Did you know that trading bitcoin is an easy way to generate income?
Many people are starting to trade bitcoins because of how speculative it is. The idea that cryptocurrency can replace modern currencies is something that many can get behind, so bitcoin constantly sees jumps in value.
Before you start using bitcoin stocks, you must know several things. Because bitcoin comes with many risks, you’ll need to spend time learning about crypto and finding a decent platform that has everything you need.
Fortunately, we’ll cover all the main things about bitcoin stocks you should know. This will ensure you can quickly start earning profits.
Read on to learn everything you need to know about trading bitcoin!
Bitcoin Is Extremely Volatile
One of the realizations that many traders have when that start investing in bitcoin is that it’s extremely volatile.
The problem with investing in bitcoin is that you essentially “hope” it goes up. While this can be said for anything else, bitcoin’s value isn’t based on anything other than speculation.
If you invest in a stock, you know that the value will increase if the company performs well. However, bitcoin’s value doesn’t rely on anything like this because it still hasn’t made its way into mainstream use.
As bitcoin becomes an accepted form of payment in more locations, the value will most likely increase. For now, all it takes to change the value is a Twitter bio from Elon Musk.
This type of volatility is extremely dangerous for new investors, so it’s something to keep in mind when you put your money into it. However, if you’re looking to gamble, bitcoin may be for you.
One of the benefits of trading bitcoin is that can buy and sell it on most trading platforms. Because bitcoin has made its way into everyday conversation, the largest platforms have started allowing traders to invest in it. The only downside is that you may have to apply for cryptocurrency trading depending on the platform you use.
If you use platforms like Robinhood, Webull, and Fidelity, you can get involved in bitcoin trading while also investing in stocks. Having this ability makes it much easier to manage your investments because going through several platforms can make things confusing.
Aside from stock trading platforms, you’ll find bitcoin on all of the largest crypto platforms. Coinbase and Kudocoin are some of the most notable, but you can find a plethora of platforms.
If you’re interested in using bitcoin as cash, you can find the best bitcoin ATM in your area to withdraw funds in minutes. This is a new service, so expect more ATMs to become available in the near future.
You Should Stay Informed
When investing in anything, especially bitcoin, you must stay informed. We don’t mean that you should check the news once a day. Instead, you should be checking it several times throughout the day.
Because bitcoin can swing in one direction in the blink of an eye, you must follow notable bitcoin investors and events to ensure you don’t miss anything. Should something happen that causes bitcoin to plummet, there won’t be anything you can do about it.
Start following people on social media that focus on cryptocurrencies and turn on notifications. The more information you read about bitcoin, the less likely you’ll lose money.
Protect Your Portfolio by Diversifying
Understanding how to trade bitcoin isn’t difficult, but you should diversify your portfolio to avoid losing all your money. If bitcoin were to plummet 20%, you could take a minor hit by having a diverse portfolio instead of losing 20% of it.
Investing in bitcoin stocks is most effective when you also have money in companies. Keep in mind that bitcoin is a cryptocurrency, so you’re not investing in a company. Because of this, your cryptocurrencies should take up a small portion of your portfolio.
Unlike investing in companies, cryptocurrencies often fall or rise together. If you lose money in bitcoin, you’ll most likely lose money in dogecoin, ethereum, and other cryptocurrencies.
The Pattern Day Trader Rule Doesn’t Apply to Bitcoin
Aside from volatility, another thing that surprises new traders is the pattern day trader rule. This prevents traders from making more than four day trades within five days if they don’t have more than $25,000 in their cash accounts.
When trading bitcoin, this rule won’t apply to you because it’s an unregulated market. The crypto market also never closes, so you won’t have to worry about waking up at a certain time to get trades in.
If you’re looking to day trade bitcoin using a stock trading platform, the PDT rule will only apply when you’re day trading stocks. However, when the PDT block happens, you can continue day trading bitcoin. The only thing you won’t have access to is stock day trading.
Start Using Bitcoin to Make Money
Now that you have a better understanding of how to trade bitcoin, the only thing you need to do is start buying it. When using bitcoin, just ensure that you’re paying attention to everything going on. Provided that you’re informed, you shouldn’t have a problem buying and selling at the right times.
We encourage you to start looking into various platforms before trading bitcoin. If you find a decent stock trading platform that offers bitcoin, you’ll have an easier time managing your portfolio. However, you can always transfer your bitcoin to another platform if you’d like.
To learn more about how to use bitcoin, check out our other articles!