How do I start trading bitcoins?

 

Trading bitcoin can be complicated. But it’s good that some exchanges now use the STOP-LIMIT, and MARGIN function when trading.

Below are few basics to trading;

The casino never closes

The market is open 24/7, giving traders the feeling that they always have to be trading. This causes tremendous fatigue and FOMO (fear of missing out) for emotional traders. Nobody can effectively track a market that is perpetually available, and new traders find it difficult to step away. This often ruins both their personal lives and destroys their finances.

> I can turn $10 into $1,000 with leverage!

Leveraged trading is far too common among beginners. Leverage is a tool that should only be used by the most experienced traders, those who have proven to be profitable for years.

The barriers to entry are non-existent in crypto, on exchanges that are built to transfer the wealth of inexperienced retail traders into the pockets of the exchanges themselves. Beginners will likely lose everything they risk trading with leverage because the downside is massively compounded.

> Traders do not average down!

A common grave mistake many traders make is Averaging Down: buying more of the coin as the price drops with the logic that a good thing is now cheaper (an even better bargain). This logic applies to investing, not to trading.

A trader has an invalidation level for their idea price dropping significantly should invalidate their trade and cause their stop loss to fire! Most beginners do not understand this and dig a deeper hole than necessary.

*Why trade bitcoin?

- Compared to other financial instruments and markets, bitcoin requires only a few requirements to entry. In fact, if you own bitcoin, you can start trading at the same time. In case you don’t own it, there so many trading companies offering this product regarding contract for difference (CFD).

- Bitcoin is a revolutionary cryptocurrency with enables fast and cheap transactions globally.It doesn’t require any centralized authority to function, and works directly between people.In short, it acts as an alternative to traditional currency.

Before you get to know how you can trade bitcoin, it’s important to get familiar with this product and what makes it unique and exciting.

* Bitcoin is very volatile

Bitcoin prices are well known for their frequent and rapid movements. This automatically creates exciting chances for traders with the ability to make quick decisions and reap quick benefits anytime. By the way, it’s very easy to spot an opportunity from price movements by just looking at the online trading chat.

STEPS TO FOLLOW WHEN TRADING BITCOIN.

1, Educate yourself about Bitcoin and cryptocurrency trading.

LEARN WHAT MOVES  BITCOIN PRICE

To get in on a surging opportunity or short the latest bubble, you first need to understand the factors that have an impact on bitcoin’s price:

* Bitcoin supply. The current bitcoin supply is capped at 21 million, which is expected to be exhausted by 2140. A finite supply means that the price of bitcoin could increase if demand rises in the coming years.

* Bad press. Any breaking news which concerns bitcoin’s security, value and longevity will have a negative effect on the coin’s overall market price.

* Integration. Bitcoin’s public profile depends on its integration into new payment systems and banking frameworks. If this is carried out successfully, demand might rise which will have a positive effect on bitcoin’s price.

* Key events. Regulation changes, security breaches and macroeconomic bitcoin announcements can all affect prices. Any agreement between users on how to speed the network up could also see confidence in bitcoin rise – pushing the price up

2, Choose a secure Bitcoin wallet to store your digital assets

3, Find an exchange market. Select a reputable cryptocurrency exchange that supports Bitcoin trading.  

Here are some good trading platforms for Bitcoin: Bybit, Primexbt, Binance and Bitmex. 

4, Create an account with the exchange market you choose, Complete the verification process on the exchange to comply with regulations.

5, Deposit funds into your exchange account, either in fiat currency or other cryptocurrencies. Most exchanges allow you to do this using a credit or debit card, bank transfer, or other payment method.

- Buy bitcoins: Once you've added funds to your account, you can buy bitcoins by placing an order on the exchange. You can choose to buy at the current market price or set a limit order to buy when the price reaches a certain level.

- Store your bitcoins safely: Once you've bought bitcoins, it's important to store them in a secure wallet. Most exchanges offer their own wallets, but you can also use a hardware wallet for added security.

6, Pick a bitcoin trading style and strategy,  you have to choose whether to be Day trader, Scalpers, Swing trader.

7, Practice with a demo account: Many exchanges offer the option to open a demo account, which allows you to practice trading with virtual money before you start trading with real money. This can be a good way to get a feel for the market and develop your trading strategy.

Practice with demo account until you develop a trading plan: It's important to have a clear trading plan in place before you start trading. This should include your investment goals, your risk management strategy, and the markets and instruments that you will trade.

8, Start Trading, If you ready after practicing in demo account then you can start to trade, navigate to the trading section of the exchange and place a buy or sell order for Bitcoin.

What you can trade:

* You can trade dollars to crypto (for example US dollars to Bitcoin or US dollars to Ripple).

* You can trade crypto to crypto (for example Bitcoin to Ethereum or Ethereum to Litecoin).

Before you start trading, getting used to the crypto lingo, it is the same for forex trading as well.

- Ask Price: It is the minimum price at which people in a particular trading site are willing to sell their Bitcoins.

- Bid Price: It is the most you are willing to pay for the Bitcoins.

NOTE THAT, The differences are considered as the difference between the price of the offer and the price of the request. In the case of Bitcoin, if the gap is very large, it means that there is a significant gap between buyers and sellers, which means that the market is not moving.

If the spread is very small, it may mean that there is a lot of activity on the market as there is intense competition for the next best price.

- Volume of Trading Site: The volume of assets is the number of assets traded over a period of time. If Bitcoin has a billion dollar volume on a day, it means that a billion dollars in Bitcoin are exchanged 24 hours a day.

- Market Depth: It is the number of Bitcoins that the people have put up for sale on a trading site, and have not yet been purchased (and so far, no one is willing to pay the price).

- Support - The term "support" is used to describe the level of weight of upward pressure in terms of so-called assets capable of maintaining asset stability.

In trading, traditionally if, for example, Bitcoin enjoys very wide support at a certain price level, it could be a little more difficult for prices to lower this level because there are so many orders to buy at this level. price.

- Resistance - The term resistance describes the strong sales or downward pressures of a market. For example, if Bitcoin has significant resistance at $ 5,000, it means that there is an abnormal number of $ 5,000 sales orders, which may mean that the price of Bitcoin may have a hard time exceeding that amount.

- Liquidity - It is important for all transactions. Liquidity refers to the speed or slowness with which an asset can be bought or sold. If Bitcoin has high liquidity in the stock market, it means you can buy and sell it almost instantly.

If Bitcoin has low liquidity on other exchanges, it means you could be stagnant when it comes to buying or selling Bitcoin, which means you can wait a bit.

- Speculator: It is someone who is trying to make a profit by buying Bitcoins at a low price and selling at a higher one.

- Arbitration: It is the activity through which you try to make a profit by taking advantage of the difference in price that may exist between the different trading sites.

- High-Frequency Trading: It is the activity through which you try to make a profit by predicting price movements in the short term.

- Bubble: It occurs when, for some reason, a heightened demand for Bitcoins occurs; thus, the price soars and falls after a while due to the lack of “foundation” for this demand. This has happened between December 2013 and February 2104.

- Margin Trading: It is a risky form of speculation in which Bitcoins are traded using borrowed money. This allows higher profit margins, but at risk of forced liquidation.

- Leverage Trading: Is a form of trading on the underlying product, or contract for difference enabling you to trade more than your initial investment, Some bitcoin brokerages offer 500:1 leverage

9, Risk Management, Implement risk management strategies such as setting a budget and using stop-loss and take-profit orders.

10, Stay informed about industry news and market trends that can impact Bitcoin prices.

There are a lot of ways that you can trade Bitcoin and cryptocurrencies and it is entirely dependent on what you want to gain from your investments and how much time are you willing to give to trading. There are four main kinds of trading:

> Day trading

> Swing trading

>Scalping

>Passive trading

A, DAY TRADING 

Day traders open and close their position within one single trading day.

This strategy works for traders who want to take advantage of short-term opportunities in the Bitcoin market which may come about in light of developing news or emerging patterns.

B, SWING TRADING 

Swing traders catch trends in price movements the moment they form and hold onto it until the trend experiences a reversal. This strategy is great if you want to take advantage of market momentum.

C, SCALPING 

Scalpers Make several intra-day trades on minor price movements. If you are the kind of trader who would make several small frequent profits rather than wait for a big opportunity,

D, PASIVE TRADING 

If you are a long-term holder or you want to just get into the crypto market and try out your hand then passive trading may be ideal for you. The idea is as straightforward as it is timeless. Wait for the price to drop to a certain level and buy-in. Wait for the price to go up to a certain level and buy out.

ADDITIONAL WAYS OF TRADING BITCOIN 

E. Trend trade bitcoin

Trend trading means taking a position which matches the current trend. For example, if the market is in a bullish trend, you’d go long and if the trend was bearish, you’d go short. If this trend started to slow or reverse, you’d think about closing your position and opening a new one to match the emerging trend.

F, Bitcoin hedging strategy

Hedging bitcoin means mitigating your exposure to risk by taking an opposing position to one you already have open. You’d do this if you were concerned about the market moving against you. For example, if you owned some bitcoins but were concerned about a short-term drop in their value, you could open a short position on bitcoin with CFDs. If the market price of bitcoin falls, the gains on your short position would offset some or all of the losses on the coins you own.

G, HODL bitcoin strategy

The ‘HODL’ bitcoin strategy involves buying and holding bitcoin. Its name derives from a misspelling of ‘hold’ on a popular cryptocurrency forum, and it is now often said to stand for ‘hold on for dear life’. However, this phrase shouldn’t be taken too seriously – you should only buy and hold bitcoin if you’ve got a positive outlook on its long-term price. If your research or trading plan indicates that you should sell your positions to take profit or limit loss, you should – or you could set stop losses to close your positions automatically.

H, Arbitrage - 

Bitcoin arbitrage is similar to the styles above. However, instead of looking for money-making opportunities within the same exchange, traders who use arbitrage look for those opportunities across different platforms. In essence, they buy BTC from exchange A then sell it at exchange B for a higher price.

TIPS FOR BITCOIN DAY TRADERS AND SCALPERS 

1, Scalping Bitcoin requires you to be awake during periods of high market volatility. I know people who trade for 12+ hours.

2, Have another source of income. I trade as a hobby.

3, If you are awake during low volatility time periods, change your sleeping schedule to match the optimal times to trade.

4, When scalping, track every single buy/sell order and look at open interest in order to predict if the position is being opened or closed.

5, Look at volume.

6, Predict stop hunts. For example, relentless market spamming with orders of 1.5 million buys/sells followed by a fast move down/up may be a stop hunt. It’s obvious if a single large cluster of sells are in a single area, and price has moved much higher. I longed upon a stop hunt that triggered sells worth over 30 million in a single 1 minute candle.

7, If you market buy large amounts at once, such as 300k, be prepared for price to instantly go against you, as the market maker will remove bids in order to try to get sellers.

8, Bitcoin has patterns where it breaks three lows at once on the one minute timeframe before moving higher. This is obviously an attempt to get long fills.

9, Know which breakouts are real and that you should buy into by looking at volume and prices where buys/sells entered.

10, Make sure you don’t place stupid stop losses that are very tight (under 1%). It is easy and obvious to hunt you. Just have a wider stop loss and have a smaller position size.

11, Do your own research : there is plenty of crypto out there, with different features and innovation. Bitcoin is the most famous but some crypto currency offers really interesting perspective.

12, Don’t trade with money that you are not willing to loose.

13, Don’t try to time the market : most of your guesses will be wrong… buying low selling high is the motto but it is also all too subjective and stressful.

14, Invest over time : that goes with the 3rd tip… instead of placing a “All in” bet by entering now it’s better if you buy a tiny bit every month therefore averaging your acquisition price.

BITCOIN TRADING VS FOREX TRADING 

There are a few differences between forex trading and bitcoin trading. In both situations, the prices of both paper and digital currencies are based on global supply and demand metrics. When demand for bitcoin rises, the price increases. When demand falls, it falls.

However, bitcoin is not subject to the supply uncertainty created by international central banks. Bitcoins are mined at a predictable rate, while unexpected shifts in monetary policy, like the Swiss National Bank’s decision to unpeg its currency from the euro in 2015, can create significant swings in currency prices. Bitcoin value is linked to the fundamentals of the cryptocurrency ecosystem, while forex matters are tied to the economic decisions and conditions of an individual nation and its currency.

“Trading bitcoin is like trading anything else on an exchange. You can trade dollars for euros through forex, and dollars for bitcoins on the exchanges. It’s very similar, but it depends on the idea that it’s traded on an actual currency,” said Lord. “There’s a little bit of a disconnect when talking about it. It’s not a real thing. Many say it is a currency, but it’s not as dynamic as trading currencies.”

Another issue is the way individuals trade currencies. In addition to the one-to-one trading potential, currency traders can boost their leverage through derivatives and other paper contracts designed to boost returns. In the current environment, some brokers are slowly underwriting contracts that will boost leverage in the bitcoin sector, but such contracts are still in their infancy. Bitcoin trading is more similar to the ownership of an equity on the New York Stock Exchange.

“There is very little derivative work around bitcoin, in contrast to the currency market where there are many over-the-counter (OTC) contracts,” Lord said. “It’s getting there. Some are allowing investors to purchase bitcoin on margin, or they are creating new contracts. But right now, trading is mainly speculation on the rise of the price of bitcoin.” Additional financial engineering is expected.

Perhaps the greatest difference between Bitcoin and Forex is the matter of liquidity. Global currency trading is a $6 trillion market, compared to a bitcoin market valued in the billions.

The smaller market in which bitcoin exists is more likely to experience a more volatile trading atmosphere and may see significant price swings over small macroeconomic events.

The currency spot market is unregulated. Regulators like the Commodity Futures Trading Commission (CFTC), the NFA, and several other futures exchanges oversee options and futures that are based on currency trading.

However, the CFTC has yet to issue a formal ruling on how it defines bitcoin aside from it being an asset.

However, the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), the Consumer Financial Protection Bureau (CFPB), and other agencies have sent several investor warnings on the risks associated with bitcoin investing.

DANGERS/ RISK OF TRADING BITCOIN 

1, Very high fees - compared to equities, which these days typically follow a fixed fee model in a race to the bottom (I think Etrade charges $6/trade) crypto trading services usually charge a percentage of the overall transaction in fees. For example, bitfinex charges 0.2% on a market order (that applies on both buying and selling) and 0.1% on limit order (again on both sides) though if your trading volume goes up lot (like over several million per month) the limit order fees will scale down somewhat. That means that on a trade with market orders, you're already down 0.4% of your principle before you've done anything, so you're going to need to make at least 1% profit on each trade to make it worthwhile, which raises the bar quite a bit.

2, Very high volatility - this is good or bad, depending on your perspective. High volatility means the high potential to make or lose money in a short period of time. I've seen some cryptos lose 15–20% of their value in a single day. If you're holding a long position that means a significant haircut, or becoming a bagholder, or worst case scenario, a forced liquidation if you're on margin, often before you can react. Or it means getting your stops triggered often even when the stock is trending in a direction that would have been favorable for you

3, Limited volume - Bitcoin is the best of the bunch here, but even Bitcoin has light days of $15–20M in total volume. This can make it hard to fill orders even if you time and size them just right unless you use market orders, which will cut into your profits as they'll fill farther away from your target prices.

4, A resistance to most technical analyses - many cryptos just stubbornly will not follow patterns that rely on technical analysis based on equities with even a fraction of reliability. Despite being “independent" most track to Bitcoin to some extent. While a lot of technical trading is hand-waving bullshit to begin with, even patterns like head-and-shoulders that actually are somewhat reliable in equities break down in crypto. That means that more often than not, in a short term position you're just gambling

Remember that Bitcoin trading involves risks, so it's important to start with a small investment and gradually increase your exposure. Seeking advice from professionals or experienced traders can be helpful that's why we offer trading course and day to day signal that helps to capitalize profits and maximize gain under our training program.