How Much Do I Need To Start Trading Bitcoin?

Bitcoin

Since the advent of cryptocurrencies, more people are discovering ways of making money through them. Activities such as mining, swapping, farming and trading of the assets have become quite popular because they have made many rich. Trading Bitcoin can be very profitable despite the ups and downs of the market, but how much do I need to start trading Bitcoin?

There is no specific amount needed to trade bitcoin, even though you need some substantial amount to see good profit. Amounts such as $100 worth of Bitcoin is a lot of money if it was invested 5 years ago, but these days, you’ll need more than $1000 worth of BTC to see good profit, if you’re an experienced trader.

So in the rest of the article, we shall examine what you need to do and how much worth investing to see good profit as a trader in bitcoins.

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Preamble

Even though trading of bitcoin is profitable, the trader should know the fundamentals of trading to make the most of this venture. Some of the basic things that an aspiring trader should know are:

Fundamental Analysis

This is essentially valuing the cryptocurrency using market conditions and other factors that would naturally influence the market. These include the social, political and economic factors that generally have impact on the price of financial assets. As you’re aware, Bitcoin can rightly be defined as a financial asset, so the market demand will be affected by such issues as economic policies of several governments.

Fundamental analysis is used to estimate or guess what will happen to the value of the asset in the long-term or short-term. For instance, if there is a ban on the use of the coin by a country with a high population of users, the demand for the coin drops. So at that point, traders would exit the market to safeguard the value of their bitcoins.

The summary of fundamental analysis is that the value of Bitcoin is determined by demand and supply. These are influenced by economic, social and political situations in several countries. If the country is a major economic hub, its impact would be bigger than if it is a smaller country with fewer users of bitcoin.

Technical Analysis

Technical analysis is a must for anyone that wants to learn how to be a technical trader of bitcoin or any other cryptocurrency. This sort of analysis has to do with studying the historical behavior of the price of the coin, with the knowledge that history repeats itself as far as any asset is concerned.

Technical analysis has to do with the study of the price pattern and movement of the coin, with the hope to determine the trend and possible price of the asset in the immediate future. This takes cognizance of factors such as the volume of the asset and the price that it supports at a particular time. This enables the analyst to search for similar patterns in the past, with the knowledge that this would likely repeat at some points in the future.

It is important to understand that technical analysis is subjective. This means that reading the charts would not make two or three analysts come to the same conclusion on where the price of Bitcoin would be in the next couple of days. When you hear about Fibonacci, Bollinger bands and candlesticks, they mostly refer to the different ways people read charts.

Helpful Tips To Trade Bitcoin

Invest in Knowledge

This is quite fundamental since trading your coins without the requisite knowledge is mere gambling. It is a sure way of losing your bitcoins. There is a lot of information available to the trader that, if utilized, would ensure that trades are not made blindly like shots in the dark.

Learn Through Practice

The options available for practicing what you have learnt is first using a demo account. Also, there is a need to start trading with a small amount. While practicing, use some of the strategies that you have learned until you are proficient in them.

Trade Live Account

Trading tentatively in a live account is necessary to give you a right state of mind in your understanding of how things work in trades. After practicing what you have learnt in a demo account, move to a live account and trade with a small amount to see how things go. The right state of mind is necessary to enable you to make the right decisions under the pressure of the market.

Start Small

This should be clear enough. A beginner trader must always start with a minimal amount until they have perfected a strategy. Under no circumstance should they trade with amounts that they cannot afford to lose. It is a good idea to use 0.1% of your capital when you start using real funds in live trade. When you have traded for a while and the analytics show that you have a win rate of up to 90% consistently for some weeks, you can move 1% of your capital and start trading with it.

Learn from Your Mistakes

Now this is important. Mistakes are meant to teach and not discourage you. Learn from them and move on to the next phase of your learning and practice. When you lose in a trade, be sure to find out the reason for the loss and internalize it for the future. The essence is to help you avoid such mistakes in future trades.

Do Not Gamble

If you do not have a strategy and do not follow an entry and exit plan based on data from a chart, you’re just gambling. The possibility of a loss or losses are high.

Control Your Emotions

Emotions such as fear of missing out and greed contribute to losses that traders incur. This is incentivized when a trader is trading with funds that they cannot really afford to lose when their skills have not been honed. This is why you should gain mastery over your emotions when you set up a trade. This means that you must stick to your entry and exit points, unless there is a logical reason to change your plan.

Explore 

Do not be afraid to take risks. If there is a strategy that you need to take some risks to gain experience from, do that. Also do not be too rigid in your quest to learn. Try new things and be willing to change your strategy if it is not giving you the right output.

Commit To Your Dreams

You should understand that there will be ups and downs. Commit to your dreams by seeing the bigger picture. Bear in mind that trading is a learning process. Over time, it would yield profits if you stick to what you learned and persevered against all odds.

Be Willing To Make Adjustments 

This is clear enough. When you try something that is not working, be willing to make adjustments and try something else in terms of strategy. Also bear in mind that not all strategies would work for your type of personality. If you’re a conservative person, trading with a conservative strategy would serve you better than trading with a high risk strategy.

Use Stop-Loss for All Trades

This is very important. The stop-loss tool is a risk mitigating instrument that you must not do without. It helps to narrow down the risk that your funds are exposed to and must be used in every trade.

Give Yourself Time

Your efforts may not start yielding profit in a week, month or even a year. What you should ask yourself is if you’re learning and making progress. Keep to it and be patient until you have the skills that are necessary to start making consistent progress. You should be able to access your progress using the analytics from the cryptocurrency exchange that you’re using to trade bitcoin. Your losses should not be more than 10% to prove that you’re ready to dive in.

Learn Specific Strategies

There are many strategies out there that are available for the BTC trader. Learn, adopt and adapt the ones that fit your personality. Then start using it until they become an extension of your personal trading system.

Join A Channel

There are many channels on Telegram and Discord that you can join. These are meant for traders to share ideas or receive signals or news about the market. Choose a channel that gives you a worthy update on the coin market and also know the sentiments about the market through such channels.

Focus On A Pair 

When you start trading bitcoin, the temptation may be to try different pairs with BTC, but that is not necessary. Your best bet is to focus on BTC with another coin such as ETH or USDT until you perfectly understand the pattern of the price movement of that pair. Only then should you bother trying out another pair.

Check Other Options 

Bear in mind that there are other options that are available out there for a trader who is still trying to understand how things work. If you’re in a hurry to earn, you can try copying trades. But never be in a hurry to earn when you’re trading yourself if you have not developed the skills needed to make consistent gains. There is also the option of holding your BTC for a long term gain.

Sell At Peaks, Buy Dips 

The basic strategy that traders use in the coin market is that they buy when the price of Bitcoin falls and sell when it rises. This should be your objective in trading. Do not be in a hurry to close trades on high because you’re losing.

Make Mental Not Emotional 

One of the errors of trading is making decisions based on emotions. This must be avoided. Every trade must be based on data-based inference, after studying relevant charts.

Choose Reputable Exchange 

One of the errors that new traders may make is choosing exchanges that are not reputable. This has its own hazards such as high commission fees or even loss of funds if such exchanges have fraudsters behind them. Using an exchange with a good reputation ensures that you do not lose your funds to technical malfunctions or scams.

Do Not Panic

It is very easy to think that you would lose a trade when there is a market downturn. It is at such times that a trader needs the discipline not to panic. Sticking to your trading plan would help you not to be carried away by sentiments. The hardest part of trading is learning how to control your emotion and avoiding panic buy or sell.

Have A Target

What exactly do you want to achieve with each trade? Have a target. This would make your entry and exit points easier. If you’re working with a base, it gives you an inkling what price the market is willing to support at that point. Make sure that your exit point is within that range and make sure that you exit within it, even if things are looking good at the point of exit.

Enroll in Trainings

There are many resources online and off that are meant for beginners. The advantage of taking a training course is that a good one would lead you through in an organized manner. You build on your knowledge and skills over time in the course of the training. You do not have to if you can find a free resource that is worthwhile.

Personal Research

You can get a lot of information from other traders that could help you determine market sentiments and even help you analyze the price of BTC. Nevertheless, you still need to have a clear understanding of how to research the market independently. This and the ability to improve on your skills is a must if you would become a successful trader.

Risk And Money Management

Experienced traders are aware that risk and money management are essential skills that help to preserve and protect the trader’s capital. The essence is to make sure that the trader does not lose money uncontrollably. Also, it ensures that their capital is protected through a phased deployment in trades.

Essentially, these are the basics of trading in bitcoin. Remember that it is of essence to start trading in a systematic way with an amount that is experimental to you. This should be after trying your hands on demo trading. How much you need to start trading BTC should be the minimum that is not critical to you. You can scale up down the line when you have the requisite experience and skills.

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Author: Jofor Humani

Jofor is a crypto journalist with passion for investigative review of projects with the aim to determine the authenticity of their claims.

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