How to trade "Dying Bitcoin" profitably

I stated in an earlier post that one of the greatest things about trading is that you only need to be right part of the time. That statement is only true if you can manage your risk. As of today, Bitcoin is seeing the hardest pullback in its history. Around this time yesterday, the price of Bitcoin was 40% higher, and the price continues to drop. I haven't been in Bitcoin for long, but it is quite obvious that moves like this should not shock anyone. With such a media craze new investors are in the market, and they don't know what they're doing. They are very emotional, inexperienced, and inpatient. I would agree if someone said I am much like these new investors, but I like to think I'm not as bad. In my opinion, these emotional traders are the reason that Bitcoin has huge spikes, and huge drops. Of coure there is a large ammount of manipulation happening in the market, but rich, old, selfish dudes can only do so much. The price changes slightly and everyone rushes to secure their profits when it goes up, or panic sell when it comes down. A highly volatile market like this can be very profitable, but only if you learn to manage risk.

I've already started a stock trading account for the blog, and soon I will start a cryptocurrency trading account as well. I want to discuss my current plan for trading bitcoin while it seems to be on a steep downfall.

The plan is simple: wait for the price to drop down and possibly establish a bottom/support, buy in and set a stop loss/risk level right under the new bottom, set a profit target (20% or so), and profit! If you played major league baseball and only got on base 1 out of 10 times, you would be fired. In trading, those chances will make you a profitable man with the right risk management. If you only risk 1% every trade, but have a chance to profit 20% every trade, you would only need to be right around 1 out of 20 times to break even! It's that simple. It doesn't take a genius to realize Bitcoin has an insane profit margin, especially after such a drop. So if you can only risk 1 - 3 percent on your account, with the possibility of doubling your money, the odds that you will profit in the long run are very good. Your odds will continue to get better as you become more experienced and learn how to determine the perfect time to buy in. However, even with a trigger happy mentality, you can profit if you manage your risk.

Of course there is a lot more to it, and with experience we will fine tune our strategy. I wrote this article to help simplify trading Bitcoin. It doesn't need to be so scary, as long as you are willing to risk a small portion of your account. You may lose 5 or 6 trades before winning, but if you place sensible goals, you will still profit. Use those losing trades as teaching sources, and remember, "It's win or learn, no losses".