Bitcoin is a highly volatile and very popular cryptocurrency. So, naturally, you will wish to invest in Bitcoins and enjoy a good profit. Though trading Bitcoin can give you a lot of profit, you need to know about the trading process close to avoid mistakes and face monetary losses.
So, here are some easy steps to learn how to trade Bitcoin without any problem.
What is the meaning of bitcoin trading?
Bitcoin trading is how you can have your speculation on the movements of the prices of the cryptocurrency. Traditionally, this was involved with purchasing Bitcoins via a specific exchange, hoping that its value would increase in time. The traders of cryptocurrencies are using derivatives to properly speculate the falling and rising prices of those cryptocurrencies. It adds volatility to Bitcoin.
Now lets’ learn about the steps of trading bitcoin.
Steps to trade bitcoin
- Choose a trading style and plan
There are four types of strategies regarding the trading of bitcoins. Such as:
- Trend trading
Trend trading means taking a specific position that can match the recent trend. For instance, if the market has a bullish trend, you need to go long, and when the trend becomes bearish, you should remember to go short. If this trend reverses, consider opening a new position by closing the older one to cope with the emerging trend.
- Day trading
In this, the trading starts in the day and concludes by the end of the day . This will help you to avoid the overnight charges of funding.
- HODL strategy
The strategy includes the process of buying and then holding your Bitcoin.
- The hedging strategy
The hedging strategy of Bitcoin means you can mitigate your chances to face risks just by taking a position that is opposite to the one that you have opened already. When you are troubled, you can select this process that the market may move against you.
- Select how to get exposure
There are several ways through which you can get your exposure to bitcoin. Such as:
- Purchasing bitcoin via an exchange
This is usually a strategy of purchasing and holding the bitcoin because buying via an exchange shows that you will become the direct owner of the bitcoin.
- Trading the derivatives of bitcoins
Trading the derivatives of bitcoin means that you can speculate its price without owing a bitcoin. Hence, you can take place in the increasing price of bitcoins, just by “going short” or “going long.”
- Decide on going short or long
Depending on the recent sentiment of the market, it is possible to go both short and long. Going short implies that the price will fall, whereas going long means you think that the price of bitcoins will increase.
- Set up your limits and stops
The limits and stops are some risk managing tools that are very important. So, you need to choose carefully.
Normal stops: This will close the position at a specific level, but those may become liable to slippage when the market price quickly changes.
Guaranteed stops will close your position on a specific level without thinking of any slippage. These are free of cost, but you need to give a charge if this is triggered.
Trailling stops: This will follow the favorable market movements to lock while there is profit, thus capping your downside risks.
- Open and properly monitor the trade
To open the trade of bitcoin, it is better to buy when there is a rise in the price, and you should sell it when you think that the price will fall. According to your anticipation, after the trade is open, it is better to carefully monitor the market and ensure that it’s moving in the right way.
- To enjoy profit or stop loss, you should close your position
It is better to close your position when you wish to cut an unwanted loss or take your profit. The profit will be paid to you directly into the trading account, while the losses will get deducted from the balance of your account.
So, you can always learn to trade Bitcoin successfully and become successful. In this quest of yours, bitcoin revolution can be very helpful at any time. This Bitcoin trading platform is going to provide you with all the assistance and information to start a safe crypto trading journey.
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