Five Tips for Speculating in Bitcoin

Here are some tips that will help you get the most out of your investment—or at least lose the least amount of money.

Invest Within Your Means

I’ve said it before and I’ll say it again: Don’t invest any money you can’t afford to lose. It’s tempting to see a run-up in Bitcoin pricing and want to dump everything you have into the market. Don’t. You can lose big money just as easily (if not more so) than you can make big money. If you have spare cash, invest it. If not, don’t. It would be inadvisable to spend the rent money or your kids’ college tuition fund on Bitcoin. Again, if you need the money to live on, don’t gamble with it.

Be Realistic

Yes, some people have made millions in Bitcoin. You probably won’t. Bitcoin is most definitely not a get-rich-quick scheme. Think in terms of 5%, 10%, maybe 20% gains. If you get more than that, you are one fortunate fellow. But don’t expect unrealistic returns on your investment, in either the short or the long term.

Do Your Research

Be a smart investor, not an impulsive one. Research short- and long-term Bitcoin pricing trends. Keep up on the latest Bitcoin-related news. Get a feel for what makes the market move, when new players are entering the game when bad news might hit. If you’re smart about it, you’ll better know when to buy and when to sell.

Ignore Rumors

The Bitcoin market is like any other trading arena. Lots of folks out there are touting this or that advice, promising insider trading tips, passing on rumors of movement as if they’re established the fact. Learn to separate the rumors from the facts, and listen only to legitimate sources. Nobody has an inside track on this one, no matter what they might tell you.

Don’t Panic

Bitcoin pricing goes up. Bitcoin pricing goes down. Sometimes by a lot.

Get used to it. And don’t panic if and when your investment takes the inevitable hit. Over time, Bitcoin pricing has been on an upward climb. Just because you see a one-day drop doesn’t mean you need to dump your holdings. Chances are, the price will come back, and then some.

Similarly, don’t get over-exuberant over a one-day gain—and don’t expect the same percentage gain every day of the week. What goes up most often comes down. It’s the average gain over the long term that matters.

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