Let’s get started learning how to trade bitcoin! Bitcoin trading is actually pretty straightforward once you get the hang of it. Being the premier cryptocurrency, it is pretty straightforward to buy and sell them as and when you want to. Bitcoin has a history of volatility which has brought in a lot of traders and media interest into the ecosystem. One of the most common way to trade Bitcoin is so called “breakout trading”. This means that you short or long Bitcoin when the price breaks support or resistance. As an example, when a support line and a resistance line converge, there will be a breakout, where the price leaves the range. Nov 25, · To trade Bitcoin, the first step is to Open an accout with a regulated exchange, depost funds, select Bitcoin from the platform list, and lastly Buy Bitcoin (go Long) or sell BTC (go short). This guide on how to Trade Bitcoin BTC will break everything .
How to trade bitcoin tradingHow To Trade Bitcoin For Beginners
You can see the full list here: Bitcoin trading exchanges here. Support and resistance is created in the chart based on supply and demand, and the orders in the order book. Without getting too technical here, support will often keep the price from going lower, and resistance will often keep the price from going higher.
Usually, traders try to short at the resistance and long at the support. This is one of the most basic trading strategies when trading Bitcoin. This means that you short or long Bitcoin when the price breaks support or resistance. As an example, when a support line and a resistance line converge, there will be a breakout, where the price leaves the range. A traders job is to catch the breakout by shorting or longing. Something that you should always make sure to have is a stop loss.
The stop loss will prevent you from losing more money after a given price. What if Bitcoin goes down? In fact, protecting capital is the corner-stone of every successful trader.
To this end, Bybit exchange has made it simple to enter a stop loss as soon as you enter a trade. For more info, read our full Bybit tutorial to learn more about how to enter a stop loss. The below possibilities are several strategies you can use to make money from trading Bitcoin, and no strategy is better than the other.
Swing Trading — Swing trading is a slower type of trading where you sit in a position over several days or several weeks. Day Trading — Day trading is a faster paced type of trading where you normally enter and exit out of your position during the same day. Passive Trading — This is if you make very slow moves and basically just sit and hold your position over a very long time.
This is more like investing than trading. There are several Bitcoin trading exchanges that offer Bitcoin futures trading. Some of them offer up to 20x leverage, and some allow up to x leverage, like Bybit. Of course, the higher the leverage, the higher the risky profile, so a trader must take this into consideration when making a trading decision. Find out more about our Bitcoin trading exchanges to compare them against each other.
When Bitcoin meets this price, your position is liquidated. Make sure to always have a stop loss in place before reaching the liquidation price. Naturally, with proper risk management, leverage can greatly enhance your profits over time.
If you want to learn more about the liquidation price and how to trade Bitcoin with leverage, read our Bybit tutorial or BitMEX tutorial. Many Bitcoin traders use bot programs to create their own Bitcoin trading bot. The most popular bot trading program in Bitcoin is called 3Commas.
A very cool thing with 3Commas is that you can actually copy other already successful bots and use them yourself. Bitcoin trading might be a whole new playing field for traders, but simple trading strategies from traditional markets work equally as well in Bitcoin trading, with the only major difference being the volatility. In essence, this means that you can learn Bitcoin trading by simply reading about regular trading.
As with other markets, there are two types of analysis to understand called technical and fundamental analysis. For a Bitcoin trader, it is key to know about this basket of tools. While technical analysis is very effective, it is also very important to also know fundamental analysis.
This analysis is not directly related to prices, but to factors on the asset like the news, technological developments, and other important pieces of information outside the price. These books are widely known to be among the most important books for traders. In these books you will find extremely valuable knowledge and strategies about trading. While none of these books cover Bitcoin specifically, the information can be applied to any market that is subject to human psychology.
As such, they can be applied to Bitcoin trading. This book consists of a compilation of interviews conducted by Jack D. In this book he interviewed legends in the trading world. In fact, these trading legends have made billions of dollars in trading.
The best part is that this book gives you direct access to the knowledge and strategies that were used to build these fortunes. Stock Market Wizards is a must read for anyone who want to start with Bitcoin trading. This might already be common knowledge, but just in case, YouTube is a pure gold mine with valuable knowledge and information.
Whether it be chart patterns or trading psychology, all the thousands of videos about Forex and stock trading can also be applied to Bitcoin trading.
A great tip is to follow big YouTubers who make daily Bitcoin market analysis on Youtube. These people trade Bitcoin for a living and share the strategies and results for free online.
Check this list below to find the 3 most popular Bitcoin traders on YouTube. One thing that most successful traders will tell you is: Find a mentor!
Obviously, this is easier said than done. However, YouTube might be the solution to that problem, because these YouTubers can serve the same function. They will share their ideas and knowledge about the Bitcoin market which will tremendously help you to learn Bitcoin trading. Because Bitcoin has a limited supply of 21 million Bitcoins and is backed up by a decentralised network of hundreds of thousands of computers spread around the world.
Bitcoin cuts away the middle man in finance. Basically, with Bitcoin you no longer need banks or services like Paypal. You can think of Bitcoin like digital cash. Bitcoin is the logical evolution of money. Interestingly, no one knows who the creator of Bitcoin is. For more information about bitcoin, read up on our explainer — Bitcoin an introduction to a new monetary standard. Given the fact that Bitcoin is not backed up by a central bank, you might wonder, what gives Bitcoin its value?
The answer is simpler than you might think. The same can be asked about gold, what gives gold its value? The answer is: supply and demand. Because the newly created supply of gold is small relative to the already existing supply. In other words, gold has low inflation. Unquestionably, the low inflation, and the predictability of the future supply of gold, creates demand, which drives the price higher. When there are more buyers than sellers, the price moves up. The same can be said about Bitcoin.
Of course, these assets are not the same, but they share similar monetary properties which makes for a great comparison. This will happen in the year , after the final Bitcoin halving the Bitcoin inflation is cut in half once every four years, called a halving. Many economic analysts suggest that this fact is one of the main drivers behind the demand for Bitcoin, and the big price swings.
Click here to see the infographic in full size. Want to add this infographic on your site? Source: Bitcoin Trading — Infographic. Bitcoin has come a long way since it was first introduced in , and it has become a global currency without boundaries. The value of Bitcoin is universal, and it is accepted as a means of payment in many countries on earth. The popularity of Bitcoin has given rise to alternative coins or altcoins like Ethereum, Bitcoin Cash, Ripple, among others.
You can shop online and buy a range of goods and pay for services with Bitcoin. Many merchants accept Bitcoin as a means of exchange, and this has become easier with the issuance of Bitcoin debit cards.
The bandwagon effect of Bitcoin has led to a growing acceptance of the altcoins, and this can be seen in the increasing market activity.
Answers to Important Questions — There are some important questions that newbies always ask about Bitcoin. Here are the major ones you should know:.
Is Bitcoin an altcoin? Bitcoin being the first crypto coin, it is not an altcoin. All other coins, but Bitcoin are altcoins ex. There are several ways to make money with bitcoin. A few of them are: trading or long term investing. Bitcoin arose from the innovative work of Satoshi Nakamoto, who laid out the specification and operating methodology. Satoshi did not create Bitcoin alone, as he worked with other developers on the project. As a result of this approach, Bitcoin operates as an open source and decentralized platform.
While many people have wondered whether Satoshi was a pseudonym or a true identity; the answer remains unknown. Bitcoin is definitely the outcome of a painstaking work that includes the footprints of several people.
Bitcoin is created when a computational difficulty is solved on the Bitcoin Blockchain, and this is rewarded through block rewards. Block rewards are given to miners who successfully completed the recognized process that gives rise to a Bitcoin. Block rewards are not arbitrary as they are subject to a verification process built-in as a part of the Bitcoin algorithm. Bitcoin derives its price from the interplay of the forces of demand and supply.
As people increasingly acquire it, the price soars and the inverse leads to a price drop as demand reduces. Bitcoin can then be seen in the likeness of gold or diamond that is scarce in supply. Bitcoin is limited in supply to the tune of only 21,,, and about 17,, of these are in supply at present. It is not known if any change can be made successfully to the underlying framework of Bitcoin; otherwise, it has a fixed supply.
Bitcoin has attracted lots of controversies in the course of the last few months as a result of concerns and misrepresentations. The United States, Europe, and several countries have accepted Bitcoin as legit, and efforts are being made to regulate it.
This is not to say that it faces opposition in a couple of countries. In China, Bitcoin is illegal, and South Korea has also imposed a couple of restrictions on it. A few other countries have come up with laws to restrict its use. However, an overwhelming number of countries are open to Bitcoin.
One important aspect of Bitcoin transactions is the fact that it also attracts transaction fees. While the fees charged might vary according to the processor, transacting in Bitcoin is not free.
When you buy Bitcoin, you have to pay trading fees, and if you exchange it for fiat money, you will incur charges. Bitcoin is stored in an account that you can liken to a Bank account.
The difference is that unlike a Bank account, your Bitcoin account is a virtual Bitcoin wallet. There is a unique address for each Bitcoin wallet that is created, and you can use it globally. On a trading exchange, when you create your account, your Bitcoin wallet address is automatically created. You can choose to leave your Bitcoin on the exchange for trading or withdraw it to a private Bitcoin wallet. There are hardware, online, mobile, paper, web, brain, multi-sig, desktop wallets for Bitcoin.
There are different kinds of non-exchange wallets that you can use to store your Bitcoin for security purposes. Every wallet has a public wallet address and a private key used for accessing it. Your private key is like your password for emails. Bitcoin is safe if you have it stored in your private wallet.
There is a difference between storing your Bitcoin in your trading exchange wallet and a private wallet. Your trading exchange wallet is considered to be risky to store your Bitcoin. When hackers attack exchanges or there is a system breakdown, you can lose access to your Bitcoin. To prevent this, it is advisable to use a hardware wallet for storage.
Trezor and Ledgerwallet are two of the best known hardware Bitcoin wallets. You can also lose your Bitcoin if you send it to a wrong address.
If you send Bitcoin to an unknown address, there is no way to claim it back at present. Bitcoin can be mined by anyone who is interested in doing so. There are a few options when it comes to mining Bitcoin. You can decide to buy a mining gadget for that purpose and this is a common practice in many countries. While the profitability of the mining exercise also depends on the market price of Bitcoin, the electricity implications have to be evaluated. As Bitcoin surges in market price, mining becomes more lucrative, and a crash in market price also means that you could incur losses.
You can also decide to use your PC for Bitcoin mining, and this will require that you download a Bitcoin mining extension by using your browser.
Using a browser extension for Bitcoin mining is a rather passive means to earn an income. You will be credited a share of the Bitcoin mined with your browser by the service provider. An understanding of the Blockchain is equally important for anyone who is keen to follow-up on its underlying basics. Blockchain is best described as a distributed ledger that operates within a decentralized network of linked computers, nodes and devices.
There is no central control over the Blockchain, and it can be accessed anywhere around the globe. The use of Blockchain extends across several spheres of human endeavor from medicine to shipping, payment systems to database validation, etc. Payroll processing, invoice management, and Insurance are some of the other facets of life that are revolutionized by the Blockchain.