Bitcoin: Bitcoin for Beginners (Cryptocurrency Book 2) by FinTech Publishing

Author:FinTech Publishing
Language: eng
Format: azw3
Published: 2017-07-21T07:00:00+00:00

Manage your risk

Whether investing, trading, or gambling with bitcoins, you need to manage your risk. Take note that these options will give you a higher rate of return than keeping your money in a bank. However, in exchange for the potential high return, there is also a risk of losing your money. Such risk is in the heart of any profitable investment. So, how do you manage this risk?

Have a plan

Even before you but any bitcoin, you should have a complete plan on what you want to do with bitcoin. Part of this plan is to set your goals. What are you going to do with the bitcoin? How much profit do you want to make? How do you intend to reach your expected profit? Of course, you need to research the market and the viability of your strategy. Although plans always have a good objective, you must keep your plan as practical as possible.

Stay conservative

You must keep your computations as conservative as possible. Just because bitcoin experiences a massive surge in price does not automatically mean that the same thing will happen again. In fact, there is also the possibility that its price may drop down in the future. It is hard even to make an estimate of how bitcoin’s price will change. When you do your own computations, it is strongly advised that you keep them as conservative as possible. For example, instead of assuming that bitcoin’s price will increase by 15% in one week, you should also be ready when its price only increases by 7% in the next two weeks. The key here is to be prepared for a worse scenario.

Get as much information as you can

When dealing with bitcoin, the thing that can leverage your position is the amount and quality of information that you have. The more information that you know about bitcoin, the better you will be able to predict its direction in the market. Of course, if you know the direction that the bitcoin will take, you can easily come up with the right investment decisions. For example, if you know that the price of bitcoin will shoot up, then you can buy a bitcoin today so that you can sell it for profit in the near future. If you are able to identify the time when the price of bitcoin will drop significantly, then you can sell your bitcoins before the price drop. By knowing how the bitcoin’s price will change, you will also know how to make a good profit from the changes.

Work on your strategy

The best way to manage your risk is to minimize your possible losses. After all, your risk is only the amount of losses that you may experience. But, how do you do this? The best way to minimize your possible losses is by having a strategy. Regardless whether you are an investor, trader, or gambler, you must develop a strategy that can minimize your risk and turn the odds in your favor.

Focus on small gains

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