In this section we will outline some of the basic concepts of Bitcoin investing. We will demonstrate the differences between long-term, and short-term investing. We will also online general concepts that are essential for any Bitcoin trader. By reading this section, you will gain a solid understanding of the basic trends of the Bitcoin market, which should you help you develop your own trading strategies.
Bitcoins are often referred to as BTC on financial markets. This is similar to a currency’s symbol, or a stock’s “ticker”. For example, the U.S. dollar is often referred to as “USD”, and Ford Motor’s stock uses the symbol of “F” on stock exchanges. So if you see the term “BTC”, either in this book or elsewhere, it is most likely referring to Bitcoin.
Understanding risk is essential for any investor in any investment type. Not only is there risk in regards to losses on investments, but if you invest too late or at the wrong time, you could lose a chance to make huge returns. Being cautious is generally a good idea, but if you are too cautious you might miss out on some great opportunities. First, however, let’s go over a few important concepts.
Buying and Selling Bitcoins
Investing centers around the buying and selling of an asset, in this case Bitcoins. The basic premise is simple, buy Bitcoins while they prices are low, sell Bitcoins while prices are high. In an ideal world you will buy Bitcoins when prices have bottomed out, or hit as low of a price as it will go, and sell Bitcoins when prices “peak”, or have reached a price as high as it will go before declining. This concept is what people are referring to when they say “buy low, sell high.”
Stock markets can be heavily influenced by “psychological” factors, so often prices will rapidly rise and fall. This creates opportunities for investors. By figuring out when prices will rise or will fall, a savvy investor can maximize his or her profits off of trading. Of course, actually predicting when prices will rise or fall is not an easy task and there is always a lot of uncertainty.