Bitcoin Trading is a highly popular digital asset that exists online. Invented by Satoshi Nakamoto, it is an electronic currency based on blockchain technology. Though it can be spent similar to cash but holds a high value that is similar to gold. If traded correctly, then it may fetch an exceptional range of profit, especially now that buying Bitcoins from the Bitcoin ATM is easier. Below is the guide that will help in successful Bitcoin trading!
Why do People Prefer Buying Bitcoins?
In general, Bitcoin refers to two different things that include the following:
- Bitcoin digital asset – The Bitcoin digital asset refers to digital coins in actual. There are almost twenty-one million Bitcoins that exist.But bitcoin is capped with a certain number and the value of bitcoin will automatically increase when there is a shortage in their availability.
- Bitcoin network – The Bitcoin network refers to the Blockchain that will give the digital asset its actual value and practical applications.
It is the supply and demand that influences the price of Bitcoin. Bitcoin is worthy as someone is willing to pay for the same. The three vital reasons that persuade investors to opt for Bitcoin include the following:
- Speculation – Being a highly pure digital asset, Bitcoin is easy in terms of storage, transportation, and buying. Due to limited supply, it is considered as a hedge against inflation that is similar to the digital version of gold.
- Payment – Bitcoin is considered to be a great way to make international payments. People may use the same for making payments and they can buy goods and services with bitcoin.
- Economic diversification – Bitcoin is no doubt, a highly secure option than government currencies. Though the fiscal policy of the Government may affect the value of ordinary money, the overall value of Bitcoin will remain affected. For example, fiat currency of a state is mainly regulated by their government and it can be manipulated by their political leaders. But, bitcoin is not controlled by any government and it is free from any custodian authority like banks and financial institutions.
Holding some money like Bitcoin, there will be chances that the investors will have some money in their hands even after the government collapses. These are some vital reasons that have made Bitcoin a highly popular choice in almost every corner of the world.
An Insight to Bitcoin Trading!
Bitcoin trading has become a common activity today. It is all about buying low followed by selling high. Earning a high return from bitcoin can be a easy job because you can buy it from an exchange and hold it for a longer period of time to get the right price. To analyze the price of Bitcoin, there are two different ways:
- Fundamental analysis
- Technical analysis
If you are determined to trade with Bitcoins, then below are three important steps to follow:
- Opening an account on a Bitcoin exchange
- Verifying your identity
- Depositing money into your account
- Opening the first position on the exchange for buying and selling
These are some vital steps that you must follow to start with your trading with Bitcoin. Want to know what are the factors that result in the fluctuation of the price of Bitcoins? Here they are….
What Results in High Fluctuation of the Price of Bitcoins?
Similar to financial markets, the price of Bitcoin also moves up and down. But it is the degree of volatility that makes Bitcoin different from stocks trading. The fluctuation may seem to be scary sometimes. Interested to know about the reasons that result in the moving of the price of Bitcoin? Here they are:
- Coverage from the press – Keeping up-to-date with the news related to Bitcoin will make it easy for the readers to make the best decision.
- Integration – As cryptocurrencies like Bitcoin are being accepted by many outlets and are integrated into banking and payment systems, the price may rise in the future.
- Remarkable events – Remarkable events like political events and declarations by governments related to Bitcoin also result in the moving of the market.
Now, it is high time to come across some vital strategies related to Bitcoin trading that are prevalent in the market.
Vital Bitcoin Trading Strategies that Exist
As an investor, if you are planning to make money online by trading with Bitcoins; then it is high time to follow the various strategies. Some of the vital ones include:
- Day trading –This is a particular form of Bitcoin trading where people may buy and sell the respective cryptocurrency within the same day. It is all about taking advantage of short-term movement in price.
- Hedging – It is the respective strategy where a single investment from your side may cancel out some or all risks related to losses with the other. If you want to consider it as a long-term investment plan then you can following this trading method.
- Scalping trading – In this particular strategy of trading, people try to make small profits in trades. They get in and come out based on the situation.
- Trend Trading – Trend trading is the strategy where a Bitcoin investor decides to buy or sell Bitcoin based on the moving of the price of the respective cryptocurrency.
Whatever strategy you choose to go with, it is very much important to be aware of the scams that are related to Bitcoin that exist on the web.
Risks Associated with Bitcoin Trading
As a first-time investor, it is high time to have an idea about the following pitfalls related to Bitcoin trading for own safety:
- High volatility – The price of Bitcoin may rise or drown anytime without any prior notice.
- Chances for fraudulent activities – Security forms a major issue associated with Bitcoin trading. Some exchanges dealing with Bitcoin are genuine whereas others are fake. It is your luck.
- Cyber-attacks – Bitcoin exchanges are inclusive of some exclusive offers due to which it is a hot favorite among hackers. Once the Bitcoins get stolen by a hacker, retrieving them will be difficult.
- Difficult to predict the future – As Bitcoin is an emerging market, it is a bit difficult to predict what is going to happen in the future. Lots of uncertainty exists.
Keeping in consideration these risks, it is advisable to invest in Bitcoin carefully. Better start with a small amount and then increases the amount gradually.