Simple insights on how to master the art of Bitcoin trading

Bitcoin shining

Bitcoin trading has turned out to be a profitable venture for price speculators, whether amateurs or professionals. The market volatility offers great opportunities with huge spreads. Traders have several options at their disposal; whether arbitrage or margin trading. No other cryptocurrency has experienced rapid highs accompanied by open volatility such as Bitcoin. As Bitcoin relishes in wide media coverage, it generates more interest attracting more users. As the hype fades, so does the price slump.

What do we understand by Bitcoin trading?

There are two main types of Bitcoin traders; short term and long term traders. The traders are classified on the duration in which they hold onto their trading position. The long-term traders have specialized in observing the price trends over a long time period. This is what mainly informs their decision to buy and hold over long time periods. Their goal is to make a profit from releasing when it’s at a higher price than the original entry point. The short-term traders pay more focus to the daily behavior shifts and volatility in price. During the early stages of Bitcoins evolution, any small event in crypto space would result in a huge price shift. The more Bitcoin is adopted globally, the more stable it becomes.

bitcoin chart analysis

Bitcoin trading rules

stack of cryptocurrencies smallAs long as you exercise caution and adventure carefully, Bitcoin trading can be highly profitable. All this depends on the market movement patterns. The value of Bitcoin rises and drops significantly during trading days, a phenomenon which can be quite risky if misjudged. As a beginner to Bitcoin trading, here are some rules that might help you emerge a trading guru:

  • Do not put all your cards in a single basket. Break down your capital investment into multiple positions spread out across different price levels. This is the best strategy to make profit long-term.
  • Do not throw in your life savings or money you cannot afford to lose into your trading adventure. This is very important considering the unregulated nature of the Bitcoin environment which is shrouded in uncertainty.
  • Utilize technology when trading so that you can gain an edge and make maximum profit.
  • Always remember that it is impossible to claim to have understood the market. Making correct predictions needs a great deal of time and concentration. Carry out lots of research that will help you get ahead of current trends.
  • It is important to be strategic and know when it’s best to cash in. Do not invest in emotion, remain focused and maintain professionalism.
  • As a trader, you must understand that winning and losing is part of the trading experience. What counts will be your cumulative gain.

Find a suitable exchange

There is no official Bitcoin trading exchange. As a user, there are many choices that can help when deciding on a suitable exchange. You must ask yourself whether the exchange is legit or a scam. A fraudulent exchange can vanish with your investment portfolios. An exchange that operates within your country is best advised can accept the local fiat currency. Take time to find out the exact fees charged while trading. Bitcoin traders who move large volumes will only go for an exchange with solid market depth and high liquidity.

Why should I trade in Bitcoin?

When compared to other conventional financial instruments, Bitcoin is global and simple to trade. The cryptocurrency offers few entry challenges and trading can start immediately. In special cases, trading does not require verification. Anyone interested in trading Bitcoin can opt for any of the online trading companies providing Bitcoin as a contract for difference.

A global currency: Unlike regular fiat currencies, the price of Bitcoin is not affected directly by economic policies by any individual country. Despite the price resilience, some events such as the devaluation of the Chinese Yuan and the capital controls in Greece brought about price reactions.

Round the clock trading: Stock markets have starting and closing times. As for Bitcoin exchanges, they operate independently and run 24/7. As of today, there are hundreds of exchanges that offer Bitcoin services, creating an opportunity for arbitrage. In many cases, the time exchanges remain within the same price range.

Bitcoin volatility: Bitcoin is widely known for its price volatility that creates great opportunities for traders to reap the benefits.

Steps to Bitcoin trading

Open a trading account - To trade in CFDs or to spread a wager, you need to open a trading account. This takes a few minutes for setup. Always have in mind that those who buy and sell bitcoin do not need a bitcoin exchange account.

Develop a trading plan - If you are new, a trading plan and strategy can buffer you from learning the hard way. This helps the trader make objective decisions during high stake situations. You can determine the perfect duration to leave them open or closed. To develop a trading plan, clearly identify what you want to achieve in the short and long term. Point out the acceptable risks from each trade and the amount you seem willing to lose. Pick a reward ratio to identify the profit required to justify the loss. Finally, pick the markets you intend to trade in.

Do research - It would be naïve to engage in Bitcoin trading if you are not up to date with the latest Bitcoin trading news. Prior knowledge can help you foresee price fluctuations. Analyzing charts and past data can help in predicting market movements.

Place your trades - Once you settle on a position you are all set. Stake your amount on the deal ticket and engage in trading. Clearly define your conditions setting clear stops on your closing positions anytime the market shifts against your position. Having stops and limits are good ways of risk management.

Future trends

Despite anyone’s reservations regarding Bitcoin, it will remain with us. These are interesting and historic times for bitcoin users and the entire cryptocurrency community. Leading exchanges warn against indulging in reckless investing. No not be swept by emotion anytime the price of Bitcoin goes in your favor. Remember, there is a thin line between hype and bubble when it comes to cryptocurrencies.