Bitcoin is a highly volatile asset, creating more trading opportunities than conventional markets like forex and stocks. For this reason, some investors prefer to hold their tokens instead of buying and selling them more often.
This way, they can earn profits as the value of Bitcoin gradually increases. But some people prefer Bitcoin trading because it allows them to take profitable positions in falling or rising markets.
Although many people claim that Bitcoin could be the next big thing, traders should not rush into buying or trading without giving it some thought. Bitcoin has made millionaires during its existence due to its increasing value.
A few years ago, people who bought Bitcoin are now wealthier because the value of their digital asset has increased. But some people have lost fortunes for buying Bitcoins high and selling them low. If you’re considering getting into this game, here’s why you should learn how to trade Bitcoin first.
The volatility of Bitcoin
The volatility of Bitcoin offers traders the opportunity to make profits by taking advantage of the rapid and wild price fluctuations. So, the volatility of this cryptocurrency is not bad. However, you need to research and learn about Bitcoin volatility to profit from your trading activity.
For example, learn what causes rapid changes in the price of Bitcoin. Thus, you will be able to monitor the cryptocurrency market and determine when to buy or sell Bitcoins to maximize profits or reduce losses.
Ways to Trade Bitcoins
You can’t start trading Bitcoins if you don’t know how. Learning to trade Bitcoins is therefore the first step. Trading Bitcoins can involve buying and selling Bitcoins directly on a platform like “La Formule Française”. Such a platform allows you to buy Bitcoins with conventional money like US dollars. Likewise, you can sell your tokens to receive fiat money on the same avenue.
Short-term crypto traders or day traders open trades that last a few minutes or hours. In contrast, long-term traders can buy and hold Bitcoin in their digital wallets for weeks, months, or years, hoping their value will rise.
Whichever way you choose to trade Bitcoin, learning the nuances of the crypto market will help you avoid losing money due to its volatility. Learning how Bitcoin trading works prepares you for any challenge that may arise from the unpredictability of the crypto market.
Bitcoin is a speculative investment
Investing in stocks involves putting money into a company that has been around for decades. Individuals have been using Bitcoin for just over a decade. This means that analyzing its performance or history is still difficult. You don’t know if its value will increase or if people will continue to accept it as payment.
Despite the uncertainties surrounding Bitcoin, people continue to believe in it. This is why more and more people are buying, selling and holding Bitcoins. Learning how to trade Bitcoins allows you to understand how it differs from stocks. Bitcoin is a new asset class that does not compare to conventional assets. Thus, predicting the performance of this cryptocurrency requires a thorough understanding of how it works and the factors that affect it.
Understand the risks
Learning Bitcoin trading allows you to understand the risks of this activity. For example, criminals can hack into your cryptocurrency exchange account and transfer the funds there to their digital wallets. If someone gets your digital wallet’s private key, they can also send your funds to their account. Learning Bitcoin trading teaches you to take precautions when buying, selling, and storing your tokens.
Bitcoin is new to the vast majority of people. And like anything new, this cryptocurrency comes with challenges that you need to understand to avoid losing money. Therefore, dedicate some time to learning Bitcoin trading to engage in this activity safely and earn profits.