5 Easy Steps For Bitcoin Trading For Profit and Beginners
Bitcoin trading can be extremely profitable for
professionals or beginners. The market is new, highly fragmented with huge
spreads. Arbitrage and margin trading are widely available. Therefore, many
people can make money trading bitcoins.
Bitcoin’s history of bubbles and volatility
has perhaps done more to bring in new users and investors than any other aspect
of the crpytocurrency.
Each bitcoin bubble
creates hype that puts Bitcoin’s name in the news. The media attention causes
more to become interested, and the price rises until the hype fades.
Each time Bitcoin’s price rises, new investors and
speculators want their share of profits. Because Bitcoin is global and easy to send
anywhere, trading bitcoin is simple.
Compared to other financial instruments, Bitcoin
trading has very little barrier to entry. If you already own bitcoins, you can
start trading almost instantly. In many cases, verification isn’t even required
in order to trade.
If you are interested in trading Bitcoin then there
are many online trading companies offering this product usually as a contract
for difference or CFD.
Avatrade offers 20 to 1 leverage and good trading
conditions on its Bitcoin CFD
trading program.
Why Trade Bitcoin?
Before we show you how to trade Bitcoin, it’s
important to understand why Bitcoin trading is both exciting and unique.
Bitcoin Is Global
Bitcoin isn’t fiat currency, meaning its price isn’t
directly related to the economy or policies of any single country. Throughout
its history, Bitcoin’s price has reacted to a wide range of events, from
China’s devaluation of the Yuan to Greek capital controls.
General economic uncertainty and panic has driven some
of Bitcoin’s past price increases. Some claim, for example, that Cyprus’s
capital controls brought attention to Bitcoin and caused the price to rise
during the 2013 bubble.
Bitcoin Trades 24/7
Unlike stock markets, there are no official Bitcoin
exchanges. Instead, there are hundreds of exchanges around the world that
operate 24/7. Because there is no official Bitcoin exchange, there is also no
official Bitcoin price. This can create arbitrage opportunities, but most of
the time exchanges stay within the same general price range.
Bitcoin is Volatile
Bitcoin is known for its rapid and frequent price
movements. Looking at this daily chart from the CoinDesk BPI, it’s easy to spot
multiple days with swings of 5% or more:
Bitcoin’s volatility creates exciting opportunities
for traders who can reap quick benefits at anytime.
Find an Exchange
As mentioned earlier, there is no official Bitcoin
exchange. Users have many choices and should consider the following factors
when deciding on an exchange:
Regulation & Trust – Is the exchange trustworthy? Could the exchange run
away with customer funds?
Location –
If you must deposit fiat currency, and exchange that accepts payments from your
country is required.
Fees -
What percent of each trade is charged?
Liquidity – Large traders will need a Bitcoin exchange with high liquidity and
good market depth.
Based on the factors above, the following exchanges
dominate the Bitcoin exchange market:
Bitfinex - Bitfinex is the world’s #1 Bitcoin exchange in terms of USD trading
volume, with about 25,000 BTC traded per day. Customers can trade with no
verification if cryptocurrency is used as the deposit method.
Bitstamp - Bitstamp was founded in 2011 making it one of Bitcoin’s oldest
exchanges. It’s currently the world’s second largest exchange based on USD
volume, with a little under 10,000 BTC traded per day.
OKCoin - Bitcoin
exchange based in China but trades in USD.
Coinbase - </p>
Coinbase - Coinbase Exchange was the first regulated Bitcoin exchange in the
United States. With about 8,000 BTC traded daily, it’s the world’s 4th
largest exchange based on USD volume.
Kraken - Kraken
is the #1 exchange in terms of EUR trading volume at ~6,000 BTC per day. It’s
currently a top-15 exchange in terms of USD volume.
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