If it’s the first time you want to trade Bitcoin, you might like to learn before venturing into the new market. Bitcoin is undoubtedly a unique asset you may not know much about, and you don’t want to spend your hard-earned money on something unfamiliar. Bitcoin trading involves speculating on the cryptocurrency’s price movement. Bitcoin is undoubtedly the most famous cryptocurrency. Satoshi Nakamoto created and launched it in 2009, but it received greater attention almost a decade after its phenomenal price increase.
Bitcoin’s volatility and stories of people that have made significant returns from their crypto investments captured many people’s attention. Many people have registered with platforms like biticodes, where they buy and sell this cryptocurrency. But is Bitcoin trading worthwhile?
Is Bitcoin Trading Right for You?
This question doesn’t have a straightforward answer. Whether Bitcoin trading is ideal depends on your understanding of cryptocurrency and risk tolerance. Warren Buffet, a US tycoon, said he could only invest in simple businesses. But, Bitcoin trading is not complex. Many platforms enable individuals to register and trade Bitcoin with little or no knowledge of how it works.
You can trade Bitcoin if you have a computer, smartphone, and internet connection. Ideally, you don’t have to learn everything about Bitcoin to start purchasing and selling it. Also, you don’t have all the money necessary to buy an entire Bitcoin. You can purchase only a part of it. Moreover, many crypto exchanges provide the information that even newbies need to start trading.
Trading Bitcoin- The Basics
Most people use crypto exchanges to trade Bitcoin. Several digital platforms allow individuals to sign up, load their accounts with fiat money, and start buying and selling Bitcoin. However, please carry out due diligence when selecting a crypto exchange. For example, find out whether somebody has ever hacked a crypto exchange. Also, check how the venue handles customer complaints. Other vital considerations include the platform’s headquarters and its regulatory body.
Apart from crypto exchanges, some people trade Bitcoin without owning it via leveraged products like CFDs and spread trading. A leveraged product allows you to purchase and sell it on a margin. Thus, you only put up a deposit or the initial margin to open a trade position. However, this approach has magnified losses and profits compared to non-leveraged trade positions. The service providers use the total trade value to calculate losses and gains.
So, Should You Trade Bitcoin?
Bitcoin’s popularity has undoubtedly grown significantly over the years. However, the risks of crypto trading are still looming. Therefore, you should learn a few things before trading Bitcoin. For instance, understand the following risks of Bitcoin trading.
- Extreme volatility: Bitcoin is notoriously volatile. While this is an attractive feature for some traders because it enables them to profit quickly, it can also lead to significant losses. The crypto market will not favor you every time. If it goes against you, it could mean substantial losses. Therefore, on trade with an amount, you can lose, and your life proceeds.
- Cybercrime: Many unsuspecting traders have fallen victim to cryptocurrency crimes. Bitcoin is prone to scams since there’s nothing you can do once somebody steals your Bitcoin. Therefore, have adequate measures in place when trading to avoid losing money to cyber criminals.
- Discontinuation and forks: The blockchain network’s hard forks or radical changes can cause uncertainty and increase market volatility. Also, governments can implement regulations that may affect the existence of cryptocurrencies.
Apart from the risks, take the time to understand how Bitcoin works and the factors influencing its value. Also, understand different crypto trading strategies and implement one that works best for you.
Image by MichaelWuensch from Pixabay