Last Updated on January 4, 2021
Are you planning to invest in cryptocurrencies?
You’ve all heard stories of life-changing money that’s made in the crypto space. With this, it’s tempting to leave your job to become a professional crypto trader.
However, don’t be in a hurry to quit your job to trade in Bitcoin. Take time and understand the basic rules of trading and minimizing risks.
If you don’t prepare, your trade comes tumbling down. You’ll lose your money and join others in asking, ‘why is Bitcoin trading hard?’
Like in any business, there’s a chance that your bitcoin trade will flourish or fail. At least 95 percent of all traders who venture into this industry fail.
In most cases, the traders run entirely broke.
Contrary to popular belief, trading in bitcoin is the most complex undertaking for beginners. Here are the reasons why:
The Casinos Are Always Open
Bitcoin trading is done online. Therefore, the market doesn’t close.
With this, you’ll have a feeling that you should always be trading: the results, tremendous fatigue, and the fear of missing out on valuable offers.
As a trader, you cannot keep track of any market that’s always available. As such, it’s quite tricky for beginners to step away from the market.
The habit ruins your finances and personal lives unless you figure out a way to control your desire to trade.
Lack of Clear Fundamentals
Clear rules and regulations form the cornerstone of any trading market. Unfortunately, the bitcoin market lacks these fundamentals.
For instance, when buying stock, you can review sales reports or quarterly earnings. As such, you have many different barometers to use in determining whether you’re making the right decision or not.
Even better, companies trading in forex markets are highly regulated. As such, they ensure a transparent undertaking. As such, you know the assets you’re buying and their corresponding costs.
However, the strength of the bitcoin project is irrelevant to your needs. Instead, you’ll focus on technical analysis to make your decisions. Most newcomers in the market can’t use these tactics properly.
With bitcoin trading, you’re uncertain about whether you’re buying small bits of computer codes. Alternatively, you may be purchasing the wrong idea on what these bits and codes are.
Lack of Expert Advice
Yes, there are successful bitcoin traders on social media. But most of these traders are ever busy to share ideas and advise new beginners.
Unfortunately, most beginners are learning tips from other beginners in the market. As such, new traders are relying on strangers and greenhorns for advice on the crypto market.
Nothing is worse than spending your money on avatars who are manipulating you for their own gain. Don’t base your financial decision on someone who’ll not deal with results.
Low Bitcoin Balances
The interplay between altcoins and bitcoin presents a complicated wrinkle. But why?
Alts aren’t safe to trade-in. Getting an opportunity requires experience and patience. Unfortunately, beginners inherently lack these two traits.
In most cases, beginners gauge their success on the USD value of a coin. However, leaving your capital in bitcoin form is far more comfortable and profitable.
On the other side, trading in legacy markets using fiat money is straightforward. In this case, you either lose or make money.
Immunity from Fraud and Hacking
The value of bitcoin is increasing since its launch years ago. The rise makes exchanges a prime target for hackers. Therefore, hacking these sites is quite lucrative.
According to FBI reports, $28 million worth of losses were recorded in 2016. Don’t forget; this is what was reported to the authorities.
Money launderers can’t email FBI and report hacking cases. In simple terms, no one knows the actual money that’s lost to hacking.
But the sad part is, money lost through hacking is irrecoverable.
Setting up Stop Loss
A legacy trader has the benefit of placing profit orders and stop losses. As such, trade requires less management and babysitting.
However, crypto exchanges don’t have a full breadth of orders to manage risks. It’s even worse in a market that doesn’t close.
If you check, experienced crypto traders will share the devastating results with a stop loss. In most cases, they lose a considerable pump because of protecting their downside with a stop loss. It’s even worse when they don’t sell orders at their set targets.
As a trader, you shouldn’t have to choose between managing risk and taking profit.
The Get Rich Mentality
In stock markets, traders know it’s not a get rich quick scheme. However, most people consider trading in bitcoin as an opportunity to get rich. Well, this is very unrealistic.
People who get rich trading bitcoin are mostly lucky, not excellent. Plus, there’s a difference between being rich on paper and in real life. Most of these traders fail to sell at the top, forcing their wealth paper to disappear as quickly as they made it.
No Legitimate Exchange of Value
Bitcoin has been around for eight years. But despite this, it’s only used for speculation.
Despite being in the market for eight years, currency transaction volume is still low. If you’re looking at bitcoin trade to make quick money, you’re mistaken. It seldom happens.
Bitcoin is Not Free
As a trader, you acquire bitcoin through mining.
However, as a miner, you expect a fee for work done. Plus, they don’t process transactions unless they’re paid.
As such, the mining costs pass down to the end-user. Don’t expect any free lunch, even in the bitcoin industry.
Bitcoin is the popular cryptocurrency in the market. Despite this, don’t be in a hurry to invest in the trade. Take time and understand how the financial asset works. That’s the only way to sail through in this market.
Also, make sure you’re trading with a competent broker. Assess their skills and reputation in the trade. For instance, how many clients can vouch for their service?
Having a professional broker ensures you get value on your investment.