Bitcoin trading is the new craze around the world, but you have to deal with it intelligently. You can’t just jump into bitcoin trading because others are doing it. That will not benefit you in any way. First, you have to understand the pros and cons of being in this market.
Secondly, you will have to learn everything that helps you understand trading in cryptocurrency markets. Thirdly, you will have to find ways to trade Bitcoin because despite being the most prevalent cryptocurrency, it is not available everywhere in the world for trading. So, if you want to make money from trading Bitcoin, here is a comprehensive guide to Bitcoin trading that should get you started.
Understand the Value of Bitcoin First
The first thing you have to know is Bitcoin itself and its value in the cryptocurrency world. If you do not have an idea already, Bitcoin is the first cryptocurrency of the world, one that is supposed to change “currency” forever. It has been around for quite some time now, which has removed the doubts in the minds of the people about it being a fad.
No, bitcoin is not a fad, but a technological revolution that is here to stay. You have to understand the value of this digital currency before you start trading it. Why is it so famous and why you should pick it from hundreds of other cryptocurrencies?
Bitcoin has been performing well in the financial markets since its inception. There is no other digital coin that has beaten it in terms of popularity or value as of yet. It is the highest in value and that’s what makes it one of the most attractive cryptocurrencies out there.
One Bitcoin will cost you more than $8700 in your bank account. That’s a lot of money to buy just one unit of a cryptocurrency. No, there is no other cryptocurrency whose value comes even near this.
Know the Reason of Trading
Before you start trading cryptocurrencies or any other asset for that matter, you have to figure out why you want to do that in the first place. Why can’t you just save money in your bank account, and withdraw it when you have retired?
Well, the issue with saving money is that you are not increasing it at a rate at which you can. You are accumulating a lot of units of currency, but inflation and interest rates are biting through that value. Yes, you are saving money, but you are not gathering value. By the time you withdraw your retirement savings, they have already lost half of their value.
On the other hand, you can start trading with your money and increase it with time. If you are successful with your trades, you can turn your thousands into millions in no time. However, most traders have the dream of making more money in less time. That’s the dream that cryptocurrency trading can fulfill with the most convenience. Since the value of bitcoin is extremely high, one profitable day can make a huge difference for not just your finances but your entire life.
Know the Important Terms while Trading
Before you start trading bitcoin, you have to know the many terms that are used in this market every day. First, you have to know about volatility because that’s a word strongly attached to cryptocurrency trading. Volatility tells you how much a market can move in one direction on any given day.
More volatility means big measures of movements. Big measures of movements mean you can either benefit a lot of end up with colossal losses. Usually, the best assets do not move so fast in any direction. However, the cryptocurrency market is new and that’s why even the smallest piece of information shared in the news can cause the market to sway in one direction.
Other terms that you should know include broker, trading platform, leverages, spreads, technical analysis, fundamental analysis, price charts, stop/loss, hedging, portfolio, swap rates, etc. There are many other terms in addition to these that you have to understand before you can start trading bitcoin.
Know the Best Places Where You Can Learn Trading
Now, you want to learn trading before you enter it. You do not want to fly a plane if you do not know how to pilot it. In the same manner, you have to understand how cryptocurrencies work and what a normal day in any financial market is like. You have to figure out sources that teach you trading.
There are many, fortunately. You can learn trading right from home within a few days. You can even decide whether you want to learn through videos or ebooks. You can always take advantage of webinars to listen to experts in real-time and gaining from their knowledge.
One of the best places for you to learn bitcoin trading is your online broker. Yes, you will have to choose an online broker before you trade any asset. Now, when you choose an online broker, you have to sign up with it with a given trading account.
You can usually pick from a variety of account types to suit your budget and trading style. When you create an account and deposit the first initial funds in your account, you get access to the training materials as well. Through this training material, you can know what cryptocurrency trading is like and what strategies you can use to make money from this market.
You can also try the many courses that are available on various educational websites. The best thing is that many of the online courses have been created by professionals who have already put a lot of their money in cryptocurrency trading. Their courses are short but they teach you a lot within a few hours. What makes things even more interesting is that you get to earn a certificate when you complete the course.
Find Out the Methods of Trading Bitcoin
In addition to learning platforms, you also have a lot of different ways of trading bitcoin. The best way, again, is to sign up with an online broker. An online broker will give you access to the trading platform that gives you access to all the financial markets.
When you trade with an online broker, you get to take advantage of the leverage as well. Leverage is a help from the broker to allow you to enter large trades. These trades are so big that you cannot afford them with the minimal funds in your account. However, the broker you sign up with is always there to offer some leverage so you can increase your order size and make a lot of money from successful trades.
With leveraged trading, you also get the advantage of trading cryptocurrencies without owning them. When you trade Bitcoin with an online broker, you do not own the digital asset at any point. This type of trading is safe because you are not at a risk of losing money to some hacker.
The other method of trading Bitcoin is exchanging money on crypto exchanges. Yes, you have a lot of cryptocurrency exchanges on the internet where you can go to buy Bitcoin. However, you will only be able to sell or buy your desired digital coin on these exchanges.
You will not be given any leverages from the exchanges. You have to keep in mind that leverages are only offered to you by online brokers. An exchange is just a place where you give one currency to buy some digital coins. You can use your credit card, debit card, or bank wire transfer to buy digital coins from these exchanges.
Pick Your Style of Trading and Stick to the Plan
It might sound clichéd but that’s exactly what works for most of the traders from around the world. You will have to create a trading plan first and then stick to it to benefit in the long run. The first thing you will have to make up your mind about is the analytical method that you will be using.
You can either go with fundamental analysis or technical analysis. A combination of the two is always better than choosing one. Technical analysis allows you to predict the future price of the asset based on the current and past price patterns. On the other hand, fundamental analysis looks at Bitcoin, the news surrounding it, global economy, market sentiment, etc. before you trade the digital coin.
The one thing you can’t do when you trade bitcoin is letting your emotions causing you to get carried away. New traders are often a prey to this issue. They start trading and can’t stop it because they are either profiting too much or going in loss.
When they go in loss, they just want to recover as fast as possible. On the other hand, when they make a profit, they get greedy. Keep your emotions out of trading. If you know you will have a hard time doing that, you can go with automatic trading based on algorithms wherein a robot trades on your behalf based on your commands.