I’m no serious trader, I’ve been trading Bitcoin for about a year now but I always felt like a complete rookie doing it. My overall balance was positive but only by chance, the BTCUSD pair suffered big fluctuations over the past 6 months and eventually I regained my money back with some small dividends. Small as they might have been though, I still earned a few times more what my bank offered on a similar savings account, oh the irony…

So I decided if I could do some extra change trading Bitcoin, why not getting a bit more serious, say technical analysis? Sounded a bit off my league but why not giving it a shot? I crunched Japanese candlestick charting techniques over Christmas break and have been paying a bit more attention to the details in the market ever since.

It turns out technical analysis is more fun than what I had expected. The book covers the a-z of candlestick analysis and patterns but as the author well points out – these are just tools to decrease risk exposure and increase market awareness. It’s not like reading this book alone will make anyone an expert, not even close, in fact the book also mentions some comparisons with other analysis techniques – the western ways – and even encourages the combination of different techniques for better results.

Nonetheless I combined what I had learned before (my few rules of thumb) with what I learned from the book and decided to simply measure my success by the amount of trades on which I entered the market and took the profit without big swings, as in, positive rallies with no negative swings that accidentally bounced positively after a few days.

Turns out I made millions so far!… Nope not at all, the amounts I’ve been saving are about the same as before but I improved my market entries considerably and by considerably I mean in 8 trades since January I entered and exited without negative swings in 6 of them, that might not sound impressive at all, but for a rookie like me I was indeed surprised I was able to improve a lot from my (practically) “fingers crossed” technique to a more disciplined way to trading.

DISCLAIMER: I still consider myself a rookie, I will proceed with a few things you should keep in mind if you are considering jumping on the bandwagon.

Here’s what you need to do to get started on trading Bitcoin:

Documents

Get your passport up to date and any decent proof of residency, scan both, you’ll need it to register in a broker.

Broker

Pick one. To be completely fair I haven’t explored thoroughly which one offered the best fee conditions my only priority was to pick one that was not a market maker, tl;dr; I prefer the flexibility of a normal broker, I went with Bitstamp.

China

The Chinese market is the one that commands the troops. They have by far the biggest volume in Bitcoin transactions in the world, this basically means, if the valuation fluctuates in China, it will fluctuate accordingly everywhere else. I often prefer analysing the patterns and trend indicators in brokers such as Huobi or OKCoin over any other broker’s. I find the Chinese charts to contain less indicators (say, gaps for example) but consequently the few indicators are often more accurate.

Market entry

So you learned a few tricks and start feeling like the time has come to invest and buy Bitcoin. But once you’re in for a ride, there comes the hard part – What to do?

Regardless if you are aware of any analysis techniques now is the moment your feelings are there poking your mind and teasing everything you think is the best decision. This was the moment I decided to actually learn at least the basics of market analysis, it is very important to have a clear and objective analysis of what’s going on otherwise bad things happen.

Also technical analysis is not just about when to get in it’s about everything happening from the psychological factors of certain candlestick patterns to actual numbers such as volume, RSI or moving averages. It’s a conglomerate of tools that eventually will lead you to the best timings to get in or out.

Feed crunch

Blockchain, Fintech, Bitcoin and many more are all buzzwords going around these days and the trend is increasing as the months go by. The future of Bitcoin is still very uncertain except in few things: it’s a damn good way of storing value transparently and securely. Whenever there are big events impacting the technology directly (or China coughs!) the prices tend to fluctuate a lot. I suggest you start paying more attention to what’s going on and of course understand what the technology is all about.

All in all it seems a lot of work – reading, paying attention, looking at charts, feeling the stress. It’s true, after a while you may fall into the risk of dedicating most of your free time for small trades. But if you’re interested and really want to be good at it that’s the price to pay (in everything). I still think it’s way easier to trade casually than to develop an app but it’s of course up to you to find out if you gain the taste for it or not.

References:

1 – Japanese candlestick charting techniques

2 – Investopedia