How To Trade Bitcoin And How To Avoid Scams

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Updated: Mar 4, 2019, 13:22 GMT+00:00

Bitcoin is the new darling of the trading industry and everybody wants a piece of it (even a small piece will do) so let’s see how to trade it while avoiding scams – because there are LOTS of scams.

How To Trade Bitcoin And How To Avoid Scams

I remember a few years back: “Bitcoin? What’s that? Ohh, yea, that computer money BS. Come on, spend your time and money on something real”. Ahem… and what are you saying now, huh? Now everybody’s sorry they didn’t spend their time and a bit of money on Bitcoin when it was dirt cheap. Bitcoin is the new darling of the trading industry and everybody wants a piece of it (even a small piece will do) so let’s see how to trade it while avoiding scams – because there are LOTS of scams.

Dabble With The Markets

You must know something right off the bat: trading is very risky and requires skill and a lot of patience. So if you think you’re gonna open an account today and make a profit tomorrow, you are wrong (well, you could be incredibly lucky and then I would be wrong but let’s assume we are all lucky within normal limits). If you are already a trader who has experience with the Forex, or CFD’s, then the transition to cryptocurrency trading will be smoother, with less of a learning curve, but you still have to take a few things into consideration.

For example, the price action of the cryptocurrency markets is not the same as the one you’re used to from the FX world. The price of Bitcoin (BTC/USD) is all over the place, with fluctuations of up to 20% daily in some cases. This is unheard of for a Fiat market. EUR/USD moves 0.25% up or down on average. When you have a 1% change, you know something major is happening. Compare this with 20% and you realize how risky it can be to trade cryptos as opposed to fiat.

Also, some crypto markets have incredibly low volume and this means that a sudden capital infusion can create huge jumps and spikes. That’s why low volume markets are especially ripe for Pump-And-Dump scams. Of course, the Bitcoin market is huge in volume, so you are safe from pump-and-dumps but be careful if you’re trading low volume markets or unknown altcoins.

The Scammers Are Lurking: Trading Robots, ICOs And So Much More

There are scammers in the crypto space and that’s a given. Not “maybe”, not “possibly”; it’s a certainty. Knowing this, you can prepare for the worst and hope for the best. Maybe you should assume that everything is a scam… OK, that’s probably too radical but let me give you an example: The Bitcoin Trader is a software that claims to make you the first million within just 61 days by predicting the Bitcoin market with 99.4% accuracy. It is also given away for free to anyone who wants it. Do you want to be a millionaire? BOOM! You’re a millionaire. As simple as that.

If this Bitcoin Trader robot is not a scam, I don’t know what is. This is blatant but there are others, harder to spot, like the many ICOs that appear like mushrooms after the rain. Some are legit, but many are pure scam. I know they may sound appealing, with all the coin bonuses and marketing sweet-talk but that’s all there is: marketing. Many of the ICOs don’t even have a solid team with verifiable credentials behind them and their only purpose is to cash in during the pre-sale and sale, then disappear into the sunset, abandoning the project and all means of communication. All the above are a big reason for Google to ban Bitcoin ads.

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Do Your Homework And Stay Safe

Although it’s very appealing to just jump in and trade Bitcoin, please just take a moment to think about it. I am not saying you should stay away from cryptos – no way! – I am just saying that you need to think things through and always, always question what you hear online. If some random guy in a chat room says without solid arguments that it’s a good idea to buy something, it’s probably better to stay away.