It’s no secret that crypto current has changed the way people think about investing. In fact, it seems like more people than ever before are learning how to invest ever since Bitcoin rose to popularity. So, you want to know how to improve Bitcoin trading plans?
You’ve come to the right place! In this article, we will go over a list of ways to help you make money through crypto trading.
Step 1: Understanding How Crypto Trading Works
First things first — understanding how it all works. I think that a lot of people get into crypto trading because it’s exciting and new, but then they run into problems when they realize that it’s a different animal from traditional forms of investing. The good news is that understanding trading can be easy, so long as you do your research and take the time to learn.
There are several key aspects of traditional trading that differ from crypto trading:
- The way you measure profit (It’s usually in percentages rather than with dollar amounts)
- Currency pairs
- Exchange rates
- Timeframes (In crypto trading, long term trades are the norm)
Step 2: Know the Different Ways to Make Money
Once you’re able to understand cryptocurrency trading, it’s time to move on to step two — making money. There are several different ways in which you can make money with crypto. These include:
- Speculation (This is when you buy low and sell high with the assumption that the value will continue to rise)
- Arbitrage (When you buy and sell an asset on different markets at a higher price in one market than the other)
- Day or swing trading (This is when you use technical analysis indicators to create short term swing trades that last anywhere from 4 hours to a few days)
- Long term trading (This is when you hold onto an asset for several months or even years at a time; the goal here is to make money by riding price trends over this timeframe)
- Crypto lending (This is sort of like peer-to-peer, interest-bearing savings accounts)
- Cryptocurrency mining (This is when you use your computer to profit by helping confirm transactions for the blockchain)
Step 3: Get Yourself Set Up With a Trading Wallet
Just like traditional trading, being able to have access to your money at all times is very important. This means that if you decide that you want to begin trading, you should create yourself a wallet to keep all of your funds in.
Here are two types of wallets that you can use:
- A software trading wallet (This is when you download and install the right programs onto your computer; usually, these provide users with access to their private keys)
- A web-based cryptocurrency wallet (This is when you store your private keys on a cloud-based server; usually, these providers give you access to your digital assets with a username and password)
Step 4: Learn How to Use Technical Analysis Indicators (and When You Should Use Them)
There are many different technical analysis indicators that traders use in order to make decisions about their investments.
Some of these include:
- Moving averages (These are indicators that you can read in order to determine the general direction that a market is moving in)
- Bollinger Bands (These are used to measure volatility and help identify price trends)
- Relative Strength Index (Also known as RSI, this indicator can help you determine if an asset is overbought or oversold)
You can check out this resource to learn more: bytefederal.com
Step 5: Understand How Margin Trading Works
Finally, now that you understand money management and technical analysis, you’re ready to step into crypto trading. One of the first things that you need to learn about is how margin trading works. Here are some important points to keep in mind:
- Margin trading loans cryptocurrency assets: If the price moves against your favor, it’s possible for you to lose much more than you initially invested
- There are many different exchanges that offer margin trading, and they all take a fraction of your investment as collateral. For example, if you want to trade $2000 worth of cryptocurrency with two times leverage (which means you want to control $4000) on an exchange like BitMEX, you’ll need to put down money as collateral
- Margin trading comes with its own risks, so it’s important to remember that there is a real possibility of you losing money if you aren’t careful
- Even though you’re using borrowed money to trade with, it’s still possible for you to keep most of your profits
It’s a good idea to use a trading bot when you find yourself in a margin trading situation. This way, you can automate most of the trades and make sure that they happen at the most opportune times.
Step 6: Choose a Good Exchange
Once you understand how crypto trading works and what makes it different from traditional investing (or gambling), then you need to find an exchange that is right for your needs.
There are 3 main types of exchanges with their own pros and cons, so be sure to pick the one that makes the most sense for you:
- Centralized cryptocurrency exchanges (These types of exchanges are like eBay; anyone can list their cryptocurrencies, and they’re run by a company)
- Decentralized cryptocurrency exchanges (These types of exchanges don’t charge fees for making transactions; instead, traders pay these fees when they submit an order)
- Hybrid cryptocurrency exchanges (Some of these exchanges give you the option in what kind of assets and features you want. Usually, there is a fee for using these options, but it’s still cheaper than most centralized exchanges)
Step 7: Avoid Getting Scammed
Now that you know how to trade cryptocurrencies and have a secure exchange, it’s time to focus on avoiding scams.
Here are some dangers that you need to be aware of:
- There is a chance that your crypto trading platform can get hacked and the personal information of their users will get leaked
- Phishers can try to install spyware on your computer through a new software update or email attachment
- There is always a risk that you can get deceived by someone who offers to sell you crypto at a price that is lower than the market value
- It’s possible for someone to try and scam your cryptocurrencies out of you without any repercussions
Step 8: Identify Your Goals
In order to improve your Bitcoin trading to the fullest extent, you’ll need to have concrete goals that you can pursue. Do you want to make only a little bit of money or do you want to go all out? What is your ultimate end goal for trading cryptocurrencies?
What about how much time you expect to dedicate toward trading on a daily basis? Answering these questions can go a long way.
Step 9: Keep Track of Your Trading Transactions
After you’ve made a trade, it’s essential that you keep track of it. If you’re making a lot of trades in a short amount of time, then it’s also a good idea for you to record them on a spreadsheet or an app so that you have a clear overview of how much money you have invested.
There is an abundance of price tracking apps and websites on the internet. It’s best to choose one that makes the most sense for your needs (and remember: if it works for you, then it doesn’t matter what anyone else says)
If you feel like you don’t have enough time to track your trades, then it’s probably a good idea for you to keep them simple.
Step 10: Look at the Bigger Picture
When all is said and done, your goal in cryptocurrency trading should be to make as much money as possible. However, you should consider all of the factors that affect your bottom line::
- The amount of time that you’re willing to dedicate towards trading
- The level of risk that you want to take on (the higher the risk, the greater the reward)
- The amount of money that you want to invest in this endeavor
- The amount of time that you have to dedicate towards researching the best trading opportunities
Knowing How to Improve Bitcoin Trading Plans Can Seem Intimidating
In some cases, it might even seem impossible.
This is especially true for new investors. However, the above guide will help you improve Bitcoin trading plans effectively and allow you to reach performance goals that you didn’t think were possible.
Be sure to check out the rest of our blog for other useful info about how to become a Bitcoin trader.
Carol
Information sourced by the author for luxuryactivist.com. All content is copyrighted with no reproduction rights available. Images are for illustration purposes only.