How to trade Bitcoin?

BitCoin mobile

Bitcoin, world’s first novel cryptocurrency is already creating a buzz all over the globe. Experts in this field are seeing it to be a close contender to pose a substantial challenge to the conventional currencies. But when you take into account its price history, it may be assumed that there is going to be much volatility. As a result, many people are looking forward to trade bitcoin and in case, you are one of them, this article can offer an insight to you.

Means of dealing bitcoin:

There are two major ways of trading bitcoin: you can either buy it all by yourself while waiting to sell it on profit or keep on speculating its value without needing to own a token. Spread betting and contract for difference or CFD works on the means of speculation.

When you are placing a spread bet, you are required to comprehend and assess whether the price will rise or fall. A CFD allows a bitcoin holder to trade a contract in accordance with the prices of the underlying market condition. Here, you can put down a petty deposit initially and gain an exposure to a much wider position. This aids in magnification of profits but it can also have a similar effect on the losses incurred.

Is it important to use an exchange for trading bitcoin?

When you decide to trade bitcoin, you need not interact with an exchange directly. You can trade bitcoin on buy and sell prices from trusted sources or portals which source the required information for you. You will also need an IG trading account for taking a position on the price of bitcoin.

It is worthy of mention here that bitcoin exchange works in the same manner like any conventional exchange so that the investors can buy or sell bitcoin from one another. But there are various reasons why using exchange may not be a good idea when it comes to trading bitcoin and some of them include:

  • The bitcoin exchange is deficient of optimum public records, infrastructure and information required for responding promptly for supporting requests.

  • Exchanges impose restrictions and fees on withdrawals and funding from the exchange account while accounts may take even days together for acquiring.

  • The matching engines as well as servers of the exchange are unreliable which may pave the way for reduction of execution accuracy and suspension of markets.

When you trade bitcoin, you are also able to gain considerable liquidity at the chosen price. When you are buying and selling from an exchange directly, you may have to accept multiple prices for completion of your order.

What can affect the price of bitcoin?

bitcoin dc smallThough the volatility of bitcoin makes it an attractive scheme for investors, this particular attribute also makes the cryptocurrency market a risky one. The price of bitcoin can shift sharply all of a sudden and since it operates 24x7, such unwanted changes can occur at any point of time in the day.

Since it is a decentralized currency, it is free from the major political and economic concerns affecting the traditional currencies. Also the market is in its growing state which indicates that there are a lot of uncertainties which are unique to the market only.

However, there are certain factors which can have an impact on the price and they also help you to navigate the risks effortlessly. Some of these factors are:

  • Supply of bitcoin- There could be a finite supply of these currencies but there is also a fluctuation of availability on the basis of the rate at which they reach the market along with the activity of those who possess them.

  • Market cap- How the investors will visualize the opportunity is dependent on two factors: the bitcoin value and the perception of its value.

  • Poor press- No matter whether it is a traditional currency or a cryptocurrency, they are bound to be affected by public opinion. But when it comes to bitcoin, the security, longevity and value are always questionable even when the market is most stable.

  • Adoption by various industries: Bitcoin is a currency that is still yearning to be adopted by businesses across the world and therefore, it is yet to see what effects bitcoin cast when it gets to perform at the corporate stage.

  • Integration- How it integrates into the novice payment systems and crowdfunding areas will determine the profile and confidence of bitcoin compared to traditional currencies.

  • Major events- Key events such as security breaches, regulation alterations and macroeconomic setbacks can have a serious impact on the bitcoin market.

Means and process of trading bitcoin:

There are several steps to trade bitcoin and they are discussed as follows:

Step 1: Opening an account

In order to trade CFDs or spreading bet, you will need to have an IG account and you just need to spend a few minutes for the process. Then you can add funds and subsequently take your initial position. If you depend on any reliable sources, then you will not require any exchange to trade bitcoin.

Step 2: Sketch a trading plan

You must opt for a trading strategy and in case you are a newbie, then it would be great to consider having a trading plan as well. This can help in making objective decisions even when you are at stake so that you don’t end up leaving the trades open for long or close them way too early.

Step 3: Conduct your own research

Before you set out to trade bitcoin, you must ensure that you are up to date with all the information available so that you can speculate what’s yet to come. Charts can pose to be an invaluable tool when it comes to comprehending the behaviour of bitcoin. The information about recent past can help you get a sense of how the market is working and the emerging patterns and market trends can be understood by comparing the timeframes.

Step 4: Position a bitcoin trade

Once you have a strong foothold on the market, you are liable to place a trade with the help of web trading platforms available online. When you expect the price to rise you will have to buy and vice versa. For closing your present position, you will just have to deploy the opposite of your actual trade. With this information and a bit of effort from your side, you can see yourself as a successful bitcoin trader in the near future.