Anyone who has ever heard of bitcoin wants to earn money trading it. Before you dive deep into the trading nuances, you have to buy cryptocurrency. Problems that may come with the purchasing process can surprise you.
Buying a bitcoin is not as simple as going to the bank and purchasing currency. You have to spend some time learning how to go about it. Cryptocurrency newcomers often make numerous mistakes that lead to lost money, time, and desire to trade.
In this short guide, we are sharing common errors made by bitcoin buyers to help you avoid them and have enough enthusiasm left for trading.
When you decide to buy bitcoin, it’s hard to understand all the details. Some people give up and go to different online resources. There, they get advice about when to buy bitcoin and how to do it. After that, these people are very surprised at losing their money. After all, they asked the experts, didn’t they?
When it comes to bitcoin, everyone who has ever traded it deems himself or herself an expert. This is hardly the truth. Only a few real experts exist. Even they don’t know exactly what will happen to bitcoin in the future.
Try not to rely on someone else’s opinion. Do your own research.
Many people start mining bitcoin because they hope to become multimillionaires like the original miners. It’s very tempting to buy equipment and allow the money to start coming. The money may start coming but at what expense?
Bitcoin mining is expensive. If you make simple calculations, you may find out that you can’t make any profit mining bitcoin in your country.
Mining requires large amounts of electricity, which is often expensive. That’s why miners from all over the world are travelling to find spots where electricity is cheap. If you live in a first-world country, the ROI of mining is likely to be too low to be worth the effort.
Meanwhile, there is a limited number of bitcoins allowed for mining. Right now, more than three quarters have already been mined.
Don’t forget to do your research on this matter. Perhaps mining is a good choice for you.
Of course, everyone hopes for the best. But bitcoin traders should be different. We hope it doesn’t come as a surprise to you, but cryptocurrency is highly volatile. It may be on top today and on the bottom tomorrow.
Bitcoin buyers and traders have to be ready for mistakes and financial losses. Some experts call bitcoin trading playing Russian roulette. In some sense, they are right. When you trade bitcoin, you always have to be ready for losing it.
Mistakes and losses usually come as a surprise to the beginners, keeping them from making new investments.
Don’t become one of these people. Be ready for losses. Never put the money you can’t afford to lose into bitcoin trading.
4. Don’t Avoid a Strategy
Trading cryptocurrency is much tougher than buying it. You have to work out a strategy. For example, if you purchase bitcoin and it starts growing in price, when is the right time to sell? There is no guarantee that it will keep growing tomorrow. Meanwhile, you don’t want to sell today only to learn that it has grown trifold tomorrow.
That’s why you need a solid strategy to follow. Only when you have strict guidelines about selling, you can avoid sharp regrets in case the cryptocurrency keeps growing.
If you don’t have any idea how to come up with a bitcoin selling strategy, it’s time to do some serious research. By learning what others rely on, you can come up with your own approach to knowing “when to fold’em”.
If you want to make money with bitcoin, you have to find the best exchange to do it. Many amateur traders believe that all they have to do is buy bitcoin with a bank card and then wait for it to grow in the price for selling.
The process is much tougher than that. First, not all exchanges allow buying bitcoins with a bank card. Second, they have all kinds of fees for buying and selling. If you aren’t trading large amounts, fees could be eating up a big chunk of your budget.
Before entrusting your money to the first exchange that seems appealing, do research. Hardly all of them are created equal. Some are designed for serious traders, while others can be suitable for beginners.
Pay attention to the reviews of the exchange as well as the security measures it takes to protect your money.
Your private key is what opens your bitcoin wallet. Entrusting it to anyone, especially an exchange, means that you aren’t the owner of your money anymore. Many bitcoin trading amateurs make the mistake of underestimating the importance of private keys.
Before you decide to buy bitcoin, you need to do research about crypto wallets and their security. If you don’t hold on to your private key, you can say goodbye to your money.
Bitcoin security is something you have to study thoroughly. Otherwise, you could lose your money before you start trading.
Even though sending money to the wrong wallet seems like a stupid mistake, hundreds of traders make it every day. Be careful about the wallet number you are sending the money to. Once you click the send button, your money is gone forever.
There is no way to get your money back unless the recipient decides to do it. This usually doesn’t happen.
So make sure you check the wallet number twice before sending it. Never send one cryptocurrency to a wallet in another cryptocurrency.
As we already said, private keys are important. If you can’t memorize your private key (which is pretty tough), you have to keep a hard copy of it.
Computers crash, hard drives burn out, files get stolen or compromised. That’s why you should always keep a hard copy of your private key. If you lose it, you lose access to your money forever.
Write the key down on paper and keep it safe somewhere. While this advice may sound strange in the 21st century, it can help you avoid serious losses.
Being emotional is the key to failure in bitcoin trading. Trying to rely on intuition or the weekly horoscope is likely to lead you nowhere.
Buying and trading bitcoins is hard work. It’s not a gambling game you enjoy in a casino. With bitcoin, it’s possible to earn money if you use the right strategy with the right approach. Of course, a little luck could help too.
Bitcoin trading could go smoothly if you take the time to do the right research. The above information should keep you from making common mistakes and help you come out on top. Don’t forget to take emotions out of the trading processes while keeping your private keys safe.