With all the talk about cryptocurrency, most of us have at one time or another wondered how to buy Bitcoin. After all, given the popularity of crypto, we should get behind it sooner rather than later, right?
But the process can be a little confusing to those who are completely unfamiliar with the process. Here are a few things that you should know before you get into buying and selling Bitcoin for the first time.
- Trading Versus Investing
First, you need to know what it is you are doing with your Bitcoin. Are you looking to buy and sell regularly or are you partaking in a more long-term investment? That distinction may not sound like much but it is an important one to make.
Trading and selling is more of a short-term strategy. Given that Bitcoin is no longer the only cryptocurrency on the market, it could mean leveraging that Bitcoin into other forms of cryptocurrency. After all, Bitcoin can’t remain the only game in town forever.
Investing, meanwhile, means hold onto it for the long-term. Given the volatility of the market, Bitcoin can rise and fall at a rapid rate on any given day. It has experienced huge rises and even bigger falls. Holding long-term means that you believe there will be growth long-term and that you will ride out any of the peaks and valleys that may come.
- The Different Trading Methods
If you determine that you are in it to trade Bitcoin, there are a few different methods to choose from. The beauty of it is that there are different methods for every comfort level. Here are three of the most prominent.
Day traders are usually very active. These traders have several trades throughout a day and are trying to earn a profit from the short-term movement in price. They spend a lot of time analysing the markets and try to time their trades to close by the end of the day.
A more popular move of late, this is where big profits can be made on small movements. It is a focus on the extreme short-term with the idea that those small profits done repeatedly create advantages for the traders. Scalpers will make dozens, sometimes even hundreds, of trades in a single day.
Swing traders look for the beginning of a price movement, entering their trades then. They hold until that movement starts to die out, flipping their investment for a profit. They see the big picture and will hold for weeks or months at a time until they hit the mark they were looking for.
- Know the Terms
There are far too many terms to cover but a few that are of the utmost importance. For starters, there’s the “price.” When you hear about the price, it is in reference to the value of Bitcoin at the last trade that was conducted.
There is volume as well. This is the number of bitcoins being traded in a single time frame. Because bitcoins can be split, you will often see fractions of a bitcoin for smaller traders.
These are just a few of the most common terms and there are several more to know. Bone up on your terms and you can communicate with anyone in the market with no issue.
- Avoid the Common Mistakes
There are far too many mistakes to cover in one space but rest assured, there are many who have been through the cryptocurrency market and not come out on the other side. Before you can learn how to buy Bitcoin, know what mistakes can be avoided.
For one, have a plan. Know what your goal is with your strategy. Have an exit point. Far too many investors simply ride the wave and don’t know when to get off.
Also, don’t put your money on an exchange. They have security concerns just like any other middleman and you don’t have control over it. Keep it on a personal device so that you can access your money whenever you want to.
Most of all exercise patience. Bitcoin is volatile; rises and falls are going to happen, so don’t panic.