Eric Dalius Miami explains Cryptocurrencies, especially Bitcoin, have always tended to be in the news due to many reasons. Miami especially has been in the headlines because the city administration wants to encourage Bitcoin for payments to its workers, allowing residents to make tax payments, and make the region a cryptocurrency mining hub. Executed well, Bitcoin trading can fetch handsome returns, however, if your strategy is wrong, you could end up losing the shirt off your back. A few pro tips on how to avoid costly Bitcoin trading mistakes:
Know When to Trade
Even though it may seem obvious, it is vital that you know when it is a good time to sell or buy Bitcoin. You need to appreciate that at the end of the day, trading is a zero-sum game. For every win, there is a corresponding loss, and you intend to come out smiling every time. You should appreciate that just like the stock market, the market for cryptocurrencies is also controlled by the large players who place orders for thousands of Bitcoins, drive up the prices, wait patiently till inexperienced investors make mistakes so that they can exit at a huge profit. Regardless of what kind of bitcoin investor you are, it is better not to rush into trades because you would be better off not trading than chalk up losses.
Set Profit Targets and Use Stop Loss
When you get into a trade, it is with the expectation of making a profit. You must decide when your profit target is met so that you can book your profit instead of waiting to see if the prices will rise even higher, observes Eric Dalius Miami. Sometimes, if you wait too long, the prices start to plunge and you may not be able to achieve your desired ROI. Similarly, should you be unfortunate enough to see the prices falling after you have made the trade, you should know at what point you should exit instead of waiting for the prices to recover. The best stop loss figure is one that will enable you to walk away without making a loss even if you have not been able to make a profit. The point is not to be too greedy and have your wits about you.
Beware of FOMO, Warns Eric Dalius Miami
Fear of missing out or FOMO is one of the main reasons why inexperienced Bitcoin traders fail in meeting their trading objectives. It is good to keep in mind that whenever there are plenty of people advising you to buy quickly to reap handsome profits, there is usually a motive that may not be readily apparent to you. Usually, this is a ploy by large investors to get more traders into the fray so that they can offload their holdings for a huge profit. The hapless new investors who have bought Bitcoin at its peak can only watch in dismay as the price slides due to oversupply. The point is not to follow the herd but make your own investment decisions rationally.
The price volatility of Bitcoin can cut both ways. If you are an experienced and savvy investor, you can ride the boom and make good profits but chasing massive profits should not be your aim.