Bitcoin poses a serious challenge to traditional currencies as the world’s first cryptocurrency. However, considering its price history, there should be a lot of volatility along its path.
Below are four steps that will help you trade Bitcoin:
- Mechanisms to deal Bitcoin
Bitcoin can be dealt with in two ways: buying the Bitcoin itself and hoping to sell it at a profit or theorize on its value without ever owning it. CFDs work in the latter sense. What a CFD does is enable you to deal with a contract that is constructed on the prices in an underlying market. This is a purchased product, which means that you need to initially put down a small deposit and again disclose a much more prominent position. This can appreciate your profits. It should be noted, however, that it has the same effect on your losses.
When trading Bitcoin, do I need to use an exchange?
To take a position on the price of Bitcoin, what you need is an IG trading account. However, when you deal with bitcoins CFDs, you do not interact directly with an exchange. As an alternative, you trade the sell and buy prices sourced from a couple of exchanges on your behalf.
Same as traditional exchanges, Bitcoin exchanges work the same way. This enables investors to purchase the cryptocurrency from or dispose of it to another person. There are some advantages when you cut them out of the picture entirely.
Their service and matching engines are unreliable. This can result in reduced execution precision or shelving of markets.
They inflict restrictions and fees on the withdrawing and funding from your exchange account, while accounts can take long periods to acquire.
When you trade Bitcoin CFDs, you acquire considerably improved liquidity at the touch price you’ve chosen. When you sell and buy from the exchange directly, you will have to accept multiple prices to finalize your order.
- Factors that change the price of Bitcoin
The volatility of Bitcoin makes it an attractive opportunity and dealing with cryptocurrency. Due to the Bitcoin market operating continuously, this can happen at any time of the day. Bitcoin is free from the various political and economic concerns that influence the traditional currency. However, due to its young age, there remains a lot of uncertainty uniquely based on the fact that it’s a cryptocurrency.
Any of these factors can impact its price suddenly and significantly, and for this reason, you need to research and know-how to navigate these risks that may come up.
Bitcoin supply
Even though there are a limited number of bitcoins, the last Bitcoin will be mined in 2140. However, the availability of Bitcoin changes as to how they enter the market. For example, their holders’ activity, dealing with them in Bitcoin slots, also affects this availability.
BTC market cap
The Bitcoin market value is recognized to be both an impactful and opportune because traders will want to jump on a surging opportunity, or not.
Industry adoption
What remains to be seen is the impact Bitcoin will have on the corporate stage as it is yet to be accepted generally by most businesses around the world.
Day trading
When you day trade, there is a need to take a position that considers an accidental movement in the short term. It would help if you also closed it out by the end of that specific trading day. This is an effective strategy if you desire to acknowledge opportunities in the short term in the Bitcoin market. This is in light of emerging patterns or developing news.
Scalping
This is when you place intraday traits frequently one small movement in price.
This is a worthy strategy if you desire to place yourself in a position to form continuous but small profits. This is when you do not want to wait for a significant breakdown or break out.
Swing trading
This is when you capture trends the moment they are made and clutch on to that position up to the point the trend shows the signs of a reversal or runs its course.
This is the preferred strategy for you if you decide to take advantage of this chance from market momentum.
It is advisable to automate your processes in trading and react to changing market conditions on your behalf.
This strategy is best used if you consider yourself a passive trader.
Open an account
You will need an IG trading account if you want to trade CFDs. It is an easy task to do, and you can go ahead and take your first position when you have added funds to your account.
Establish a trading plan
It is always a smart move to establish a trading plan. This works hand in hand with your chosen trading strategy. If you’re new to the market, you need to consider having these two. A trading plan will assist you in making objective decisions regardless of the stakes being high. This mixture that you do not leave trades open for long or close them early.
Do your study
To understand what’s next for the cryptocurrency price, you need to do your research and speed with the latest Bitcoin news. It is essential to do this before you start on your trading journey.
When you are looking up to interpret how Bitcoin behaves, charts are an important tool. Past data is an excellent indicator of how the market is progressing. The comparison of time frames can also provide better insight as to the emerging patterns and trends.
Place a trade
Using a web trading platform, you will be required to place a trade once you have decided on your position.
You need to enter the deal tickets the amount you have decided to stake on your trade.
While you do this, you have an option of defining your clothes conditions: you can set a stop to terminate your position when the market is not in your favor up to a certain amount or a restraint for when it’s move is in your favor. Always check yourself; limits and stops are important to sound risk management.
Note that, if you anticipate Bitcoin to appreciate, you then ‘purchase’ the market. If you believe that it will depreciate, you will ‘sell.’
To finalize your position, you need to place the reverse of your initial trade. This means that if you purchased at first, you’d have to sell the same amount;
If you had sold, you would not need to buy it. You will be required to click sell or buy to finalize your trade as your deal ticket is automatically filled.
References
- How to trade Bitcoin: Get to grips with the basics of how to trade bitcoin with our step-by-step guide.
- Cryptocurrency trading: Find out how to get started trading cryptocurrency in this step-by-step guide. By Andrew Munro.
Disclaimer: This is a paid post and should not be considered as news/advice.
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