Common Mistakes People Make while Trading Bitcoin OTC
The popularity of Bitcoin and other cryptocurrencies rises with each day. More and more people become less skeptical about digital currency and find it to be a perfect place for investment. Thus, crypto trading is developing each day. There are several main options for those who decide to start trading btc: crypto exchanges and otc markets.
Crypto exchanges work just like stock exchanges: there are many traders who post the prices they are willing to buy BTC for, and there also are some of them who post the selling prices. The exchange becomes a middle-man of any deal, and information about any transaction can be accessed by other exchange members, which results in affecting the price of digital currency.
Over the counter, bitcoin markets work differently. There are two parties of a deal cooperate directly with each other so that they discuss the price of a deal between them without any third parties. As a result, the transaction is secure, private, and it has no influence on the overall market.
Both variants require some specific knowledge and financial background. No wonder that many people, both newbies, and even experienced traders, make some mistakes when trying to sell or buy cryptocurrency OTC. Let’s review the most widespread mistakes of those who trade on the otc crypto market to make your further experience better.
Mistake #1: Looking for the Cheapest Price
Trying to sell or buy bitcoins on crypto otc trading exchange, many people start to shop around, contacting top cryptocurrency brokers in the USA and asking for their prices. This method might seem quite logical: the more you call, the more variants you have and the more informed about the current prices of Bitcoin you become.
However, it is not that easy. The exchange rate of Bitcoin is extremely unstable, and the littlest changes n the market change its rate significantly. The brokers might use calls against you: contacting many of them, you increase the demand, which would result in rising prices immediately.
What you should do instead is not to shop around without any need. Give preference to only one or two OTC brokers and contact them only when you a ready to make the deal. This will increase the probability of a great deal, and you will not affect the overall market significantly.
Mistake #2: Showing Your Hand
The most significant rule of profitable deals on any over-the-counter (otc) crypto trading service is not to show your hand. Yeah, just like in poker. You should never let the broker know how exactly BTC you need to sell or buy.
Let’s imagine: you contact a single broker and let them know that you want to sell 200 BTC. This information is already enough for a broker to manipulate the prices on the market, and there is a high probability that they would use this information against you.
That broker might sell their own Bitcoins, lowering the prices on the market. This will enable them to buy your own crypto for lower prices. And even if you will decide to make a deal with a different OTC BTC desk, another broker will also buy your digital money for lower prices as the previous broker has shifted the exchange rate. Thus, the party which will end up with a profit would be a broker.
Otherwise, if you contact the broker and ask for prices for several options, for example, 50, 100, 1000 BTC at the same time, you don’t show your own hand but make the broker reveal their prices. This will help you not to show your hand, and to count the broker’s bid. Hooray!
Mistake #3: Your Predictability
Another popular mistake is predictability. There are some widespread patterns of behavior when making a deal, and brokers can use this to manipulate the prices and minimize your profit. They also commonly use bluff to make the best profit themselves.
For example, they could note that you usually call them in a certain period of a month, asking for exchange rates. They also know that you gather information from different sources, so they would tell the lowest possible price to attract you. As a result, you will cooperate with this otc bitcoin broker because you know that they have the best prices. But in fact, they offered an affordable price for the first time only to attract you, and the results of the deal would be profitable for them, not for you.
To become a winner in this situation, make use of otc BTC broker’s bluff: ask to lock in that rate, which sounds good.
Mistake #4: Full Amount Deal
Trying to trade with big assets, buy or sell BTC OTC in one deal is a great mistake, which would turn disadvantageous for you.
As it has already been said, the crypto market is extremely flexible, and that’s dangerous: there are no guarantees that when you make another great transaction, the rate price won’t slip. As a result, you could lose a noticeable sum of money. Moreover, OTC bitcoin brokers usually price this risk, so that the exchange rate would be higher.
However, if you try to trade your assets in parts, you are more likely to save yourself from unnecessary risk. The exchange rates for 10 BTC are usually better than those for 100, so take advantage of this fact and try to divide your assets into parts. There’s no need to risk your millions!
Bitcoin OTC Bottom Line
The bottom line of cryptocurrencies is the riskiest aspect of investing in digital currency. As crypto has no such stable foundation as the rest of the financial sector has, investing in Bitcoin is always a game of chance. While the crypto has a strong tendency to rise, its rate still remains highly volatile, which means that the price for BTC otc can change in minutes. It is challenging to predict the rate of crypto as it depends on numerous factors, some of which might be really unexpected. Thus, it is significant to pay attention to the bottom line of crypto – nowadays, it’s around $10000.
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Crypto trading is a breathtaking business, yet it requires much knowledge, experience, luck, and logic, so try to predict every risk you take and keep learning. Good luck!