Do you want to trade in bitcoin? Before you start, read this bitcoin trading guide. It lets you know the key facts before you dive into the crypto world.
From being the currency that was once sold in Gas Stations to becoming one of the most coveted assets in the world, bitcoin has come a long way. There are other coins which have been developed based on the same technology as the bitcoin.
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However today, bitcoin is known as the King of Cryptocurrencies. Once used as a token in the gaming industry, it is now a hot commodity in the market and everyone wishes to own at least one.
You might also want to own it in the hope that the rising price will be the solution to all your financial problems.
Cryptocurrencies are being discussed in almost every room. In fact, knowing more about it will just make you a big part of those discussions.
You Cannot Go Wrong With These Easy to Follow Bitcoin Trading Guide
Knowing about the bitcoin and other cryptocurrencies is just not enough. You also need to have intimate knowledge about the process of trading cryptocurrency.
So, let’s explore more using this bitcoin trading guide.
To trade different cryptocurrencies, you need a good cryptocurrency exchange. Before starting to trade, any trader whether beginner or professional needs to do some fundamental research on how to trade Bitcoin.
There are many strategies which have been evolved over the last couple of years. However, the best strategy is to do some paper trading by observing the market movement daily.
Over a period of time, you would realize that Bitcoin and other cryptocurrencies move in a daily particular range. It moves between 5 – 10% up or down which gives the trader a good swing trading opportunity.
Let us now explore different ways to successful Bitcoin Trading.
Fast Execution of Trades in The Exchange
You may be aware that the bitcoin and the altcoins are being traded rapidly from one user to another popularly known as peer to peer. Because of that, there is a fluctuation that you can see in the price’s multiple times within microsecond.
This creates a need to have lightning speed execution of trades in cryptocurrency exchange. There are many exchanges who had claimed to be the fastest in the past. However, during the heavy volatility in the market, it tends to delay in price execution.
Moreover, sometimes it even fails to execute the trade at the right price. You do not want to be stuck, waiting for the trade to happen. In the end, you may then realize that you could have bought or sold at a better price.
Bitcoin Trading Guide – Trade Strategies
Arbitrage
When you are in the business of trading cryptocurrencies, you might be familiar with a number of exchanges currently operating in this space.
Often, you might have noticed that there is a difference in the prices of the same coins listed on each of these exchanges.
This brings the opportunity for an arbitrageur to take Buy position on one exchange and sell position on another exchange. Thereby grabbing the opportunity of difference in pricing.
One thing that you have to keep in mind is that the difference should be good enough. So, that you can cover the transactions fee to make a profit.
Jobbing and Scalping
Jobbing is also known as Scalping and is a unique trading strategy for High-Frequency Traders (HFT). Traders trade aggressively in the market with a high number of trades and thin profit margin.
This strategy is also good to take advantage of volume incentive benefits introduced by many Crypto Currency Exchanges in the world.
This reduces the risk of high volatility happening overnight. In this strategy, you would earn small amounts in each trade and vice versa.
Selection of the Customised User-friendly Exchange Platform
Before selecting the exchange, the most important thing is how well the exchange gives you to customise your trading experience. Whether it is user-friendly in terms of the market watch, time and sales data, order window, balance screen and so on. All these would help you in having a seamless trading experience.
In today’s smartphone world every user is sitting online more than 75% of their daytime. Giving a mobile experience application would give you an easy to track the market at any given point of time.
You can thereby react to the fast volatility of all the cryptocurrency listed on the exchange. This also gives you an added advantage to trade in the fast-growing Crypto world.
Exposure Beyond Bitcoin
When you become comfortable trading in bitcoin, you will want to explore other opportunities that you see on the exchanges. There are a lot of altcoins that can help you make profits.
There is an old saying “Do not put all your eggs in one basket”. This is the most important strategy which is proven to be right since ages as betting only on one crypto would take you for a ride.
Instead, distribute your money by investing in different altcoins available in the market. However, you will want to look out for the predictions on the altcoins. Since they are quite a lot more volatile in prices than the bitcoin.
This might mean a higher profit ratio but it also means higher risk. Since you are going to be dealing with quite a lot of coins in your portfolio. So, it is a good idea to have all of them in one single place so that you do not lose track of your financials.
A solution to this problem is to choose an exchange that has the support for all the major cryptocurrencies. Moreover, it must also support other digital assets so that all your trades can occur in one single place.
Security an Eternal Part of Cryptocurrency Exchange
When you are trading, there are funds involved. For some people, it is the life savings that they trade on, in order to ensure a better future than they had previously planned.
Therefore, it is quite critical that the trading exchanges are secure and reliable. For that, you need the best possible security system in place. So that to prevent people from hacking into your accounts and taking the funds out of your wallets.
There is a concept called Cold Storage and Hot Storage Wallets. You should always look for the exchange which supports both as Cold Storage wallets are hard to hack.
Another thing that you require to check before you start trading on the exchange is a strong team backing the exchange. It may be in the form of developers so that the trust is built strongly between the traders and the developers.
Understanding Different Trading Pairs – Bitcoin Trading Guide
You may find different exchanges which trade into different Fiat to Crypto and Crypto to Crypto. However, as a first-time user, you would also be able to trade Commodity to Crypto. Yes, you hear it right, there are a lot of developments happening in the market.
A trader can always look for new opportunities so soon. It is said that traders would get a new trading pair named Gold / Bitcoin, Silver / Bitcoin and so on.
This would enable a trader to have the next level of Arbitrage opportunities which are going to be excited. Traders would be able to trade between traditional exchanges of Gold / USD and Gold / Bitcoin by hedging Bitcoin / USD.
Doesn’t it sound Exciting…!!!
Conclusion – Selection of the Right Crypto Currency Exchange
Investment is always subject to market risk. Therefore, you should always conduct thorough research before you go ahead. This bitcoin trading guide lets you make a choice of the exchange that you are going to trade on.
Consider that the exchange should be highly secure since you do not want to lose your funds to a kid who learned to hack well. Make an informed choice and ensure that you go through the reviews of the other users on the internet before you put your hard-earned money in the exchange.
The number of scams that have happened recently has opened the eyes of many people. You must follow who provide in-depth knowledge on the working of many exchanges.
In the end, the only thing that matters is a best user-friendly exchange, best in class security and technology and highest trade execution speed.
So, whether you are a beginner or a professional trader, it is important to have proper fundamental research and then hit the TRADE button.
Now I’d like to hear from you.
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Published on: Dec 26, 2018