy the dip, but it’s best to buy when it’s going up instead of down. If you see that BTC is at a low, avoid buying it until you start seeing it rise.
2. Save Money Before Investing
Setting financial goals is crucial when investing in bitcoin, but you also shouldn’t break the bank trying to chase profits. Instead, grow a savings account before investing so that you have money to fall back on whenever you have losses.
Having savings will also make it easier to day trade, which is what many people do with crypto. You’ll need at least $25,000 in your brokerage account to avoid the pattern day trader rule, which prohibits you from making more than 4 day trades in a 5-day period.
3. Make Small Investments
If you’ve never invested before, inherent risk will make profiting from bitcoin difficult until you get a better idea of what moves it. In the beginning, start by making small investments. This will ensure you can increase your bankroll with other trades while trying to profit from BTC.
Although bitcoin is currently floating between $50,000 and $60,000, you can buy a fraction of one at whatever value you’d like. For example, you can buy in with $100 and get a fraction of a bitcoin, which will change in value at the same rate as an entire bitcoin.
4. Learn How to Read Charts
Depending on the trading platform you use, you may have a hard time reading charts. While platforms like Robinhood make chart-reading simple, it doesn’t provide many tools. However, Robinhood happens to be one of the most beginner-friendly platforms. You can use it for trades, but use another one for charting.
If you go to a platform like TD Ameritrade, you can use their Thinkorswim software to view detailed charts with extensive information. These charts give you a plethora of tools to view price points, track changes, and set limit prices.
Learning how to read charts is crucial if you want effective risk management because it’ll help you make better decisions. If the platform you use doesn’t offer help options to learn about charts, you can watch YouTube videos.
5. Choose a Decent Trading Platform
As stated, Robinhood is a beginner-friendly platform because it has an extremely simple design. When you enter Robinhood, you’ll see how much money you have invested along with a basic chart that shows growth.
Choosing a platform is all about finding one that offers the tools you need. If you’re someone that wants to make basic BTC trades, Robinhood is a great option. However, anyone that wants to study charts should use platforms like Webull, TD Ameritrade, and Fidelity.
You can also use Coinbase, which is designed just for cryptocurrency. From a platform like this, you can easily learn more about buying bitcoin.
6. Never Rely on Others
Bitcoin is one of those things that everyone has an opinion about, but few are ever trustworthy. Whenever you invest in anything, not only BTC, you should never rely on others to tell you when to trade.
The golden rule to making money with bitcoin and any other investment is to do your own due diligence. Providing that you research crypto and find out what makes BTC move, you shouldn’t have a problem making money with it.
7. Stay Informed
The last thing you can do to improve your bitcoin trading strategy is stay informed. Bitcoin is constantly in the news, so you’ll never have trouble finding information. However, you must ensure that you’re actively reading things about BTC so you know when to get in or sell.
For example, Turkey has just banned cryptocurrencies from being used for transactions. What did this mean for investors? Heavy losses.
Bitcoin, along with other cryptocurrencies, suffered major declines after the announcement. Because crypto is so volatile, announcements like these can drastically affect the value of bitcoin.
If you were invested in it when Turkey made that announcement, you too would’ve lost a lot of money if you panic sold. Fortunately, bitcoin is starting to bounce back thanks to the investors that are staying informed.
Improve Your Bitcoin Trading Strategy Today
Now that you’ve read this article, you know several tips that’ll ensure you improve your bitcoin trading strategy.
We encourage anyone that wants to start buying BTC to build a savings account before investing. While doing this, research bitcoin as much as possible so that you’re prepared when you buy in. Set some financial goals and get ready to ride to the moon!
To learn more about bitcoin and crypto, check out our other articles!