How To Trade Bitcoin | UseTheBitcoin
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Instead of buying and holding bitcoins in a wallet for the price to rise before you make a profit, it is possible to trade bitcoins and make a profit in a short period of time. Trading involves trading how the bitcoin price moved in the market through CFD trading. A trader predicts whether the price of bitcoin will rise or fall and takes a position by buying or selling. There are specific steps to follow in order to trade Bitcoin, which are covered in this guide.
About Bitcoin Trading
When introduced to cryptocurrencies, the first cryptocurrency that almost every cryptocurrency trader knows is bitcoin; However, not all traders understand how to trade bitcoins. The price movements of many cryptocurrencies in the market are caused by the price movement of bitcoin. Bitcoin trading is very risky due to its high volatility and it is possible to experience large fluctuations in its price. Therefore, before trading bitcoin, it is necessary to know how it works and understand the market.
Bitcoin trading methods
There are two main ways you can trade bitcoin and they include:
- Use of gears
- Using a CFD trading account
It involved buying bitcoin from exchanges and holding it to sell when the value rises. However, the unreliability of this method stems from the fact that it is mainly dependent on central matching servers. Exchanges are also prone to hacking and theft because many traders store their Bitcoins on them. Many exchanges were hacked in 2018, such as Coincheck losing $534,800,000 and BitGtail losing $195,000,000 to cyber thieves.
Using a CFD trading account
Traders do not need to buy and hold bitcoins beforehand conducting bitcoin trading by opening a CFD trading account. It requires the trader to speculate on bitcoin price movements and use analysis to take a position in the market. Bitcoin trading is very volatile. Thus, trading with bitcoin CFD is recommended because it is possible to offset losses. Additionally, traders are open to leverage, which you can use to make more profit.
A step-by-step guide to Bitcoin trading
Follow the steps below to start your journey in bitcoin trading:
- Before you can trade bitcoins you need to open different accounts bitcoin contract and there are many top exchanges. If you are a beginner, it is recommended to practice with a demo account before opening a live account so that you do not lose all your funds.
- There are many strategies used to speculate on bitcoin price movements. Therefore, you need to determine what you use. With a good strategy, you know when to enter the bitcoin market and when to exit.
- Once you have chosen the most suitable trading strategy, define the plan you will use for bitcoin trading. When you have a defined trading plan, there is no deviation problem and all the decisions you make are objective. In addition, it improves consistency, which is essential in trading.
- Searching for news or information in the financial market can affect the price of bitcoin, the crypto industry or the country’s economy. Staying up to date with the news helps predict future bitcoin price movements.
- Once you have confirmed the above steps, the next thing is to start trading bitcoin using the information from your market analysis and price movement forecast. It is important to consider the size of the lot and include preventive measures such as profit maximization and stop loss. It helps traders to minimize their skills and prevent them from losing their assets.
Bitcoin trading is a risky investment and there is a chance of losing money no matter how accurate your market analysis is. Thus, portfolio diversification is encouraged. You can also trade on exchanges with high liquidity to improve quick communication between sellers and buyers. The number of fiat currencies paired with Bitcoin should be several.
Traders are advised to define their trading plans permanently so that they are not inconsistent, which can lead to losses as it interferes with their trading plan. This guide will make your journey through bitcoin trading smooth.