Bitcoin trading
Speculating the up or down movement of the Bitcoin Cryptocurrency prices and buying or selling based on this speculation pretty much sums up the definition of Bitcoin trading or cryptocurrency trading.
A cryptocurrency exchange account is needed to buy and sell cryptocurrencies available online on a cryptocurrency exchange.
The more a person trades, the more they learn about the trends of prices of various cryptocurrencies including Bitcoin. These cryptocurrency exchange accounts charge their users a nominal fee to maintain the accounts and keep using their services. Some exchanges, also put limits on the daily amount exchanged in transactions.
A cryptocurrency in itself, on the other hand, is decentralized and is not controlled by any bank, government or higher authority, they run on hundreds and thousands of computers belonging to crypto traders and exchange users across the globe in real-time.
Dos and Don’ts of Bitcoin Trading
There is more to trading Bitcoins than what is commonly believed. It requires a thorough understanding of the factors that affect its price, as well as understanding the different seasons throughout a year and following the trend in its prices in comparison with Bitcoin’s rising and falling prices.
Dos:
- Custody of Bitcoins: The leading cause of lost funds is theft from centralized exchanges like Binance, Bithump or Bitfnex. Users should have a hardware wallet to store and protect their cryptocurrency assets.
- Hardware wallet: The user must sign a transaction with their private key before initiating it, which a hardware wallet helps with for the user and only communicates the signed transaction. Hence, the private key is never sent to another device.
- Backup strategy: The user should assess the risk associated with different scenarios such as theft, fire, flood, etc. associated with the backups. The user must ensure that the wallet can be restored in five to ten years.
- Research: Financial investments, purchases and sales should be made only after thorough research of the cryptocurrency trends and investments then should be made accordingly.
- Password manager: To make the whole experience easier and more convenient, a password manager is recommended, it helps with remembering fifty-plus passwords, as we humans are terrible at remembering.
- Two-factor authorization: Setting up a second factor to help authenticate access is extremely crucial in this day and age of hacking, phishing, etc. Users must set up two-factor authorization to use with Google authenticator and many other such apps.
- Double-checking: Once a transaction is made, it is almost impossible to reverse, hence users should pay extreme attention and always double-check before proceeding with a transaction. Also, it is advised to look for SSL (HTTPS) certificates to verify the security of the transactions done at the visited website.
- Taxes: A lot many governments charge taxes on the earnings made via crypto trading, thankfully there are widely available websites that track the taxes to be paid and percentages according to the user’s current location.
- Security: Using tools such as VPN and other browser add-ons to make the trading process safe from attacks and hacking attempts is a must for any crypto trader.
Don’ts:
- Bragging: Bragging about Bitcoin Profits and a large number of investments makes a user more susceptible to cyber-attacks and hacks.
- Storing data on an unencrypted or online device.
- Scams: Falling for Pyramid (Ponzi) schemes, phishing, fake wallets, fraudulent ICOs, Multi-level marketing, etc.
- Granting remote access to an unknown person via TeamViewer and other such apps. Third-party clipboards and auto screenshot uploaders also come under such a category.
- Following the masses: Making speculations based on rumors being circulated on social media apps, mainstream media is a big NO. These rumors are circulated by a small group of people in for manipulating the market for their self-benefits.
- The next Bitcoin: There are thousands of different cryptocurrencies right now available in the market, trying to look for the next cryptocurrency that can turn you into a millionaire overnight is a long and risky shot and should be avoided.
- Investing more than can be lost: A user must only invest as much as they can bare to lose, also taking heavy loans from the bank to invest in cryptocurrencies is the biggest mistake a naive person can make.
Conclusion
The large ocean of cryptocurrency trading is full of pleasant opportunities as well as some traps that can lead to huge unbearable losses. One should always trade with farsightedness and utmost security and safety.
