Bitcoin is the leading digital currency, which means that all operations and transactions related to it, including issuing, buying, holding and selling them, occur on the internet. Unlike regular/fiat currencies, Central Banks or other monetary authorities cannot print or coin them using paper or metal. On the other hand, traditional currencies such as the dollar, the euro, and the Japanese yen are controlled by their respective governments via Central Banks.
Interest in Bitcoin among consumers, traders and investors worldwide has skyrocketed due to several factors, chief among them being the surge in its price. Besides, investors started to trade Bitcoin, ethereum, doge coin, litecoin, binance coin and other cryptocurrencies too.
Other factors contributing to Bitcoin’s popularity include the speed, security, and ease of making global transactions with the cryptocurrency. These factors have made bitcoin the leading crypto.
As a result, large groups of traders have benefited from bitcoin’s popularity and appreciation, making considerable profits in the spot markets, CFD trading, and futures trading. Before starting with the four basic steps to trading Bitcoin, we will list some of the cryptocurrency’s main features.
Many believe that Bitcoin is the biggest competitor to traditional currencies and can bring about radical changes in the global financial markets.
Bitcoin is a global currency that is not printed on paper or by any government, which means that it is not directly connected to any country’s economic conditions and politics. However, Bitcoin’s value can be affected by the global economic uncertainty that may affect the leading currencies causing investors to buy Bitcoin as a hedge, causing its prices to surge.
You can start trading Bitcoin from anywhere, as long as you have an internet connection and funds that you can convert into digital currency. The digital currency revolution has eliminated the barriers created by different currency exchange rates and contributed to creating an inclusive global economic system.
You do not have to buy a whole bitcoin to start trading since one bitcoin can be divided into a hundred million parts (0.00000001 BTC), and many exchanges allow investors to buy Bitcoin in small portions worth a few dollars.
Bitcoin trading is available 24/7, distinguishing it from physical stock and currency exchanges that operate for fixed hours five days a week. You can trade Bitcoin 24 hours 7 days a week, unlike Forex trading, which opens 24 hours 5 days a week and closed over the weekends.
Anyone can buy bitcoin or sell bitcoin at any time from anywhere across the globe, with millions of transactions being made every day as there are many ways to trade. Therefore, you can confidently make bitcoin transactions without having to worry whether you will find a buyer or a seller to complete a transaction.
However, you should be aware of Bitcoin’s massive price fluctuations that could see the value of a transaction rise or fall within seconds to reflect abrupt changes in Bitcoin prices. There is little you can do to stop the price swings affecting your Bitcoin holdings or transactions, and you should be comfortable with the same if you are trading or transacting with Bitcoin.
Now that you have a good idea about Bitcoin let’s show you the tips to get started!
Four easy steps to start trading Bitcoin:
1. Create an account.
You have to open a Bitcoin account before you can start trading CFDs, which typically takes only a few minutes. After that, you will be able to make your first transaction as soon as you deposit the required amount into your account. Note that you do not need an account on the Bitcoin exchange if you do not want to buy and sell actual bitcoin. If you simply want to profit from Bitcoin’s price swings, you can trade with a broker who displays the best prices from several exchanges.
2. Prepare a trading plan
Once your account is open and funded, you should prepare a trading plan (see below) to help you profit from Bitcoin’s price swings. Having a trading plan will help you make objective decisions when trading to capitalise on the low-risk, high reward trading setups while avoiding poor trade setups. A good trading plan or trading strategies will also help you minimize your risk exposure and increase the size of your profits by holding your winning trades and cutting your losing trades.
3. Gather As Much Information as you can about Cryptocurrencies
This may sound like common sense advice since you should always make sure to do your research and pay attention to bitcoin price prediction or analysis before making any investment decisions. Although past performance does not guarantee your future profits, history can act as a good indicator of how an asset will behave under similar market conditions.
Therefore, you should trust the decisions made from historical data instead of your feeling and intuition, especially if you are a beginner trader, always stick to your trading plan. Experienced traders sometimes rely on their intuition, but they benefit from spending many years analyzing historical data and trading the same instruments. The next and last step is to make your first Bitcoin trade.
4. Make your first Bitcoin trade
The fourth and last step to trading Bitcoin is to make your first trade. Once you have done your analysis of the markets and identified a great Bitcoin trade setup, you can execute the Bitcoin trade using the bitcoin trading platform of your choice. You can set the price you want to pay to open the trade and wait for your order to be filled. To get out of the position, you reverse your initial transaction by buying or selling.
Five tips for preparing your Bitcoin trading plan:
- Determine your trading goals and divide them into several stages, including short and long-term goals.
- Determine the percentage of risk that you can accept for each transaction and the maximum amount that you can bear to lose.
- Choose an appropriate risk-reward ratio so that you know how much potential profit you need to offset potential losses.
- Choose the markets you want to trade and decide if you want to start trading Bitcoin only or try a few other cryptocurrencies.
You should always have a stop-loss order at a predetermined level to minimize your risk exposure. Limiting your losses is a crucial pillar in every successful trader’s plan as it ensures you have the funds to take more trades in future.
You should also have a profit target for when the market goes in your favor. Remember that the market does not go up or down in a straight line, which means that you should take your profits at predetermined support and resistance levels to avoid losing out when the market inevitably reverses course. You should also allow your profits to run as much as possible.
Therefore, if you want to succeed in the world of trading, you will have to invest a large amount of your time and money in acquiring the right skills to trade volatile digital currencies. Trading is a career just like any other, and you have to study the markets and build your skills over time.
But if you only want to make quick profits from the markets, we recommend that you pursue another career to avoid the massive losses that you will most likely incur with such a mindset. Trading is not a get rich quick scheme. It is a skill that you build over time.