The Cryptocurrency market is exponentially growing. More and more people are preferring to invest in this industry. However, despite this investment craze, a good number of investors don’t make money. So, are you one of them?
If affirmative, then you’re not alone. Quite several investors lose their money and end up quitting in disgust. Well, the reason being, that some make similar investment mistakes. However, you don’t have to quit trading in a huff or surrender to the losing fate.
Here’s an article on why your strategy is failing and the tips on how to make your trades profitable.
The Reasons Why Your Trade Isn’t Working
- Failure to Set a Stop Loss
Most new traders in the Cryptocurrency market don’t place a stop order. Well, the reasons for this vary from one trader to the other. For some, it’s because they don’t understand what a stop loss is or because they want to maximize their profits.
Thus, a stop-loss order helps the investor to take manageable risks. Since the Bitcoin prices are ever fluctuating, the stop-loss order works to ensure your losses are within manageable limits.
- Focusing on Several Cryptocurrencies
Yes, it’s good to diversify your investment. However, don’t do this by focusing on several cryptocurrencies. Remember, the cryptocurrency prices are ever fluctuating. Keeping tabs on different crypto pairs can be quite challenging.
Instead of trying to become a master of all, try and perfect your trading strategy on a few crypto pairs.
- Following Tips on Social Media Platforms
The social media platforms are taking the communication industry by storm. The growing popularity makes conventional communication channels obsolete. But that’s not all!
These platforms are full of ICO’s who try to sell their coins by giving ‘useful trading tips.’ In most cases, these ICO’s use a favorite line, my coin is the best in the market, buy it today before people realize and start investing in it.
The strategy works to create a fake hype in that crypto. Trading in this coin can only be disastrous. Don’t make this mistake. Instead, undertake your research and avoid following tips from every ‘expert’ in social media.
- The Fear of Missing Out
As you know, the value of Bitcoin has been continually growing. Most people feel bad that they didn’t invest in this coin when it was first introduced.
However, FOMO forces people to make wrong investment decisions for fear of losing out on future trades. Such investors end up making the purchase when the price of the coin is higher to maximize on the rising prices. However, it doesn’t always work like this.
- Margin Trading
Most traders use the leveraging technique to place their trades. The strategy can be disastrous if not used properly. For instance, if you’re using a 20:1 leverage, you’ll earn $20 if the price goes up by $2. But if the price falls by $2, you lose $20.
According to investment rules, you shouldn’t invest more than what you can afford to lose. However, margin trading defies this rule. It increases the chances of making higher trades in favorable market conditions. But if the market goes south, then you’re already in a deficit. Don’t touch this strategy unless you’re an expert.
The Best Bitcoin Trading Strategies
Bitcoin as a digital currency has had an impressive result in the market. Its value has risen from 0.10 USD to 20,000 USD in 2018. But the currency also has its downsides. The fluctuation in its market prices has seen several investors lose their money.
Don’t make this mistake. If you want to be successful, then implement the best trading strategies. Such include the following:
- Use Cryptocurrency Trading Bots
The Bitcoin market never sleeps or closes. Trading at day and night can be exhaustive for investors. Therefore, the chances of making the wrong investment decisions are quite high.
Investing in auto-trading robots allows you to make money whilst sleeping. Here, you set trading parameters for your robot. It’ll then analyze the market data and use it to make an investment decision.
But why should you invest in Bitcoin trading robots?
The bots analyze the available data before making a trade. It eliminates the human emotions which might see you make a wrong decision which costs you money. Remember, the bot requires you to set your stop-loss orders and profit targets. Other benefits include:
- Testing historical data to assess the profitability of your trade.
- Availability throughout the day and night.
- Ensures faster execution of trades and speed.
- It gives you real-time updates.
- Do a Thorough Research
It’s impossible to undertake a risk-less trade in any financial market. However, be calculative on the type and nature of risks that you take. Do your due diligence.
- Be Cautious
The purpose of trading in Bitcoin is to increase your earnings while reducing the risks. Start by investing the amount of money that you can afford to lose.
Take your time to learn your ways around this market. Then set the regular accounts which you use to trade.
- Make a Concrete Trading Plan
According to the adage, failure to plan is planning to fail. Therefore, set a concrete trading plan before investing your money. With the plan, you can identify the best times to enter or exit a trade. Further, determine your profit targets and set the stop losses.
- Insulate Your Investment
Bitcoin trading takes place online exposing you to several security risks. Hacking is so far the biggest security threat to your investment. Thus, protect your investment from hackers.
Over time, several organizations have lost their Bitcoin to hacking. For instance, in 2016, Bitfinex lost 120,000 units of Bitcoin to hacking. Mt. Gox was hacked 850,000 Bitcoin units worth $500 million at that time.
Don’t let the same fate befall your organization. Use Bitcoin wallets to insulate your Bitcoin from hackers. It also protects your business once the Bitcoin agency goes out of business.
Conclusion
Investing in Bitcoin allows you an opportunity to make money. However, achieving this requires you to be keen on your risk management strategy.
