Few things are as profitable for beginners and professionals than bitcoin trading. The bitcoin market is relatively new. In face it would even be fair to say that crypto currencies are relatively new especially when you compare it to forex trading or stock trading. Because the market is on the newer side, it is quite fragmented, and has tons of massive spreads. Margin trading and arbitrage are also widely available these days. This is a major reason why a large number of people always plan to make some money with the help of bitcoins.
The history of bitcoin volatility and bubbles has been quite influential in attracting new investors and users in comparison to any other crypto currency aspect out there. Every single bubble of bitcoin creates massive hype that never fails to bring up Bitcoin’s name on news and various other forms of media. The attention of media in particular proves to be quite instrumental increasing the price of bitcoin until it eventually fades.
Every time the price of Bitcoin rises, new speculators and investors begin searching for their profit shares. Since bitcoin is a global digital currency, you can send it virtually anywhere you want to. Suffice to say, trading bitcoin is not that hard if you take some time to understand how it works.
If you compare bitcoin to the tons of other financial instruments out there, you will notice that the barrier for entry is quite little. If you are someone who happens to possess bitcoins, the good news is that you can proceed with trading almost any time you want to. In a lot of cases you will not even need to provide verification information for investing or for trading purposes. If you happen to be interested in bitcoin trading, remember that there are several trading companies online that offer it as a CFD, which is short for contract for difference. In this article, XTRgate.net brings you 5 easy steps for bitcoin trading for profit and beginners.
Why You Should Trade Bitcoin
Before you start learning how to trade this crypto currency, it is extremely important that you understand the reasons as to why trading Bitcoin is so unique and exciting.
Bitcoin is Globally Recognized
First of all, it is important to remind yourself of the fact that bitcoin is completely different to the fiat currency. This means that its prices is not related directly to the policies or the economy of a single country. Throughout its short yet storied history, the price of Bitcoin has been influential in starting a variety of events.
The regular panic and uncertainty that ensues in the economy of today has been a major reason why the price of Bitcoin increased so significantly in the past. A lot of experienced bitcoin traders state that the capital controls in Cyprus that occurred back in 2013 were one of the biggest reasons why the price of bitcoin increased back then.
You Can Trade Bitcoin Whenever You Want to
Bitcoin does not have any official exchanges. This is completely different to what you will notice in the stock market. What this means is that the bitcoin traders are not restricted by time and they can trade bitcoin 24/7 and 365 days a year. And also, since no bitcoin exchange is there, there are no official prices for bitcoin either. This leads to the creation of arbitrage opportunities. That being said, a large number of the exchanges tend to stay in a certain price range.
Bitcoin is Highly Volatile
Known for its frequent and rapid movements in price movements, bitcoin is one of the most volatile crypto currencies out there. If you have some experience trading crypto currencies you probably have noticed some fluctuations in every crypto currency. Bitcoin however, fluctuates more than most which makes it extremely volatile. You can either win big or lose a lot with bitcoin. However, if youa re wise and patient with your Bitcoin investment and trading, you can gain a considerable amount of money through bitcoin trading. Most experienced traders view the volatility of Bitcoin ans an exciting opportunity that could help them gain benefits from it in a short period of time.
Finding a Bitcoin Exchange
As we were discussing earlier, Bitcoin does not have any official exchanges. That being said, the users have several choices at their disposal. Mentioned down below are some of the factors that you should keep in mind when you decide to exchange.
Sometimes, all a trader requires is a good bitcoin exchange to make things easier for them. Go for an exchange that has excellent market depth and high liquidity to offer.
Trust and Regulation
You also need to ask yourself whether the exchange your are planning to rely on is trustworthy or not. A lot of the times, exchanges are just created to scam people out of their money. You must avoid instances like these at all costs and make sure that you choose a reliable exchange.
This is another major consideration to keep in mind. Some exchanges charge a hefty sum of fees. Go for an exchange that is not only reliable but easily affordable as well. Sometimes experienced crypto currency traders even use more than one exchange. They do this to make sure that their losses are minimized.
Now that we have discussed the various considerations that a crypto currency trader who is starting out should keep in mind, you must be wondering what are some of the best exchanges that deal in crypto currencies? Well, there are several of therm however, only a select few are highly reliable. The bitcoin exchanges mentioned down below are quite famous and most of the crypto currency traders rely on them heavily.
- OK Coin
In order to clearly explain this guide to novice crypto currency traders, the example of Coinbase will be used for this particular guide. That being said, the basic process and principle for everything remains that same for all exchanges out there.
The first thing that you will have to do is make an account on the exchange that you have chosen for example, Kraken. In most cases, a Bitcoin exchange account is created with the help of an email. Once you provide all of the information, you will have to wait for receiving verification for the personal information that you have provided to the exchange. Every Bitcoin exchange asks for different verification levels as required by the KYC and AML laws.
Once the process for verification is complete you can start making your deposits. The best part about using a crypto currency exchange in bitcoin trading is that you can even utilize a traditional banking system for making your deposits. However, the traditional systems are slightly time consuming and take about a day or sometimes even three days. In most cases, you will need to provide six confirmations for your Bitcoin deposits. This takes almost an hour.
Be Mindful of the Risks Involved in Trading
Bitcoin trading is extremely exciting for new as well as experienced traders due to the fluctuating price movements, 24/7 trading, and the global nature of bitcoins. That being said, it is really important to understand there are tons of risks involved with bitcoin trading. Keeping the risks mentioned down below in mind can save you from losing your investments and could even potentially help you to earn a profit for your trading efforts.
Forgetting the Money on Exchanges
The famous collapse that happened with Mt. Gox is perhaps the biggest event that led happened in the history of bitcoin. During the early days of Bitcoin, Gox happened to be the biggest exchange for bitcoin out there. People from different parts of the world relied on Gox only to get some bitcoins. This used to be a massive deal back then. Unfortunately, a lot of the users ended up forgetting some key features associated with bitcoin. One of those features was controlling your money. Because of this above eighty thousand bitcoins were left in the accounts of Gox. So, in 2014, the exchange stopped all the withdrawals, essentially restricting its customers from withdrawing their funds from Gox. The CEO of the company stated that a large number of the bitcoins disappeared because there was a bug present inside the bitcoin software. Unfortunately, none of the customers whose accounts were restricted were able to get any of their funs back from the accounts of Gox.
The monumental collapse of Gox also highlights various risks that readers can face if they leave their money in exchanges for a long period of time. You can minimize risks like these by opting for regulated Bitcoin exchanges.
You Could be Risking Your Capital
Just like with any form of trading, the traders capital is always a risk. This is a major reason why expert recommend young traders to begin their trading journey with small trades. They can also start trading on paper in order to get adequate practice. If you are a beginner, you should also take some time to learn bitcoin trading strategies for understanding the carious signals in the market.