When I tell people I’ve become a part-time Bitcoin trader, reactions vary!
Responses range from a look of concerned sympathy, as if I’ve just announced I’ve pumped all my cash into a pyramid scheme, to a barrage of questions on how to get started. This latter reaction is unsurprising, considering that the rising prices of Bitcoin and other cryptocurrencies have started to hit the mainstream headlines on a regular basis. Meanwhile, plenty of investors have made a LOT of money.
A few months ago, just after I first stuck my toes into the water as a Bitcoin trader, I published an article on this site about investing in cryptocurrency as a side gig. To my surprise, it quickly became one of the most popular pages on the site, and was widely shared on social media.
Perhaps I shouldn’t have been as surprised as I was. At the time, I shared a Google Trends graph that showed how interest in Bitcoin was booming. Since then, interest has continued to gather pace, as the graph below shows:
With this in mind, I thought there may be some interest in how successful (or not!) I’ve been in my first three months as a “Bitcoin trader” – and a very novice Bitcoin trader, come to that.
In this article, I’m going to share the details of how I’ve got on, and list some tips for trading cryptocurrency, based on my experiences. However, before I start, I should make a few things clear:
1 – While I’m happy to share profit percentages and discuss some of the coins I’ve chosen to invest in, I will not be sharing the exact amounts I have put in. It’s something of an unwritten rule in the world of crypto that people don’t discuss the amounts of money involved in their personal trading. This is for two reasons; The first is that it’s rather brash and tasteless to do so, and the second is that it dangles a tempting carrot for hackers. Suffice to say that the amounts I have invested are relatively small. However, the profits I have made are scaleable, both upwards and downwards.
2 – Nothing written here is intended as investment advice. I’m an amateur at this, and while I’ve done pretty well so far, there’s nothing to say I won’t lose the lot in the future.
3 – Nobody should take the decision to become a Bitcoin trader lightly, or do it with money they cannot afford to lose. This is an unregulated market and one that is highly volatile. Before getting involved, I’d advise extensive research, perhaps starting with heeding all the very serious warnings I raise in my previous article on cryptocurrency.
If you want to get started, you can get $10 worth of free Bitcoin if you buy $100-worth or more on Coinbase, IF you sign up via this link. In the interests of full disclosure, I get 10 bucks’ worth too, so everyone’s a winner 😉
What have I been doing as a “Bitcoin trader?”
I’ve only been trading Bitcoin and other cryptocurrency since late August 2017. This means I’m writing this roundup with only three month’s experience under my belt, give or take a few days.
When I got started, I researched a number of cryptocurrencies in great detail, learning about the companies involved, their leadership teams, and their plans for the future. I spend a great many nights up until the early hours, absorbing the content and noise of Facebook groups, forums and Reddit threads. I stand firm on my previous advice that anyone unwilling to put in this time and effort shouldn’t be getting involved in cryptocurrency investment.
I made some initial investments in coins I liked the look of, and have added to my initial “stake” a few times since I got started.
While I’ve stopped short of full-on “day trading,” I have shuffled things around from time to time – selling off my coins when I’ve perceived a “peak,” and adjusting my portfolio to react to the market. Again, this has generally been as a result of ongoing research. The learning curve has been steep but enjoyable.
Perhaps most importantly, I’ve also been regularly withdrawing my profits! My general (though not constant) methodology is that every time my total portfolio value rises to a certain level above my initial total stake, I sell some coins and withdraw the profits.
As, in my case, we’re talking about relatively small amounts, I’ve been exchanging back to Bitcoin, and then withdrawing the Bitcoin to a cryptocurrency debit card. From there, I can either spend the profit or (for a small fee) withdraw cash.
The debit card I use is one from a company called CryptoPay, and I can (so far) vouch for their reliability and good support. However, I have heard that their cards may not work in the US, so proceed with caution if you’re not in Europe.
What did I invest in?
Although I’ve used the term Bitcoin trader for what I’ve been doing, my primary focus has been on other cryptocurrencies, or “alt coins.” I discussed a few of them in my previous article.
Here are few examples:
– I purchased several Litecoin (LTC), when they were around $40. They recently peaked above $100 each and have settled, at the time of writing, around $90. Litecoin is similar to Bitcoin but with far superior technology behind it. Many describe it as the “silver” to Bitcoin’s “gold.”
– At all times, I’ve held at least 50% of my portfolio in Ripple (XRP). Ripple is highly controversial, because it’s a non-mineable cryptocurrency, and the company behind it is forming high-profile partnerships with banks and financial institutions, including a recent deal with American Express.
Ripple divides opinion BIG TIME. Some people think that its clear “use case” (speeding up financial transfers between countries) and links to big banks mean it’s the one cryptocurrency with true potential. Other people see it as the devil incarnate, mainly because of those links to traditional banks!
I’m a believer in XRP, at least for now. However, I see it as a long-term investment, and it is right to mention that I could have made more money over the past few months by investing in riskier coins.
– My wife and I had a pleasant surprise with Vertcoin (VTC), a cryptocurrency she purchased a small amount of at random so she could be involved in the fun. There’s a good primer on Vertcoin here. This, to be frank, is one we “lucked out” with. As you will see from the graph below, it’s quadrupled in value since we got involved – turning my wife’s “fun” investment into a meaningful amount of money.
(Once again, I should point out that this is NOT investment advice – purely a report on some personal experiences over a VERY limited timeframe).
So: How much did we make?
That’s the big question! And, as explained at the start, I’m not going to just give you a number. The amount I staked in Bitcoin and cryptocurrency wasn’t huge, but it wasn’t tiny. We’re talking “good holiday” rather than “prestige car!”
What I am willing to do is share in terms of percentages.
Subject to daily fluctuations, I still have all my initial stake (most of the time!) spread across a selection of cryptocurrencies, including plenty of Ripple (XRP) and Bitcoin.
Last night, I added up my withdrawn profits. With all transfer and withdrawal fees covered, I have made a 44.03% profit in three months.
Now, I don’t think that’s too bad at all! It’s certainly a lot more than the couple of percent annually you see in a typical savings account from a western bank.
- Let’s imagine I put in $1000. That’s a profit of $440.
- Let’s imagine I put in $5000. That’s a profit of $2200.
- Let’s imagine I put in $10000. That’s a profit of $4400 – in three months.
And so on. And it’s profit that is as straightforwardly scaleable as that. It’s worth mentioning at this point that if I hadn’t put so much of my stake into Ripple (XRP), I’d probably be looking at a considerably higher profit percentage.
However, that doesn’t mean I regret my decision. Ripple was always intended to be a relatively “safe” play. So while it’s not risen as much as I had hoped in that short timeframe, I still have high hopes for it over the longer term. It’s also not given me any cause for panic due to the extreme volatility I’ve witnessed with some other coins. Ripple has a fascinating future ahead, and it’s never dull being part of it.
Crypto Investment Tips from a Novice Bitcoin Trader!
For my final section, I’m going to run through a few tips I’ve learned during my very short time as a Bitcoin trader.
Don’t gamble more than you can afford to lose!
This one needs mentioning more than once. Some commentators liken what’s currently happening in the world of cryptocurrency to the dot.com boom – where a lot of money was made but plenty of people lost the lot too. More cynical people liken what’s going on to the Dutch “tulip mania” events of the 1600s.
Regardless of who’s right, bust invariably follows boom at some point, and cryptocurrency values can’t go up forever.
There’s a fine line between investing and gambling, and cryptocurrency trading often straddles it.
After ascertaining that I’d made nearly a 50% return in just three months, it was awfully tempting to double down on my rather small stake, but it’s a temptation I resisted for exactly this reason.
Learn to be comfortable with losses
I’d estimate that I’ve spent at least half the time since I became a Bitcoin trader looking at a portfolio that’s worth less than I initially put in. (At the time of writing, Bitcoin is “retracing” from an all-time-high, meaning plenty of people will be in that position).
I have a very specific strategy for when everything starts to “go red” on the cryptocurrency exchanges – I just stop looking at them for several days. I never got into this to day-trade, and because I’ve followed the first rule of not gambling money I can’t afford to lose, it doesn’t matter if it’s weeks or even months until things recover.
However, the crypto Facebook groups and Reddit threads are full of people completely freaking out when one of their beloved coins falls by 10%. If you’ve not got the stomach for this (and 10% is a TINY drop in the world of crypto), you’re not going to enjoy crypto trading.
Follow your own research – not the herd
Far too many people are jumping on the cryptocurrency bandwagon without putting in any effort or research time. Hopefully the fact you’ve already read around 1700 words into this article means you’re not one of them?!
Investing in Bitcoin and other crypto means having faith in specific concepts and / or companies and, quite literally, putting your money where your mouth is.
It’s not only about getting your head around the wealth of good information out there, it’s also about filtering out the ton of misinformation. It’s also about spotting patterns and priming your instincts. While I’m by no means confident or complacent, I have correctly “called” the moment to sell coins just before a downturn on several occasions now.
Cryptocurrency isn’t an investment for the lazy. It genuinely rewards good research – which is why research is something I keep banging on about…
Don’t wait too long to jump in
IF you’re tempted to get involved in Bitcoin and crypto trading and you have decided on an amount of money you can afford to lose, it may not be wise to view it as something you’ll “get round to one day.”
If you’d bought Bitcoin just six months ago, you would have quadrupled your money at the time of writing.
Obviously all the usual caveats apply – your investment can go down as well as up, and this is not investment advice etc. etc. But I wish I’d jumped into this on one of the numerous occasions I’d been tempted to before – it would have been life-changing rather than just a way to establish a small new source of income.
Stick to your convictions
When I did all my initial research into Ripple (XRP), I quickly became sure that it was more of a “slow burn” investment than some others. However, that didn’t stop me becoming frustrated at times when I saw other coins I’d considered shooting up in value.
The thing to do here is be clear on your objectives; If you plan to keep a coin for six months or three years, think very hard before you impulsively switch that strategy. It may well be correct to switch strategy, but only once you’ve done enough research to overturn your original thoughts.
At times, I’ve wondered if I’d be better putting most of my Ripple stake into something with a faster potential for profit. The thing that’s stopped me is how much I could end up cursing myself a few years down the line.
Getting Started as a Bitcoin Trader
I hope you have enjoyed this article and found my honesty and candour useful. I don’t claim to be any kind of expert in this field, and as such I will emphasise – just one more time – that none of this is investment advice.
However: if you’d like to have a dabble in the exciting but risky world of cryptocurrency, here are some resources you’ll need to get started:
You’ll need an account with a company like Coinbase or BitPanda as a way to deposit your money. As I may have mentioned once or twice already(!) Coinbase will give you $10-worth of Bitcoin free if you sign up via this link.
Then, to trade in any currencies beyond the big names, you’ll need an account with Bittrex or another well-regarded crypto exchange.
If you want to draw out small profits as you go, I personally recommend a debit card and wallet account with CryptoPay – however, please check how well it works in your country first.
Finally, it makes sense to keep your investments safely offline while you’re not actively trading. The Ledger Nano S hardware wallet is a big favourite amongst crypto investors.
Good luck with your investments, and please check out my previous article on this subject if you haven’t already. Please share this article on social media, and with anyone who may be interested!
Founder of HomeWorkingClub.com – Ben has worked freelance for nearly 20 years. As well as being a freelance writer and blogger, he is also a technical consultant with Microsoft and Apple certifications. He loves supporting new home workers but is prone to outbursts of bluntness and realism.