Investing in Bitcoin AKA crypto trading, crypto currency markets, coins.
There is a paradox about Bitcoin that the wise investors know, the smart quickly learn, and the foolish never do. Fortunately we’re going to tell you it right now, and do away with the need to memorize such abstract phrases!
In sum, Bitcoin is easy to buy and acquire, but not easy to grow your wealth in. By no means it is impossible or too difficult, but like any investment, does need a serious time commitment to it. Accordingly, if you wish to do well while investing in cryptocurrency, there are some essential steps that you should look to incorporate into your Bitcoin investing.
Like any form of investment, finding success in Bitcoin means strong research beforehand. The depth and scope of it shall depend on your aims and long term goals a little – if you just want a asset to mature over 10 years your aim shall be different from someone seeking to buy now and sell within a year – but however you look at it, research is a crucial part of your plan.
Fortunately, by reading this guide you’ve already taken a really positive step in building your Bitcoin knowledge. In turn, we are not afraid to indicate to you here: not all Bitcoin and cryptocurrency content on the web is of equal value. Like anything that becomes very popular very fast, there is a lot of rumors, fake news, and poor quality coverage of the market out there.
Accordingly, finding quality sources to research is just as important as hours spent doing research. Indeed, reading a quality source for half an hour a day will always be better than reading a substandard one for 3 hours. There are a number of ways you can look to find a good source.
To start, look at a site and then google ‘[site name]’ and ‘reputation’. The wide variety of message boards, social media, and online articles that mention the site should you give some idea of its reputation. If it is a new site it may not have all that many reviews yet – and that is OK – but a bad site will certainly get some fast.
Secondly, look at the quality of the info on the site. Take what existing knowledge you have and compare it against the site. This guide is a reliable source of information for you. Satoshi Nakamoto’s Bitcoin paper is a reliable source of information. If you find a site that has a ton of factual errors and mistakes that go against good sources you’ve read prior? It’s a alarm bell.
Finally, reach out to people in the community. Once you start to build friendships and have conversations with others, you’ll soon start to learn quickly which websites and sources other traders trust.
Ultimately, poor research is like a firecracker
it may go up on the net fast and win some attention quickly – but it shall always smoke out and come down quietly. Good research and reputable sources endure long term.
Bitcoin and blockchain offer the opportunity for a trader to transact with immense speed. What’s more, because it is a digital-only currency, it is very easy for someone to acquire and utilise Bitcoin in day by day trading. Yet, the ease of the process should not be mistaken with the ease of trading strategically.
Bitcoin may seem like a innovative, exciting, and potentially lucrative form of investment – and it surely is all three. But it is also not a video game. There is no reset or checkpoint if you make a big trade that proves wrong. Accordingly, it is essential any new Bitcoin buyer approach this form of investment with the right mindset.
Do be excited about the innovation and potential of Bitcoin – investment doesn’t need to be dull so it is 100% OK to enjoy it as you go along – but also remain mindful this is real money, and accordingly requires a thoughtful and considered approach to trades. Especially at the start.
Starting with small amounts gives you the chance to learn with a smile, and not cry (too much) when you do make a mistake.
In tandem to starting slowly, exercising patience is an essential part of investment. Bitcoin is no exception. With time and experience, it is entirely possible to work your way up to a level of expertise on par with a successful day trader. That means making quick calls, and doing rapid fire transactions could become your way of life.
Before then though, it is vital to ensure your understanding and appreciation of the market is honed. There are no shortcuts to building this understanding, it instead must come brick by brick.
While your exact strategy for Bitcoin investment shall vary depending on your finances, aims, and market behaviour, there does exist a good golden rule for new traders:
the 30% rule.
Hold your initial investment unless its 30% above or below.
The market will fluctuate. It may go up considerably, tempting you to sell. Unless it goes 30% above what your initial investment was, do not consider selling. Similarly, unless it dips 30% below your initial investment, refuse to make a move. By using this 30% rule, you shall guard against the giddy highs and crushing lows that all investors feel when trading for the first time.
The importance of a strategy
Even the world’s very best traders get it wrong now and then. In fact there is a common saying: ‘the best traders in the world only need to be right 50% of the time’. This is because most of the time investments shall grow. The day by day might have loss, but it’ll prove positive long term.
Oh sure, there is the headline now and then about a bit business that went bust – but if that company was just 1 of 5 a good investor put even money in, they’ll still come out well ahead.
This example is illustrative of an underlying lesson: making money within investments is not guesswork. A good investor can benefit from some luck or chance, but ultimately it’s a science.
All the raw data and information in the world won’t help though, unless informed by a strategy. At first this may sound strange: if investment is a science then why do you need a strategy? You need a strategy because the world of investment is like an airport with many planes.
Some wish to get to their destination rapidly, others want to travel to many places and don’t mind flying in turbulence, and others still are a bit nervous about flying and just want a drama-free trip. Just as these passengers would not all wish to get on the same plane, so too must you devise your own strategy for investment. One that gets you to your destination, traveling as you like to.
Once again, the exact strategy shall differ, and is surely best discussed in a separate article. Nonetheless, for those starting out there are two golden principles that you can look to adhere to.
Consideration of your age
The first utilises the old saying ‘the best time to plant a tree was 20 years ago. The second best time is now’. There is no perfect time to begin investing, so be sure to focus on your future strategy and investment goals, as opposed to any events that have occurred in the past.
The second consideration for your strategy is your age. Once again, focusing on the past (and whether that high school haircut you had has aged well) is not necessary. Instead, your need for returns in cryptocurrency shall depend on your age and overall investment strategy. Each decade brings with it pros and cons.
For example, if you are 20, you may have a more limited amount of cash to invest in Bitcoin.
Yet, you shall have many years to watch it grow and mature. If you are 35, you’ll likely have a greater sum to invest, but would wish to see some positive returns on your investment quicker than a 20 year old would.
If you’re 50, you may feel financially comfortable enough to invest a sizeable sum of money into Bitcoin without losing sleep over it at night. This is a great position to be in, but with many investment options available to you, you also likely want to see a quicker turnaround on Bitcoin than someone who is 20 or 35.
Ultimately, your strategy is matter for you and your individual aims, but the above considerations can be useful in helping to start formulating a blueprint in your mind. In turn, in tandem to devising your own individual goals and aims, it is always worthwhile to seek out the advice of a trust financial professional to help you refine the finer points of your strategy as a whole.
Don’t give up
Trading and investing is ultimately a way of life, and you’ll see many changes over your tenure. There shall be times you invest little money, there shall be times you invest a substantial amount. There will be times you pay daily attention to the market for short term goals, and other times when you just check in occasionally for long term trades. Never giving up is vital throughout.
When you experience some market turbulence, or encounter a loss, this is really important.
Yet even when things are going great though, it is important to think long term. The greatest investors like Warren Buffett have been investing for their whole lives, and shall do for years to come. Even if you ‘cash out’ big at some point. It’s still wise to maintain a small market holding.
Like maintaining your health, fitness, or professional career skills, by taking a long term and ongoing view to investment, you’ll stay attuned and knowledge of the cryptocurrency market overall. This shall ensure you go through the highs and lows with persistence and confidence.
We began here detailing in our intro how we want this guide to be the last word on Bitcoin. Throughout it we’ve sought to explain in clear but simple detail the history, essential information, and necessary steps to become a Bitcoin owner and trader.
With the end of this guide we hope to have delivered the last word, and given your the confidence to now begin your journey intro cryptocurrency with certainty and clarity. Yet, we also know like Chess, beginning to play is easy, but mastery is very difficult.
Accordingly, having now read our guide, we’d value you participating in our community’s ongoing conversation around Bitcoin. In tandem to our mailing list, we’ve also social media, and our team always welcomes being contacted direct via our email [insert best email here].
All up, we know and understanding Bitcoin and cryptocurrency is a complex field. For newcomers – and even established long time traders – it can feel confronting now and then.
That’s why this site and its community was founded, to serve as a platform of regular news and content from around the Bitcoin industry; while also creating a place to engage and connect.