A Complete Guide to Trade Bitcoin

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If you have just started bitcoin trading, you must be having a hard time understanding it at first.  However, you don’t need to worry! Here is a complete guide on how to trade bitcoin and other cryptocurrencies. Whether you are using British bitcoin profit or any other trading app, this guide will clear all your […]

If you have just started bitcoin trading, you must be having a hard time understanding it at first.  However, you don’t need to worry! Here is a complete guide on how to trade bitcoin and other cryptocurrencies. Whether you are using British bitcoin profit or any other trading app, this guide will clear all your confusions.

If we have to define bitcoin trading in one sentence, it would be the fluctuation in cryptocurrency’s price. These six simple steps will set you on the track of bitcoin trading in no time.

Learn Bitcoin Price Factors.

It is always important to know the key factors that derive the whole trading market before you step into it. Here are some of the essential factors that affect the price of bitcoin:

·        Bitcoin Supply

The current price of bitcoin is around 22 million and experts say that it will rise in future if its demand continues to rise.

·        Bad Press

Any news that goes in circulation about the bitcoin market will have an impact on its value.

·        Integration

The more bitcoin is integrated into the current banking and payment sectors, the more its value will rise.

·        Key Events

Some key events like regulation changes, macroeconomic announcements, and security breaches can impose an effect on the price of bitcoin.

Bitcoin Trading Style.

Your next step is to find your bitcoin trading style, there are four ways to do it.

·        Day Trading

As the name suggests, you will open and close your trading position in one day. At night, you won’t get any market exposure. It is a profitable style if you are just looking for a short-term price movement.

·        Trend Trading

The meaning of this style can also be derived from its name i.e., take a position in the trade that matches the current trend.

·        Bitcoin Hedging

This style is preferable if you want to mitigate your exposure to risks. For instance, you own some bitcoins and feel that there is going to be a short term drop in their value then you could open a short position on bitcoins.

·        HODL

This is a buy and holds strategy which indicates a long-term holding of the bitcoin. However, it is suggested that you should sell the coins if you can make a profit or reduce loss.

Ways to Exposure.

There are two different ways to get exposure to bitcoins:

·       Trading Bitcoin Derivatives

This way of exposure is beneficial for those who are adopting the hedging style for trading. It gives you the chance to go long or short with the rising and falling prices of bitcoin respectively.

·       Buying Bitcoins through an Exchange

This way of exposure is preferred by those who mainly adapt to the buying and holding strategy of trading. By buying bitcoins through an exchange, you directly take its ownership.

Stops and Limits.

Next, you need to set your stops and limits as they are a critical aspect of risk management. There are two types of stops:

·        Normal Stops

It will close your position at a set level. However, if the market is rapidly changing, you may become liable to slippage.

·        Guaranteed Stops

It will close your position at a set level without the liability of slippage.

Monitor Your Progress.

One buys bitcoins when they expect the market to rise and sells them when they expect it to fall. Therefore, if you are open to trade, you should monitor the progress using British bitcoin profit software or any other of your choice, to see if it is going as expected.

Closing.

The last step is to close your position when you have reached your desired level of profit or when you think that the loss incurred is unbearable.

Final Thoughts:

Before jumping into trading cryptocurrencies, you need to have complete knowledge of how it works. There are numerous trading platforms that allow you to trade bitcoins. However, having a basic knowledge of trading is still required.