3 crucial tips to trading bitcoin
How you can trade the new craze in investing.
Bitcoin is becoming more and more famous, in the past year it has increased from 570 dollars up to near 5000 and just took a hit this week. So how can we trade it, and should we?
First things first, bitcoin is volatile, we need to make sure that we aren’t using too much leverage.
Everybody’s financial situation is different, the first thing that you need to do is analyze whether trading bitcoin is going to be realistic.
Even a 0.01 will have a requirement of more than 1000 dollars in margin, and a price matching the dollar difference of the BCTUSD. This means it can move more than 400 dollars in a day easily — and you should be careful so that you aren’t risking massive portions of your account on a daily movement.
I would say that to trade bitcoin, we need a minimum of 10,000 dollars of our account and even then we are looking at a high risk / reward trade, so you need to be careful of your entry point.
Secondly, be careful about trading close to the weekend.
Bitcoin has taken a lot of big movements over the weekend, and while they are usually to the upside, we should make sure that we are very confident of current momentum or we can risk starting the new week on a position based on a gamble.
Based on this, trading early in the week and making sure that the price is on the move up for the day when you do buy in.
Lastly, Check the news
China just made ICOs illegal, and ordered monies to be returned to the buyers. This has effected the price of all crytocurrency and that includes bitcoin. Being aware of these events, both positive and negative, can help you get in at the right time and avoid unnecessary risk.
Andrew “Davies” Nifield
Head of Education — www.gsimarkets.com