How to make money with Bitcoin: The most effective methods
Today, a lot of people talk about Bitcoin. Almost all of us understand what opportunities cryptocurrency gives. But when we try to trade this cryptocurrency, we often experience losses. Why does this happen? The main reason for this is a lack of understanding of the basic principles and strategies of earning money with Bitcoin. Let’s talk about them in detail.
How to earn money?
The main method of earning money with Bitcoin is trading. There are a lot of other methods, and we are going to talk about them, but let’s do it later. Trading is the most important part of this. An average person thinks that this is a type of casino. The reason why people think this is understandable. Bitcoin is a very volatile token.
Any event can significantly change the price of the coin. For example, when the Chinese government had talked about supporting Bitcoin, the price grew up to 40 percent. Many people were able to earn a lot of money at that moment.
Despite the uniqueness of cryptocurrency, the basic principles of trading are the same as with the stock market. You can use technical and fundamental analysis to understand the main tendency of a certain cryptocurrency and predict the direction of its price change.
The main risk is in lack of regulation. Due to this, anyone can change the prices manually, and you need to find reliable exchanges if you want to make a profit with Bitcoin.
How to start?
If you want to earn money with Bitcoin, you need to start from understanding the main principles:
- Don’t think about profit at the start because you need to ensure that your money is protected, and you won’t lose them after one or two orders.
- You need to create a trading strategy if you want to make a profit. You need to understand the financial asset (Bitcoin isn’t the only cryptocurrency, and you’d better trade different tokens to diversify your investment portfolio).
- Then, you need to understand the price when you would close an order with profit or losses. You’d better not wait for a better situation and exit the market when the price reaches a certain level. It is called take-profit and stop-loss.
- Analyze the history.
- Wait long enough for the currency to hit its lowest point possible, and buy it as securely as possible.
You can find tons of opportunities to do so. The first is to put money in your personal cryptocurrency wallet, which is the securest place for your crypto. Also, you can use an exchange to convert your fiat money to BTC and leave your money there. The third method is to create your account on an electronic payment system supporting cryptocurrency. Every one of these options has its own advantages and disadvantages, and no one can say what is best in your situation. Only you can decide.
In general, the safest method is your personal wallet but the most convenient is your wallet on the base of the exchange where you trade BTC. You can keep most of your money in your personal wallet and transfer a small part of it to your exchange wallet. It connects all advantages of every option.
You should divide your equity into several parts. If you trade all the money you have, you can lose a lot of money and opportunities. Also, some money is frozen and can’t be used for other profitable operations.
In addition, we recommend you use stop-loss orders. The principle of their work is as follows: you set a level at which the order closes automatically. You don’t need to analyze the market situation every second because using one simple tool is enough to protect your deposit from very big losses if the situation is dramatic. Also, it protects you from emotions because you don’t want to make irrational decisions when you see that the price becomes lower and lower.
There are 7 simple steps to prepare for real trading:
- Know more about the asset you trade. Read about Bitcoin, look at the diagram of price changes. Try to find any patterns using technical analysis because they can repeat in some time.
- Know more about the features of your trading platform and look at your exchange website and mobile application.
- Explore the available methods of market analysis and choose the most suitable for you.
- Create a trading strategy.
- Learn how to create a trading plan. Use a trader diary to find trading mistakes on time.
- Learn how to manage your deposit correctly and how to reduce risks.
- Explore automated trading systems and other tools and be disciplined. Also, remember that the trading result is totally your responsibility.
The last piece of advice is especially important for BTC trading. People who don’t have trading experience, try to find help, ask for advice on the social network channels. Some of them are correct but significantly more often they are incorrect. Their authors aren’t responsible for their ideas and your misfortune.
You need to think about what to do if the price of Bitcoin grows or falls. In these moments, traders are often under their emotions and can act impulsively.
It’s good to always have a strategy of what to do when something unexpected happens on the market. Fixing the winnings and losses is one thing of getting out of tough situations.
There are three main rules for any trader:
- Forget about scalping, especially if you are a beginner. You need to buy cryptocurrency and keep it in your wallet until the price goes up.
- Follow the risk-management rules responsibly. Don’t risk more than two percent of your equity.
- Try to keep a profitable order as long as you can, but don’t forget to bail if the cost doesn’t cease to continually drop. Fix the cost and wait for another opening.
When to start?
2020 saw the sharp rise of BTC in value, and it’s projected to grow even more throughout 2021. That said, it’s not a promise at all – crypto has never been reliably predictable. But if you’re able to catch the moment when BTC loses some of its value – go for it. The market will grow afterwards, and it’ll be way easier for you to understand the intricacies in this favorable environment.
When the cryptocurrency price becomes lower, it isn’t a reason to panic. This is a great opportunity to buy it, wait for the moment when it will cost more and sell it. It is dangerous to be in the falling market, but if you are in a wave, it can make you very rich.
What other methods are there to become rich with Bitcoin?
It is by far most lucrative to invest into Bitcoin and otherwise speculate on its price. But it’s not the only way to accumulate profit off of crypto:
- You can charge crypto in exchange for services of all kinds. They could be in form of texts, videos or whatever else you can think of.
- Today, this sphere is profitable only for people who invest a significant amount of money because very powerful devices are required to mine Bitcoin. At the same time, you can make additional income with your computer if you join a cryptocurrency pool.
- BTC cranes. These are not as profitable but are an easy method to create a Bitcoin income.
- Buying and holding.
- Affiliate marketing.
- Completing tasks for Bitcoin and other methods of accepting Bitcoin as a payment method.
- Micro jobs websites.
- Writing articles about Bitcoin.
- Participating in paid forums.
- Binary options.
- Being a masternode.
- Creating your personal Bitcoin fork.
- Fixing BTC bugs.
- Creating BTC games and applications.
- Creating a cryptocurrency infrastructure.
- Investing in different Bitcoin projects.
You can use all methods you want.