Before dealing with any bitcoin broker it is prudent to remember that crypto currency trading has many risks. The price of bitcoins can go down as well as up, and it can also be affected by external factors such as a government banning the use of bitcoins. Even though this digital currency has been around since 2009, no one knows for sure what will be its future. However, trading in bitcoins seems lucrative even though there are risks involved while trading in this cryptocurrency.
There are many things you need to consider before bitcoin trading, let’s take a look at a few of them.
1. Make Risk Management Plan
Before starting the Bitql app you need to make a good risk management plan. You need to divide your total capital into two parts, the initial part is for bitcoins trading, and the second one is of course reserve. The reserve should be of different kinds, some cash just in case you face a sudden crash in price, some other portion should be used as collateral with the broker trading platform like Goat or any other.
2. Choose Right Broker
Choosing the right broker is another crucial thing which many newbie traders often miss out on; it is important to choose the best bitcoin broker who gives leverage up to 1:20 (it varies from broker to broker). While doing so you should also check whether he charges any extra fees on top of the spread (the difference between the buying and selling price of bitcoins at any point in time), because sometimes brokers charge very high commissions.
3. Start Small & Add Funds as You Go Along
One should always start with a small amount and trade on low volume, this practice will help you to learn fast without compromising your entire capital beforehand. In addition to that one should not add funds into the account until he has reached his minimum margin requirement, which is usually around 10%. This is because if you deposit money after reaching the minimum margin requirements then your trading platform may be under-utilized for a longer period of time or even permanently so it’s better to wait until your account is fully funded for trading.
4. Don’t Be Greedy
Many newbie traders are often tempted to make high profits at once, but one should always remember that big gains can lead up to big losses too so it is advisable to have a low target profit. One good thing about this digital currency is you can trade in small margins so it doesn’t hurt too much if your trade fails by getting into loss. On the contrary your balance will hit zero and then there will be no point of adding more because your account will be locked out for some time according to the broker policy.
5. Diversify Your Portfolio
This is another common mistake made by many bitcoin traders, they usually keep all their eggs in one basket which is a very risky thing to do especially when trading bitcoins due to its extremely volatile nature. If you have some extra funds then it’s better to diversify your portfolio by trading in multiple cryptocurrencies, just ensure that you don’t keep all the money into one digital currency because there is a chance of losing everything if that particular currency fails or gets hacked.
6. Don’t Use Bot Softwares
If you are thinking of using bots to trade digital currencies then think twice before using it. These software are created by some programmers who know how to exploit a client’s trading platform, so one should always avoid using these bots because if your broker gets hacked even for a single time, you will lose all the money invested.
7. Keep Your Computer Safe & Clean
One can never be too careful when it comes to securing their bitcoins, especially on the computer used to access the wallet or any other cryptocurrency trading platform. Therefore hackers and scammers come up with malware and viruses in order to steal bitcoins from internet users so it is important that you keep this in mind and secure your PC before starting bitcoin trading or at least install antivirus software.
At last it can be said that bitcoin trading has many risks associated with it so one should always remain prepared for slumps and crashes along with keeping low profit expectation and having a well-diversified crypto currency portfolio.
It is recommended to start small with a broker who offers leverage up to 1:20 at least so that he doesn’t take more risk himself from his end.