This article covers the basics of bitcoin trading and cryptocurrency trading for beginners. This will help you to get familiar with the basic terminology, understand the Steps to Trading Bitcoin Online for Beginners, create a cryptocurrency trading plan and strategies, and know how to implement this plan in the best Bitcoin and cryptocurrency platforms.
Steps to Trading Bitcoin Online for Beginners
Bitcoin trading for beginners and cryptocurrency trading is the process of buying low and selling high.
Unlike investing, which means holding bitcoin for the long term, cryptocurrency trading deals with the attempt to predict price movements by studying the market as a whole and price charts in particular.
There are two main methods that traders use to analyze the price of bitcoin – fundamental analysis and technical analysis. Successful trading requires a lot of time, money and effort before you can do it well.
Bitcoin trading vs investment
The first thing we want to do before we dive into the topic is to understand what is bitcoin and how to trade bitcoin for beginners, and how is it different from investing in bitcoin?
When people invest in bitcoin, it usually means that they are buying bitcoin for the long-term. In other words, they believe that the price will eventually rise, regardless of the ups and downs that occur along the way.
Usually, people invest in bitcoin and cryptocurrency because they believe in the technology, the ideology, or whatever the team behind the currency is.
Bitcoin investors tend to use HODL for the currency in the long run (HODL is a common term in the crypto community that actually stems from a typo for “Hold” – in an old 2013 post on the Bitcoin Talk forum).
On the other hand, Bitcoin traders buy and sell Bitcoin in the short term, whenever they think that a profit can be made.
Unlike investors, traders view Bitcoin as a tool for making profits. Sometimes, they don't even bother to study the technology or ideology behind the product they're trading.
Having said that, bitcoin for beginners can be traded and cryptocurrency trading and they are still interested in it, many people invest and trade at the same time.
As for the sudden rise in the popularity of trading Bitcoin (and many alternative cryptocurrencies) – there are several reasons for this.
First, bitcoin is very volatile. In other words, you can make a good profit if you can forecast the market correctly. Secondly, unlike traditional markets, bitcoin trading is open 24/7.
Most traditional markets, such as stocks and commodities, have an opening and closing time. With the cryptocurrency market, you can buy and sell whenever you want.
Finally, the unregulated Bitcoin landscape makes it relatively easy to start trading – without the need for lengthy identity checks.
How to trade bitcoin online
While all traders want the same thing, they practice different ways to get it. Let's review some examples of common types of trading:
Day Trading
This method involves making multiple trades throughout the day and trying to profit from short-term price movements.
Day traders spend a lot of time staring at computer screens and usually close all their trades by the end of each day.
Scalping
This day trading strategy has become very popular recently. Scalping tries to make big profits from small price changes.
Scalpers focuses on very short-term trading, and is based on the idea that making small profits frequently reduces risk and creates advantages for traders. Speculators can make dozens - or even hundreds - of trades in a single day.
Swing trading
This type of trading attempts to take advantage of the natural “swing” of price cycles. Traders try to detect the start of a particular price movement and enter the trade afterwards. They keep holding until the movement ends, and they take the profits.
Traders try to see the big picture without constantly watching their computer screen. For example, traders can open a trading position and keep it open for weeks or even months until they reach the desired result.
Bitcoin Price and Bitcoin Forecast
When people refer to the “price” of Bitcoin, they are actually referring to the price of the last trade made on a specific trading platform.
This important distinction occurs because, unlike for example the US dollar, there is no single global bitcoin price that everyone follows.
For example, the price of Bitcoin in some countries can differ from its price in the United States, since the main exchanges in these countries have different trades.
Note: Next to the price of Bitcoin today, you will sometimes see the terms “high” and “low.” These terms refer to the highest and lowest prices of Bitcoin in the last 24 hours.
Bitcoin trading volume
Bitcoin trading volume refers to the total number of bitcoins that have been traded in a given time frame. Traders use volume to determine how important a trend is; Significant trends are usually accompanied by high volume, while weak trends are accompanied by low volume.
For example, a healthy upward trend will be accompanied by high volumes when the price is rising and lower volumes when the price is falling.
If you are witnessing a sudden change in price trend in Bitcoin trading, experts recommend checking how significant the trading volume is, in order to determine if it is just a minor correction or the start of an opposite trend.
How do you trade bitcoin?
- In order to start trading bitcoin, you need to do the following:
- Opening a trading account on the cryptocurrency trading platform.
- Verify your identity as a security factor.
- Deposit money into your account.
- Open your first position ( buy or sell short).
Is day trading a good way to make money?
Day trading is just one of the many methods you can choose to trade. Other examples include swing trading or speculation as we explained earlier.
While many people argue that day trading is a good way to make money, more than 90% of people have stopped day trading in the first three months.
Any type of trading strategy can work as long as you are consistent and willing to put in the time and effort to learn how to be better than other traders.