Should You Invest In Bitcoin Or Trade Bitcoin?
There are a number of stories about Bitcoin traders that have made a great deal of money on the back of the volatility of the digital currency. Some traders are able to make consistent profits most days with Bitcoin. So if you are just starting out with Bitcoin should you trade or go for longer term investment?
Bitcoin Trading
If you are new to Bitcoin then it is not impossible for you to make trades to make regular profits. But this is not an easy thing to do. It takes a good deal of experience and you need to be mentally and financially ready. To make consistent profits from trading you need to buy low and sell high.
When you first start to trade Bitcoin it is natural for you to panic when prices change. Bitcoin is now very valuable and there can literally be thousands of dollars at stake. The more money that you are using the more likely you are to panic.
Learn how to Trade Bitcoin
We would never recommend that you just jump into Bitcoin trading. You need to learn everything that you can about it first. A number of the exchanges will provide you with a dummy account where you can practice. These accounts have real time prices like the real ones and if you make a mistake then you can learn from them.
It doesn’t matter if you blow all of the pretend money in a demo account. Just get another demo account and try again. But imagine this was real money you were trading with – it would be devastating to lose everything wouldn’t it?
Create a Trading Plan
The best Bitcoin traders have a plan. They have minimum buy prices and sell prices. They stick to this plan no matter what and never enter into emotional trades because they “feel right”. When you start trading Bitcoin forget about making a ton of money in a day. If you have this attitude you are more likely to make a lot of mistakes.
Never go all in on a trade. Just use small amounts of money to trade with until you develop the skills and experience that you need. It doesn’t matter how good an opportunity seems to be – just stick with small amounts when you are starting out.
Bitcoin Investing
The difference between Bitcoin investing and trading is the amount of time involved. With Bitcoin investing you are committing to the longer term which we believe is a smarter decision. When you invest over the longer term you are able to cover off the volatility of Bitcoin and have the best chance of a good return.
One of the best methods to use for Bitcoin investment is the dollar cost averaging method. The concept here is to invest smaller amounts regularly so that you can take advantage of price swings.
For example if you decide you can invest $100 a week then some weeks you will get more Bitcoins for your money and other weeks you will get less. Over a period of time this should always average out so that at the end of the investing period you have still made a reasonable return.
