What are the basics one should know before trading?
February 24, 2020
First and foremost, keep logins to your Zipmex account safe. Please don’t share them with anyone, not even our customer support team. Once you are in your Zipmex account turn on two-step authentication in the settings area of your account to ensure you have the highest level of security. Also, read the instructions about the Google Authenticator app in case you lose your phone and can’t gain access to the authentication code to access your Zipmex account.
Before investing, you should research and understand what you are investing in. Never invest in something you don’t fully understand. Also, you should only invest what you can afford to lose as digital assets can be highly volatile.
We also recommend reading this page in full to get a bigger picture of the types of assets you can invest in. Finally, don’t forget to seek sound financial advice from someone qualified if you are unsure.
1. Creating a Digital Assets Wallet
Before you can start trading, you’ll be required to have a wallet by creating an account on your chosen exchange platform. Depending on the exchange platform, you’ll be able to use your credit card or link your bank account to the bitcoin wallet. Just like your physical/regular wallet, your bitcoins will be stored in this digital wallet wherein you’ll be allowed to buy and/or sell bitcoins.
These exchange platforms are simple and convenient to use, and let you track your bitcoins anytime and anywhere. However, you have to choose a credible and trustworthy exchange platform that provides good security and eliminates the risk of hacking. And, unlike bank accounts, your bitcoin wallet is not insured by the Federal Deposit Insurance Corporation nor monitored by a regulatory body, however some exchanges do insure if the exchange happens to get hacked.
At Zipmex we use an institutional custody solution whereby your assets are safely stored and insured up to US$100M by Lloyd’s of London
2. Sticking to a Stop-Loss Plan
You have to determine your goals as to why you’re trading on bitcoin. Don’t let the market pressure you to buy or sell bitcoins. Whenever you enter a trade, make sure you have a stop-loss plan. A stop-loss plan must contain your identified entry price, stop-loss level, and target price.
A Sell Stop-loss is an effective tool to mitigate risk whenever you execute a Sell Order because it marks a certain amount just below the initial buy-in price and lets you know when to pull back from selling. This limits possible loss from your portfolio.
A Buy Stop-loss, on the other hand, informs you whenever your digital assets hits a certain price above your initial buy-in price. This allows you to collect profits and gain in times of volatility.
Engaging in bitcoin trading without a buy/sell stop-loss plan is a sure way for the market to take control of you and take your money before you know it.
3. Using Limit Order to buy/sell at a price you desire
A limit order is an order that you place on the order book with a specific limit price. The limit price is determined by the individual. So when you place a limit order, the trade will only be executed if the market price reaches your limit price. Therefore, you may use limit orders to buy at a lower price or to sell at a higher price than the current market price.
Unlike market orders, where trades are executed instantly at the current market price, limit orders are placed on the order book and are not executed immediately, meaning that you save on fees as a market maker.
4. Staying Updated on the Market through Social Media
Social media platforms like Twitter , Facebook and Reddit are powerful tools to keep up-to-date with the status of your investments on the digital assets market as well as to explore future investments. You can join exclusive bitcoin-related group chats or channels to get real-time updates on the latest news and developments in the market.
Even if you don’t actively chat or comment, you can still learn techniques from more experienced traders by turning on the notification. This way, you’ll immediately know whenever a new post comes up.
Just be smart in choosing which groups or channels to join and make sure to follow only the official Bitcoin social media accounts and key individuals in the market. When you’re up to date, you’ll know whether bitcoin is going up or down and why such happens.
5. Practice Discipline and Self-Control
It’s also essential for you to have a stopper on your emotions and mood swings. Control your emotions and moods when trading, instead of letting your feelings and moods control you. Your mood and physical ailments will make your discipline falter, and you may end up making rash decisions, thereby losing your capital. This is why you should not force yourself to trade if you are feeling unwell, tired, or angry.
Bitcoin is one of the top and most sought after digital assets in the market because of its low number of circulating supply as against the staggering demands and subsequent price surge. Nevertheless, trading in bitcoin can only be truly rewarding if you are armed with the skills, knowledge, and experience to handle the highly volatile digital assets market.
Before starting your journey as a trader, equip yourself with trading strategies, an open mindset, self-control, and discipline. And, of course, only trade what you are willing to lose.