It’s crucial for you to know all the available practical knowledge to mitigate the high risk common to Bitcoin investment. While there’s a lot of profit that can be made, enormous losses can also be incurred. This is why exercising caution is one of the first lessons a Bitcoin investor should learn.
Before making a Bitcoin investment decision, you need to be sure that it is backed by sound technical and fundamental analysis. You are reading this article on CoinJournal because you have the duty of protecting your capital as a Bitcoin trader.
Volatility is one of the significant risks you stand against as a Bitcoin trader. In the words of Investopedia’s Nathan Riff, you cannot eliminate the volatile nature of Bitcoin; what you can do is managing the risk.
Since the risks cannot be eliminated, let’s discuss strategy tips that can help you become a better Bitcoin investor;
Understand the Basics
The bane of many Bitcoin investors is their lack of grasp of the basics. Do not allow the need to make a profit to drive you into making the wrong Bitcoin investments.
As much as you want to invest money, invest time into studying the crypto market. It’s not enough to know about the stock market or forex trading; the Bitcoin environment is a world on its own. While a relative level of stability is enjoyed in the Stock and forex environment, the opposite is obtainable in cryptocurrency.
Take time out to educate yourself, and you’d be better for it.
Steer Clear of Overtrading
There’s a reason why Forbes mentions overtrading as one of the traps to avoid as a Bitcoin and crypto trader. Never be overwhelmed by the excitement and anxiety of investing in Bitcoin, and neither should be clouded by the urge to make big profits, pushing you to overtrade.
You need to stay in control of your emotions. Rather than be into a lot of trades simultaneously, spread your investments into small amounts over a longer period. Over-trading can have dire consequences on your capital and your mental health.
Be Guided By a Clear Financial Goal
While you can adopt different Bitcoin investment strategies, you can be guided by a well-defined financial goal. Regardless of the Bitcoin investment approach, you are adopting, ensure it aligns with your financial goal.
It’s not just about aligning to it, but sticking to it is what matters. Every financial goal is backed by a timeline and course of action, and never forget both the period and the actions.
Work Along with a Dollar Cost Average
According to the Corporate Finance Institute, dollar cost averaging helps reduce investment risk and keeps your capital alive in a market crash. Remember that a lot of crash is bound to happen to Bitcoin and you are better caught prepared.
While Bitcoin might have outperformed every other asset in the last decade, it is still the most volatile. Even the most experienced Bitcoin trader might be affected by a dip, and this is why adopting a dollar-cost average as your trading strategy could be your safety net. There’s no better way to mitigate the effect of short-term volatility better than dollar-cost averaging.
There Should Be a Motive For Every Trade
Isn’t it too obvious if we asked that there should be a purpose for every Bitcoin investment and trades you take? Being a Bitcoin investor is a zero-sum game; for every win, there is a loss somewhere.
Most Bitcoin traders have not realized the level of patience that the large whales who control the market possess. This is why being purposeful could help you stay ahead of the whales and stay in profit.
Know that the whales are always out to dump on someone, don’t be that person.
Regardless of What Happens, Never FOMO
If there’s a faster way to fail in your Bitcoin Investments, it’s letting the Fear of Missing Out take the forefront of your trades. Yes, it’s an ugly sight to see that Bitcoin is moving massively, and you are sitting outside.
Remind yourself that the wrong time to take a trade is when the green candles are too long. Once you FOMO, that’s when the red candles will appear and grow longer.
Wrap Up
The most important tip we can give you to boost your Bitcoin Investments is never to trade until you can be decisive in getting in and out of trades. There’s a high likelihood for you to get burnt when you are too emotional about a trade.
Stay calm, and stay prepared for opportunities; there’s always a better one. You are better off with your capital than on a goose chase for profit. If you need more Bitcoin investment tips, stay glued to CoinJournal.
