How to Trade Bitcoin - Trading Bitcoins for Beginners
Bitcoin is the first digital cryptocurrency that helps to perform the transaction electrically, and without any interaction of banks and intermediaries. It was invented in 2008 by Satoshi Nakamoto. Mainly, bitcoin trading is the process of buying and selling bitcoin.
Do you know the definition of bitcoin? Before trading bitcoins, you need to understand the bitcoin properly. In this article, I want to describe the overall process of how to trade bitcoin.
There are two major types of trading bitcoins. One is the bitcoin exchange process, which is basically the means of buying and selling bitcoin, and this process depends on the matching server. Another one is CFD trading, which means contracts for difference. This process depends on the price movement by the CFD trading account. Moreover, there is no actual owner in the CFD trading method.
Bitcoin Exchange Trading
In this type, the traders must have to deposit the amounts of money in their self account before buying bitcoins. The Bitcoin exchange method helps to create a digital platform that can allow the exchange of bitcoin currencies. Moreover, using this platform, traders can buy and sell bitcoins, and this process is mainly called bitcoin exchange trading. In this method, if you want to buy or sell bitcoins, then you will need your public address and private key, the same as the traditional banking system. Using fiat currencies and the private key, buyers can buy bitcoins, and in the public address, a seller can send bitcoins. So, the address will be public, and everyone can know it, but you can not share your private key with anyone for security reasons.
CFD trading refers to the process of difference between the price of buying and selling with contracts. This method can not be allowed for the beginner trader. Moreover, this is an advanced and profitable process for trading bitcoins. This process is basically completed through a financial agreement between the buyer and the seller. In this process, the buyer and seller can exchange a share, index, and commodity.
Moreover, CFD trading acts as a financial tool. So, this type of trading can allow the buyer and seller to buy and sell shares, indices, and commodities at a fixed price for the duration of the opening and closing of a trade. You can buy and sell the shares depending on the pricing movement. So, when you think the price will go down, then you can buy shares. As well as, if you think the price will rise, then you can sell your shares.
There are various types of strategies for trading bitcoin. Before trading bitcoins, you should have proper concepts about these strategies. Now, I will discuss some important strategies of bitcoin trading in the following section.
Day trading is one type of active trading strategy that refers to the process of buying and selling a security within a single day. So, the traders can trade for a long period of time but trading must be closed within a day. Moreover, it is a highly risky trading process. The trader must have an educated and wealthy person. Because, in this method, the trader invests a high amount of leverage for a single day. So, it is basically a short-term trading strategy.
Swing trading is a long-term and fundamental trading strategy. In swing trading, the time duration is longer than a day trading. A trader can use various technical and fundamental factors for implementing their trade ideas. Moreover, swing trading acts as an intermediary between day trading and trend trading. Because this buying and selling process is prolonged more than a day but does not last more than a few weeks or a month. Thus, the goal of swing trading is to make a profit by identifying price swings over a period of time. When traders analyze the price will rise, they can sell the stock. As well as, if traders identify the price will go down, then they can buy the stock. So, swing trading mainly is dependent on the swing of price.
Trend trading refers to the process of a very long-term bitcoin trading strategy. Moreover, the duration of trend trading is longer than that of swing trading and day trading. So, this strategy prolongs the buying and selling process for more than a few months. The trend traders can use fundamental analysis for identifying the right time of buying and selling. Also, they can ensure their success and reduce financial risk because the trend trading can take a long period of time. So, this strategy will be suitable for all beginner traders.
In this strategy, the buying and selling process is performed frequently. As well, the minor pricing movement is considered in this process. If you think you will gain profit in a short time, then you can try this type of strategy. Moreover, it is one of the fastest trading strategies. Because the time duration of the scalping strategy is 1 to 5 minutes or seconds. Also, you can perform lots of buying and selling deals by using this strategy on a single day. So, this trading strategy has less risk, and traders can make some profit in a very short time.
The automated trading strategy, also known as mechanical trading and algorithmic trading. In this trading strategy, you have to set up some rules, and the trading process is executed based on these pre-programmed rules. So, this strategy is mainly a computerized trading system. Moreover, you can set some common factors like price and some technical indicators, etc. which fully depends on your requirements. So, you can make it a simple trading process or a complicated trading process. Just need to program it based on your intention.
As a beginner trader of trading bitcoin, you need to understand how to trade bitcoin. Also, you should have proper knowledge of all steps for trading bitcoins. So, in this section, I would like to provide you a complete guide on how to trade bitcoins.
1. Open an account
First, you need to open an account for trading bitcoin. It is mandatory for all traders. If you want to be a CFD trader, then you will need an IG trading account with CMC markets. Also, at Dowmarkets you can create a trading account. For opening an account at Dowmarkets, you need to confirm your identity first. Moreover, you must be at least 18 years old. Otherwise, you may not be eligible for opening this account. Also, need your valid mobile number, email address, and home address for creating an account in this market. As well as, you need an electronic wallet or bank card.
2. Building a trading plan
You can achieve everything through proper planning. For trading bitcoin, you should build a trading plan. As well as, you have to choose a trading strategy. I already discussed some trading strategies in the previous section. After choosing the trading strategy, then you have to build a trading plan. Moreover, a trading plan can help you to make effective decisions. To build a trading plan, you need to be concerned about the following things.
- You have to build your planning based on your trading goal.
- You need to consider the risks when creating a trading plan.
- Before creating a trading plan, you need to choose a marketplace.
- You need to keep track of all your profits and losses. Those will help you to build your next trading plan.
3. Research on the market situation
It is one of the most important steps for trading bitcoins. Before trading bitcoin, you need to research the present situation of the market. This research can help you to create an awareness of the pricing movement. So, you may assume the market situation by this research. As well as, you can analyze all records that help to understand the pricing movement, and based on these, you can assume the next price.
4. Trade and monitor bitcoin
If all the previous steps have completed, then you can trade bitcoins. But for trading bitcoin, you just need a place or platform. Thus, you have to choose a perfect platform. Moreover, this platform can help to ensure trading bitcoin. Without any valid platform, you can not buy and sell bitcoin. As well as, you can not monitor the trading. So, it is another important step for trading bitcoin. Bdtask provides Tradebox - advanced cryptocurrency trading software that helps to perform your trading smoothly.
In this article, I tried to give a guideline for beginner traders on how to trade bitcoins. So, they can understand the bitcoin trading types, trading strategies of bitcoin, and trading steps from this content. Moreover, these are very basic factors for trading bitcoin. Before starting the bitcoin trade, you should have gathered proper knowledge. Otherwise, you cannot sustain yourself in this market because it is a highly competitive marketplace. So, this article could provide you with basic knowledge about trading bitcoin, and that will be very helpful to you for starting a trade of bitcoin.