2024 Bitcoin Purchase Tutorial: A Manual for Newcomers
Bitcoin has become what can only be described as digital gold for both first-time and seasoned investors. Having Bitcoin in your investment portfolio can no longer be seen as a speculative risk. Instead, it is viewed as a solid investment strategy. Since its launch in 2009, Bitcoin has changed the way many people think about investment.
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With its solid foundation, Bitcoin remains the most sought-after digital commodity in the market. Newcomers and experts in Bitcoin trading use the Paybis Bitcoin wallet to keep track of their lucrative investment portfolios, specifically when diversifying across multiple fields.
Timing Considerations: Optimal Moments to Invest
Bitcoin thrust the crypto market into the spotlight and has been the industry leader for many years. As with any other investment, Bitcoin has hit its highs and lows. So, is this the right time to buy Bitcoin? The short answer is that depending on which strategy you choose for your investment, there is always the right time to enter the market.
Knowing which strategy works best for you is the key to making the most out of your investment. While trading works for some, HODling has paid off for others. To understand which strategy will bring you the highest returns, you need to know what you want from your investment. Do you want quick results, or will you wait it out?
Trading
As with other financial assets and currencies, Bitcoin is affected by market volatility. If you are looking to trade Bitcoin, you need to know what the markets are doing all the time. When the price of Bitcoin goes down, so will your investment. Knowing when to sell and buy is vital for your Bitcoin strategy.
You can engage in different types of trading depending on your capital and experience. It can be day trading, swing trading, scalping, or others.
Dollar Cost Averaging (DCA)
Dollar-cost averaging (DCA) is an intelligent investment method you can use when you don’t have time to watch markets constantly. The strategy involves buying assets such as Bitcoin consistently over some time rather than a lump sum at a particular point. This increases the chances of investment growth over a more extended period and makes the losses less dramatic, if any.
HODLing (Long-Term Holding)
Long-term holding or HODling is a strategy that sees investors leverage time to exploit the market. Buying Bitcoin today and selling it next week may yield a small profit, but holding on to the cryptocurrency for a few years could lead to much more significant gains.
Finding the Right Exchange
Whether you buy cryptocurrency to keep or trade, you must use a crypto exchange. Crypto exchanges are trading platforms that facilitate transactions in cryptocurrency. The exchanges take the form of either a decentralized exchange (DEX) or a centralized exchange (CEX).
Decentralized Exchange (DEX)
DEX is a peer-to-peer marketplace with exchanges through the blockchain. These platforms do not ask for your personal information and do not require you to create an account. This way, they preserve the user’s anonymity and the security of their funds.
Among the most well-known DEX platforms are:
- OKX
- Uniswap
- Bancor
Centralized Exchanges (CEX)
CEX is a business that facilitates the trade of cryptocurrency between two parties by acting as a broker. In order to perform an exchange on a centralized platform, you need to register an account and go through a Know Your Customer (KYC) process to validate your identity. This type of exchange is more suitable for beginner crypto enthusiasts, as most of the legwork is being done for you; however, it also means more vulnerability for your funds.
Three of the best-known CEX exchanges are:
- Binance
- Coinbase
- Paybis
Understanding Order Types
Once you find the best investment strategy and choose the suitable exchange to perform your transactions, you must place your first order. An order is an instruction on the blockchain to buy or sell a coin. Orders take various forms.
- Market order: These are instructions given on the blockchain to sell or buy cryptocurrency at the right price. The execution of this order is instantaneous; therefore, market orders are widely considered the simplest type of crypto order.
- Limit order: Through these orders, an instruction is given only to buy or sell when a specific currency reaches a particular target price. These orders are perfect for traders who can sit back and wait for their coins to reach their optimum price.
- Stop order: A stop order is only triggered when the set price has been reached. While the market can see a limit order, stop orders remain hidden until the target price has been reached.
- Stop limit order: These minimize the risk for a trader but cannot be executed immediately. Stop limit orders grant the trader flexibility to sell when the currency’s price gets high enough or buy when a selected currency reaches the preset target price.
- Stop loss order: This order automatically closes at a predetermined position should a currency fall and is used as a loss mitigation strategy.
You choose the type of order that corresponds to your needs and start purchasing those bitcoins when the time is right!
Conclusion
Bitcoin will always be an excellent investment opportunity. With the right strategy, a little know-how, and a suitable exchange, cryptocurrency investment can be possible for anyone. The market’s volatility makes cryptocurrency a valuable asset in any investment portfolio.
To get started, select the cryptocurrency best suited for your portfolio. Then, you must decide whether to trade on a DEX or CEX exchange. Finally, determine whether you want to place your order on the market and whether you will place stops and limits on your order.
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