Bitcoin is undoubtedly the virtual currency with most traders. In addition, the increasing prices of this digital currency have attracted more people. People who bought and held their Bitcoins early may have sold them later at a higher price, generating significant returns on their investments.
Unfortunately, some people sold their Bitcoins at the wrong time, losing large sums of money. Ideally, an effective Bitcoin trading strategy will allow you to profit from the activity. High net worth individuals and institutional investors opt for OTC trading when they buy and sell this virtual currency in large quantities.
Low barriers to entry into the crypto market mean that many people with computers, smartphones, and internet connections can start trading this virtual currency with seed money. Most people who trade Bitcoin buy and sell on platforms like immediatelyeconnect.org. Also known as crypto exchanges or automatic trading robots, these digital platforms allow individuals and institutions to buy Bitcoin using fiat currency and sell it for a profit.
Nonetheless, you can incur losses that you may never recoup anytime soon if you are not careful when trading this digital asset. Here are some costly mistakes to avoid when trading Bitcoin online.
Use insecure tools
The internet is full of tools that claim to be the best for trading Bitcoin. However, all tools may not work as expected. Some crypto trading tools will leave you with losses after they collapse with your money in the account you have with them. Therefore, first research the available Bitcoin trading tools. Also use a secure Bitcoin wallet to store your private keys. Even when using a secure crypto exchange, please do not keep a significant amount of funds there. Keep only the amount you need to trade Bitcoin in your crypto exchange account and the rest in a secure digital wallet.
Use real money at start-up instead of paper trading
A newbie trader shouldn’t start with real money. Instead, they can use platforms and resources that allow them to participate in paper trading. Developing a system using simple guidelines for entries, risk management, and exits should be the first step when venturing into the crypto trading industry. And you can do it without using real money. So, you can trade Bitcoin on paper until you are ready to spend your hard earned money by exchanging this virtual currency.
Shopping too long
A typical Bitcoin trader can shop around using OTC trading. And that’s a costly mistake to avoid when trading Bitcoin. You will dig a hole for yourself if you call brokers to inquire about their rates. While you want to get useful information, you provide it to brokers.
A crypto broker can use the information you share with them against you. In addition, they can discover the counterparties of your transaction. And these counterparties can extract your orders, resulting in a low market price. The result is that the counterparties get a better rate. Therefore, do not shop for too long when trading Bitcoin.
Do not use stop losses
As a newbie trader, you can easily trade emotionally. And it happens when you don’t accept losses quickly. Taking a loss and switching to another trade is a vital skill for a Bitcoin trader. Failure to do so could result in significant losses when trading this virtual currency. Therefore, have stop losses and don’t just move when a trade goes against you.
Other costly mistakes to avoid when trading Bitcoin include trading without a strategy and using excessive leverage. Additionally, failing to study and analyze the crypto market can cost you dearly when trading Bitcoin. Therefore, be vigilant and stick to an effective Bitcoin trading strategy to improve the profitability of your business in the crypto industry.