Table of Contents
- What is Bitcoin Trading?
- Learn What Affects the Price of Bitcoin
- Reasons to Consider Bitcoin Trading
- How to Get Started
This article discusses the basics of Bitcoin trading. It will help you familiarize yourself with basic terminologies, grasp several methods to “read” the market and its trend, formulate a trading strategy, and learn how to get started in Bitcoin trading.
What is Bitcoin Trading?
Bitcoin trading allows you to speculate on the price swings of the cryptocurrency. Traditionally, this has included purchasing bitcoin via an exchange in the hopes that its price would climb over time. However, cryptocurrency traders are increasingly employing derivatives to speculate on rising and falling values — to capitalize on bitcoin’s volatility.
Using financial derivatives such as CFDs, you can speculate on the price of bitcoin with IG. This product enables you to profit from price swings in either direction without owning the underlying coins; therefore, you will not be responsible for the security of any bitcoin tokens.
Learn What Affects the Price of Bitcoin
To capitalize on a rising opportunity or short the newest bubble, you must first comprehend the variables that influence bitcoin’s price:
Bitcoin quantity. The current quantity of bitcoin is limited to 21 million, which is anticipated to be depleted by 2140. In the following years, the price of bitcoin could grow if demand increases due to a limited supply.
Bad press. Any breaking news about Bitcoin’s security, worth, or durability will harm the coin’s total market price.
Integration. Bitcoin’s public visibility is contingent upon its incorporation into new payment systems and financial infrastructures. If this is accomplished effectively, demand may increase, which will favor the price of bitcoin.
Major events. Bitcoin prices can be influenced by regulatory changes, security breaches, and macroeconomic news. Any consensus amongst users on how to speed up the network could also increase trust in bitcoin, causing the price to climb.
Reasons to Consider Bitcoin Trading
Mining bitcoin is not a practical choice for most people, but trading bitcoin is rather simple if you grasp the fundamental concepts.
As previously indicated, bitcoin’s volatility is one of its primary selling points for investors. This entails the possibility of fast price fluctuations in both directions, and if bitcoin traders properly forecast the market, they can generate substantial gains. They can also incur substantial losses.
A further advantage of bitcoin is the ability to trade around the clock. Most stock exchanges are restricted to the business hours of the nations in which they operate.
However, bitcoin can be purchased and traded on global exchanges, making trading available 24/7. And since bitcoin is a worldwide currency, it is unaffected by any nation’s financial state or stability. It may increase even when other markets decline.
Lastly, the relative absence of regulation makes it an easy market to enter since there is no need for a long verification procedure.
How to Get Started
1. Check Your Internet Connection
The first need for trading bitcoin is a secure Internet connection.
2. Identify a Bitcoin Exchange
The next step is to establish a bitcoin exchange account. This is an online marketplace for buying and selling bitcoin.
There are two exchange types:
- Fiat to crypto – Here, you can purchase or trade bitcoin and other cryptocurrencies using fiat cash (for example, traditional currencies backed by the government that issued them). Generally speaking, this form of transaction is beginner-friendly.
- Crypto to Crypto – These are for trading one cryptocurrency for another and are mainly designed for more seasoned investors.
3. Open an Account
To create an account with a bitcoin exchange, you must register and pass a verification procedure to establish your identity.
Once your account is activated, you can begin purchasing bitcoins by transferring money.
4. Open a Bitcoin wallet
Once you begin purchasing bitcoin, you will also need a bitcoin wallet. This includes a public address to which your bitcoins will be transmitted and a private key used to unlock your cash and send bitcoin to others.
Unlike a bank account, you are solely responsible for its protection when you keep money in a bitcoin wallet.
There are several types of bitcoin wallets, and the one you choose will depend on how you want to use bitcoin and the amount of protection you desire:
- Mobile – This operates as an app on your smartphone and can be used to pay for things immediately. It is beneficial if you use bitcoin often, but it is susceptible to hacking.
- Web – This form of wallet is maintained on an internet server and managed by a third party, such as an exchange for cryptocurrencies. Again, they are easily accessible from any internet-connected device. However, they are also vulnerable to hackers, and there is a possibility that the company managing the wallet may not be trustworthy.
- Desktop – These wallets are downloaded and installed on the user’s computer, storing the private key on the hard drive. As no third party is involved, they are more secure, but they are still linked to the internet and hence susceptible to hackers, malware, and viruses.
- The Hardware – Keeping your private keys on a secure hardware device is largely considered the safest approach to holding bitcoin. USB sticks are the most prevalent kind of hardware wallet.
- Paper wallets – This entails printing your public address and private code in a QR code, which you will then scan to complete transactions. Even if the piece of paper carrying your information is not susceptible to hackers or viruses, you must handle it carefully.
5. Purchase Bitcoin
The price you pay for bitcoin varies depending on your exchange; there is no universal pricing.
Final Thoughts
In recent years, there has been much media attention and excitement around bitcoin, with claims of individuals earning millions by trading and investing in cryptocurrency.
