Bitcoin trading is exchanging one cryptocurrency – or more commonly, digital currency assets – against another. Bitcoin trading first started on relatively small Forex-style bitcoin markets but has now expanded to a global market, with the most popular online bitcoin platforms incorporating nearby peer-to-peer and international buying and selling markets for a total potential number of customers in the hundreds of thousands.
A trader will purchase BTC tokens with fiat, then sell them either for profit or in order to buy something else. The market value is determined by supply and demand, fluctuating as supply changes (when new coins are mined) and demand changes (due to fluctuations in price).
- What are the basics of trading?
- Bitcoin trading price
- Long & Short term traders
- Are there any risks involved in Bitcoin trading?
- Choose the best time to trade
- What does leverage mean?
- What is a stop-loss order?
- Monitor your trades closely and learn from them
- How to trade bitcoin with leverage?
- Manage your risks by using stop losses
What are the basics of trading?
Bitcoin is an abstract idea. The only way to make money on it is through actual transactions that occur in the real world, with actual money changing hands. These transactions are called “trades.” You can buy Bitcoin with fiat money from a Bitcoin ATM, or you can find someone who wants to sell you Bitcoins, or you can trade them for other currencies on currency exchanges. There are also a number of online exchanges, which use third-party escrow services to hold funds until the exchange releases them to the buyer upon completion of the transaction between buyer and seller.
Most exchanges operate in a similar fashion, with the only difference being the number of trades required to complete a transaction. Exchanges that require just 1 or 2 trades are called “spot exchanges,” as opposed to “futures” exchanges that require more trades. Futures trading is considered far riskier than spot trading because of the leverage used, so many day-trading platforms or brokerage firms will only allow investors who are well-off or have large amounts of capital to engage in futures trading. ImmediateEdge offers an alternative option with its bitcoin trading experience which lets you trade bitcoins at ease while still making good profits.
You’ll need to deposit or withdraw money from these platforms via bank wire transfer, which requires a relatively large upfront fee. You may also need to verify your identity, depending on the verification requirements of the exchange.
Bitcoin trading price
The price of 1 bitcoin changes every day, as the demand for bitcoins varies with market trends. If more people want to buy bitcoins, then the price goes up. If fewer people want to buy them, prices go down. There are a handful of sites that track the price and volume of bitcoins in real-time, including:
It is not uncommon for some exchanges to operate at a loss due to arbitrage bot trading or other factors; however, this can be mitigated by “trading bots” and other such automated methods.
Long & Short term traders
There are two types of traders: long-term traders and short-term traders.
1. Long-term traders:
Long-term traders will buy and hold bitcoins for longer than a few days. They will be holding the currency for a long period of time, usually months or years, in hopes of improving their investment. Long-term traders can benefit greatly from such platforms as Coinbase, which offers both spot and futures trading. Both of these are great ways to make money with Bitcoin.
However, to be considered a “successful” trader, one needs to average 5% gains over long periods of time; this means that if an investor only brings in 1% each month for over eight months, they would only be considered successful at 9% returns per month if they had held the investments for 12 months.
2. Short-term traders:
Short-term traders will buy and sell bitcoins for a week, a month, or even more. They are in it only for the short term, as they intend to trade the coins and take profit as soon as possible. The good thing about short-term trading is that it helps with liquidity and security, as well as the price volatility of bitcoin. If you’re looking to make money with Bitcoin trading, day trading is a great option for you.
Are there any risks involved in Bitcoin trading?
There are always risks when dealing with any kind of investment. Bitcoin exchanges can be volatile. Remember that when you trade with an exchange, you’re trusting the exchange to act in good faith and to protect your funds. For example, if a hacker gains access to your account on the exchange, he or she could take all of your money, and there wouldn’t be a good way to recover it.
Many Bitcoin exchanges are new and haven’t been tested in real-world situations. Most exchanges rely on bank deposits or virtual wallets for customer funds. Any time you start using a service that holds all of its customer’s funds in one place, it’s smart to start slowly and make sure the money is always there as you do more transactions with that service.
Choose the best time to trade
If you’ve decided that you’re thinking of trading Bitcoin, you should know when the best time to trade bitcoins is. There are times when the price will be volatile, and there are times when it will be very stable. Unless your goal is to make money quickly, it’s best to avoid these periods of extreme volatility.
What does leverage mean?
Lower margin requirements can be an advantage if you want to trade Bitcoin but don’t have much money. Leverage allows you to make much larger trades than a regular person can. As the price of bitcoins rises and falls rapidly, leverage can lead to huge gains or losses in a very short period of time. If you understand what leverage is and the risks of using it, use extra caution when trading.
What is a stop-loss order?
A stop-loss order is an order that allows you to limit possible losses. Bitcoin exchanges often offer the ability to set stop-loss orders, which can be beneficial for traders who have a large amount of bitcoins they’re willing to protect from depreciation. Stop-loss orders can be used in two ways: 1) as a “safety net” if the price of bitcoins falls, and 2) as an opportunity to partial out your bitcoins if prices rise substantially.
Monitor your trades closely and learn from them
Trading bitcoins is becoming more popular, but it’s still a very new phenomenon. You’ll need to learn how to trade bitcoins. It’s important to monitor the market and see what it is going to do next. If you wait too long, the price might crash, or you could make a large loss, so it’s best not to wait for too long before taking action on Bitcoins.
If you want to avoid making mistakes, then treat this as an investment and take notes on what was good and what wasn’t so good about your trading process. Then when you get out of crypto trading, spend some time learning from your trading performance and improve upon it for your next trade in order to make more money.
How to trade bitcoin with leverage?
Bitcoin has gotten very popular, and a lot of people want to buy them. However, buying bitcoin is not as easy as it seems. The problem is that you need to have enough money in your account to buy bitcoins, but not so much that you can go bankrupt if the price goes up or down. You can easily buy bitcoin using a bank transfer, but other options such as credit cards will cost a lot of money because of transaction fees and other costs.
In order to avoid these costs, some traders choose to leverage in trading bitcoins by using margin trading services, where the amount you deposit is multiplied by the amount you are borrowing.
Manage your risks by using stop losses
Once you’ve set your order and confirmed the trade, it’s important to make sure that your Bitcoin transaction is secure. A stop-loss can help you do this. Examples of stop losses are the price or value of bitcoin at which you sell a position in order to minimize losses. If you decide not to sell at that price, then the trade is not executed as planned and will be lost instead.
For example, if the value of bitcoins drops, you will lose the money that you have invested to buy bitcoins. So if you are to use your Bitcoin trade as a way of making money, then you need to take into consideration the risk and decide how much capital you are willing to risk losing.
By setting stop losses for your trades in advance, it’s easier to prevent any further losses. In fact, setting a stop loss can help you turn what looks like a loss into a win. Setting your stop-loss not only does it protect your investment from risks arising from sudden drops in prices but also gives you an opportunity to buy back immediately after prices drop.
When you hear about bitcoin trading, the first thing that pops out in your mind is that it is very risky and volatile. And yes, this can be a fact, especially if you are into bitcoin trading without knowing how it works, and so with this, I have learned a few things which will help you to start bitcoin trading easily:
It is not a get rich quick scheme, and you need to learn and understand bitcoin trading before you can successfully bargain bitcoin.