What is your Bitcoin earnings history
Shares, ETF, foreign exchange, cryptocurrency, social trading - here is a small list of a few learnings that have cost me money, but which are so simple that you should know them! Do you want to buy stocks, index funds, cryptocurrencies like Bitcoin or Ethereum, foreign exchange (currencies)? Are you considering a house bank, direct bank, online broker or trading app? Trading entirely at risk or new options such as social trading via app? My experiences and mistakes, a little insight!
Experiences and mistakes in retail - foreword
Important: I am not a financial trader and have no training in this area. I am an entrepreneur and I invest part of the profits in financial products. The article is therefore for beginners, beginners, beginners: financial trading simply explained.
Here I am only collecting simple, basic experiences for you.
That was expensive! First share purchase, Bitcoin & Co.
How did I have this experience? First I set up a virtual account, here you can practice, test and gain experience with virtual money. Then I wanted to look at all the apps, in 48 hours, the extreme comparison as an entrepreneur, so to speak. I lost money in the process. 1,500 euros on the first day, 3,200 euros on the second day. But, I've also gained a lot of experience.
I've been active since the beginning of 2019 and here are a few of the tips that you should definitely take a look at before you buy your first share, your first Bitcoin, your first ETF product, etc.
These tips will save you money, time and, above all, nerves!
Especially at the beginning I sat cursing in front of the notebook, cursing in front of the app, depressed in front of the screen - that has to be done! If financial products were that simple, everyone could.
Trading: stocks, currencies and apps
If you want to read even more tips, you will find many more articles on the blog, such as:
Trade only with play money
Definitely the A&O: risk awareness. To keep your risk as low as possible, only ever trade with money that you “don't need”. Regardless of currency, share, ETF, for 99.99% of investors it is not about ultra-short-term profits every hour, but about short-term to long-term, strategic investments.
When you have a small first fortune to invest, there are many, many avenues open to you. In this article and others, we focus primarily on explaining:
- Share: company
- ETF / Index: Industry
- Currency / foreign exchange: economic regions
- Cryptocurrency: digital currency
Everything is subject to the principle:
Demand / supply
This means that not only “hard” factors play a role, such as the concrete economic performance in figures according to the balance sheet, psychology also plays a major role.
Example: car manufacturer closes factories for 3 weeks
I had just invested a five-digit amount in Tesla. Just before Christmas time.
Overnight, an email was sent to all employees of the company that the plants would be closed for another 3 weeks after the regular break. In the morning the course was still stable, I hadn't paid any attention to the news.
2 hours later the course fell and fell and fell. News (what's new) is an extremely important factor in stock trading. Accordingly:
Respectively the risk
Course history: -10% in the morning
Always invest your money "long-term", mentally. If you panic now and sell, you immediately make a minus. So trading also includes “trust” and as I said, a lot of psychology. Ultimately, “the market” is just a lot of people who make decisions. The algorithms in high-speed trading are also written by people who make decisions.
Here you can see the example of the auto industry with course history.
Of course, like everyone else, with every deal I thought: "Great, bought cheap". After the first jump I was very happy, but then I was sobered again and a few days later the course collapsed by 10% in the morning.
Do you think now in the short term:
"Short-term": Oh my god! Crap, -10%
Or do you think long term. Let's just look at this chart with 5 days in history. If you just look at this one morning, it looks bad. But consider the entire 5-day course, starting at round about 630 to currently 645.
"Long-term": Buy with perspective
It's just a small, very simple example, but important for you:
Always buy with perspective, do not react hectically to short-term movements in the market.
Opening times of the exchange
Take the New York Stock Exchange as an example.
I noticed the fall of a stock too late (time difference). When I was about to sell, the New York Stock Exchange was already closed. That means I have to wait the entire weekend to get my capital free again. I can't sell again until Monday morning.
Always think about the opening times of the stock exchanges
Hours of Operation: New York Stock Exchange / NASDAQ
The New York Stock Exchange is open 5 days a week, Monday through Friday.
- CET (USA): 9:30 a.m. to 4:00 p.m.
- MET (Europe): 3:30 p.m. to 10:00 p.m.
Stop Lose / Take Profit: Automate
Execute Trades Alone? This is a 24-hour job if you want to trade financial products professionally.
Before we get to "Take Profit on '9", let's first take a look at the method:
Buy cheap, sell high
Because you cannot sit in front of the app 24 hours, 7 days a week to wait for the perfect time to sell, there are SL (Stop Lose) and TP (Take Profit).
Stop Lose: minimize losses
Let's say you invest in a stock. Since Wirecard we have all known that it can also go down quickly and very clearly, especially for “normal” systems that do not have the news and insiders constantly in view.
Stop Lose (SL) is a downward limit. You can say, for example, that I have invested 10,000 euros, if this single trade is worth less than 6,000 euros, sell this position. It also goes up. Here is another tip, TP on 9 ′
You will learn what that means in a moment.
Profit taking: setting to full amount / you -100
If you set yourself a TP (Take Profit), you often go to the full number, for example 24,000. Larger traders often drop out shortly beforehand and suddenly the price goes into the basement and you have to wait a long time until the price is at its old level.
I will go into this graph later. But here you can already see the principle. I traded the Bitcoin here. Now imagine that you still take small jumps with you between buying / selling during the time. It's not worth it with 1,000 euros in retail, but if you invest 100,000 and take 2.4% with you, you have 2,400 euros in profit. If the price falls after that and you buy something cheaper minus the spread, perfect. You will learn more about the spread (profit of the platform) in a moment.
The spread (i.e. profit) for the dealer is 200 euros or ~ 1%. With this shorter-term trade, you would have made ~ 1.4% net profit after a new purchase.
5% wealth accumulation in one day.
If you take this action on day 2, 3, you have already got 5% wealth growth out, in one day.
Earlier exit: sale before peak
What should "Take Profit on '9" tell you?
Take Profit means you plan your sale in advance. Let's say you buy for 20,000, plan to sell at 24,000, then set your TP to 24,000. Your bank, software, app then sells automatically as soon as the price reaches the TP of 24,000.
Conversely, this means - keyword "psychology in the stock market", also crypto & Co. - even if traders have already dealt with the TP, which very few actively do, then the following can happen:
You have set a sell point, but traders in front of you, in the relevant volume, go out at 23,900, then the price will not reach 24,000, at least not in the targeted period. The price drops and does not reach 24,000. So your package is not being sold.
That's why it's worth it for some trades if you set your setting like this:
- Take Profit (many traders): 24,000
- Your TP: 23,900
Now comes the advantage when you are not alone - and you will often notice this effect. The advantage, if the price drops at 23,900, for example to 23,100, you can already buy a new package. If you jump to 24,000, you make double the profit.
Spread: This is what the trader earns from
Often you hear:
"Trade Bitcoin or Stocks for Free"
What is true is that there is no extra charge. For example, one-time +10 euros on each trade. But you always pay a spread (margin between buy / sell), the platforms live on it.
Example: cryptocurrency spread
PS: Spread is the profit traders take away. Example from etoro:
- Bitcoin rate: 23,189
- Sell Bitcoin: 23,189
- Buy bitcoin: 23,364 (+ 0.9925%)
The spread (i.e. profit) for the dealer is 200 euros or ~ 1%.
With this shorter-term trade, you would have made ~ 1.4% net profit after a new purchase.
Example: Spread on foreign exchange
In forex trading, for example with the metatrader app, you don't pay ~ 1%, but ~ 0.1%
Leverage effect explained
For example, I myself initially lost a lot of money because I didn't notice the X20 at a new broker - tip: take your time trading - silver then slumped by a few%. I noticed the collapse of the silver price on the edge, thought ok, it's only a few hundred euros. Not quite, it was a few hundred euros x 20. That was within a few hours.
What does leverage mean in financial products?
Leverage means increased capital / risk.
You can use leverage in trading apps and brokers for pretty much all products. Simply put, a short term loan from the broker. This increases the profits and (!) The risk. You give $ 1,000, take a leverage of 10 and have tied up $ 10,000 in capital.
X10 = out of 5,000 you make 50,000
Examples of leverage:
|5.000 $||1: 1 / X1||5.000 $|
|5.000 $||1: 2 / X2||10.000 $|
|5.000 $||1: 5 / X5||25.000 $|
|5.000 $||1:10 / X10||50.000 $|
|5.000 $||1:20 / X20||100.000 $|
|5.000 $||1:30 / X30||150.000 $|
What is cryptocurrency like bitcoin?
I don't want to use any technical terms like “block chain”, etc. Simply explained: Crypto currencies are like raw materials, for example gold as a precious metal. There is a finite amount of XY on earth.
Already knew? There are only 21 million bitcoins
In theory, gold is worthless, but because people attach value to gold, it has value. The more people use this investment opportunity, the higher the price will rise. Bitcoin almost the same. There are a certain number and the more you invest, the higher the price rises. If people sell their shares, if they do not trust the further price growth, the price will fall again.
Fast and speculative.
- There is a fixed number of bitcoins
- Higher, faster wins / losses
- A lot of psychology, little news analysis
- Trading is possible 7 days a week
Higher frequency means more profit / loss
So of course you make “only” 1x profit. If you take the profit "more often" with you, you can increase the profit within the period.
Method / strategy in trading
You buy when the price is low and you sell when the price is next high.
Sounds easy, but many buy a financial product at the beginning and just keep it. This saves you a lot of nerves, short-term trading increases the profit.
For example, when I was trading my first bitcoins, I kept selling and buying from time to time. So I can take small profits with me and then reinvest when the price is cheaper again. PS: In the hope that it will be cheaper.
My highlight was the high of 24,000 just before December 24th. My last active day of trading. Since then I've been focusing more on social trading, which is what you will learn here: Social Trading.
Price slump, price gain: high at $ 23,900
What a thriller! After a long trade, the day came when I wanted to sell. I walked through the city for 2 hours with my app - of course, sales were already set, it was more of an emotional presence!
It also went up again, as you can see in the graphic here. The Bitcoin rate is shown here in euros. The method is as follows: You buy when the price is low and sell when the price is next high.
An important, important basis in trading financial products. The shorter and more extreme the periods, the higher the profit, but also the risk of trading.
- 2 additional purchases in 2 days
- 2 immediate sales
Graphic in euros:
Crypto trading? A full-time job
I can tell you: If you don't want to deal intensively and constantly with your investments, don't invest your money in cryptocurrency. But if you do, be there, as seen in the example above, the course does not jump over weeks, but in a few seconds and often several times a day.
Tip! Invest for the long term. There are 21 million bitcoins, so as long as people invest, its value increases. The skeptics of the first Bitcoin years have long since fallen silent. Buy, hold ... hold. The rate could have doubled again in 2 or 3 years.
Cryptocurrency Strategies: 3 Investor Tips
Cryptocurrency Strategies (Buy & Sell) - Whether it's cryptocurrency, currency trading, stocks, commodities or precious metals, these 3 strategies will help you understand the basic stock market game. I have developed these 3 strategies so that beginners and beginners understand the mechanisms in a nutshell. Since I grew up with Bitcoin rather than stocks, here in particular a strong reference to digital currencies. The mechanisms and strategies are the same for these 5 types of investments: Cryto currency, currency trading, stocks, commodities or precious metals. I would exclude ETFs and index funds here, as the risks and price fluctuations are significantly lower here.
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