Learning to Trade Bitcoin - 10 Must-Read Tips

Trading Bitcoin is perhaps one of the best passive income strategies you can think of. Like trading other financial assets and derivatives, it too comes with inherent risk considering its volatile nature, but here are some tips that can help you trade more effectively.

Let the listing begin!

Always Have a Goal in Mind

There are many ways to go about trading Bitcoin. What differentiates it from gambling is knowing when to quit. If you make series of informed decisions based on its price history, you are more likely to trade successfully.

Strategize Before You Trade

Pop culture may have only shown you one aspect of trading - day trading, whereby trading lasts the duration of a day. However, Bitcoin's decentralized nature enables you to employ multiple trading strategies based on its behavior like skimming, swing trading, or, if you're conservative with large capital, holding.


If you're new to Bitcoin, then you must learn more about it before you learn to trade. It's a fairly new concept in the financial world, requiring some know-how of its functions and what impacts price movements. You can visit its website that contains the original research paper for the concept.

Technical Analysis

Technical Analysis is a set of skills that seasoned traders employ. It involves the use of mathematical and statistical tools on past price movements to determine future ones. It's not an easy skill to attain; however, once you are comfortable with performing technical analysis, you can be sure to make much more informed guesses and price movements.

Fundamental Analysis

Price movements of any financial asset aren't just affected by supply and demand. External factors like the political outlook, news, updates, and policies will also impact your asking price and selling price. You need to remain on the lookout for these factors, as they can drastically increase or decrease your position in the market.

Secure Your Bitcoin

Never secure large amounts of Bitcoin from your trades on an exchange or in your hot wallet. They are connected to the grid and may result in you becoming the subject of theft or fraud via cyberattacks or phishing. Instead, invest in cold wallets that are off the grid and contain security measures to prevent undesirable mishaps.

Look for Entry Points

Ideally, you want to start a position at a low value and hold it until the price of Bitcoin rises. You need to be aware of certain entry points. At a certain point, the price of Bitcoin stabilizes and doesn't go below it for some time. These are called support bands and are normally good entry points for starting a trade.

Never Bite off More Than You Can Chew

Always invest with money you're comfortable losing. If you go ahead and trade via borrowed money, it may not be in your favor as it allows you greater exposure but levies huge risk. Always start out with short-term goals in mind and then learn to fly later.

Short Selling

Just like betting on the long, buying at a lower asking price, and selling for a higher one, you can also profit off of Bitcoin via short selling. This entails borrowing Bitcoin when it's high and selling when low, the difference you keep as profit when the original Bitcoin is returned. It's a slightly riskier strategy but allows you to profit even though the price is falling.

Try Derivatives

Bitcoin has established itself as a new financial class. As a result, many institutions are now offering other derivatives on it like futures, CFDs, and securities. Knowing which one to use when can give you an advantage during tumultuous market action and even secure your position during crashes when trading Bitcoin.