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The A-Z of Bitcoin Trading. A complete guide for beginners.

Bitcoin trading

Bitcoin trading is pretty simple and easy the moment you get to know about it. You can easily buy and sell bitcoin whenever you want. Bitcoin attracted and has caught a lot of investor’s interest because of its volatility. Each time Bitcoin’s value rises, new investors and speculators want a lot of benefits.

It is very simple for anybody to exchange Bitcoin as the barrier for entry is so low. Things being what they are, how would you get your cut of the pie? What needs to be done in order to be sure that you are going to trade bitcoin in an effective manner? 

Especially since Bitcoin has performed better than most other asset classes like crude oil and binds during 2019.

Bitcoin Trading: Why to Trade Bitcoin?

There are various reasons for bitcoin to be unique and very exciting some of the reasons are as follows:

· Bitcoin is Volatile

Bitcoins and cryptocurrencies are infamous for their price fluctuations. This volatility helps traders make money easily and quickly.

Bitcoin has observed incredible bull-runs and disastrous bear markets but has still survived the onslaught. It’s this inherent volatility that has made the digital asset infamous and a household name. 

For example, since the beginning of 2019 the price of Bitcoin has grown by more than 200% to an eye-watering $12000.

Bitcoin trading

 

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· Opening hours

Unlike the stock market whose timing is based on the country, they operate and reflect the working hours of that country. Bitcoin is open 24X7. There are various exchanges everywhere around that world that operate 24X7, where anyone can buy and sell bitcoins.

· Bitcoin is not Fiat

Bitcoin is not under a single government’s control that is, not a fiat currency. Instead of one economy having control over the price of bitcoin, there is a various range of events that have affected the price of bitcoin in the recent year.

· Trump’s election:The moment after Trump’s victory the markets started falling. The day before the election night, the price went up to $740 because of issues encountered by the Mexican peso. From that point onward, it went down to $705 and afterward went to $739 when Trump got elected.

· Brexit:UK’s choice to quit the European Union has caused a serious scene with their local economy. Therefore, trade giant Binance had expressed that they have been “overpowered” by enlistments for its new Jersey-based trading platform because of insane demand. Binance Jersey enables clients to exchange euros and British pounds with bitcoin and Ethereum and get to access digital asset management services.

· India’s Demonetization:The Indian Prime Minister Narendra Modi announced demonetization and banned the 500 and 1000 rupees notes. 18 days after the announcement of this demonetization, Bitcoins price went up from $757 to $1020 (per bitcoin) on Zebpay. Which one of India’s leading exchanges.

From all these three cases, we can make one straightforward and clear conclusion. Individuals tend to put money into Bitcoin when looked with unstable markets and obstacles going up against fiat currencies.

Bitcoin Trading: How Bitcoin works?

When you are interested in investing in any asset first thing you need to do know is how it works. Bitcoin is something that is powered by Blockchain Technology.

Blockchain Technology

Satoshi Nakamoto is a programmer who invented bitcoin and this bitcoin is completely powered by blockchain technology. Blockchain is nothing but a time-stamper series of unchangeable record of data is managed by a bunch of computers which is not owned by any single entity. Each and every block of these data are secured and bound to each other by cryptographic functions.

So, in simple words, let us imagine a universal ledger that anyone can download and write on it. Everyone who has a copy of this ledger can check the records on the ledger, can check the timing of the records, and they cannot make changes to any previously made entries because of the ledger in unchangeable or immutable.

That is the thing that Bitcoin has provided for us, the primary legitimate execution of an innovation which can go about as an immutable and transparent record. This innovation gives us a framework that is incorruptible and free from human corruption since every single transaction made into the blockchain can be checked.

Bitcoin Trading: How do transactions work?

In bitcoin, you are your own bank and that is the most valuable thing about it. To complete a transaction, you don’t need to go through any bank for it. This is done by public key cryptography. Each and every bitcoin user has a private key and a public key which are both derived from each other mathematically. 

The public key or the public address is like your account number and the private key is a PIN code to it. People can send you bitcoins using your public key and you send people your bitcoins using the private key. This makes it very clear that you should reveal your public address to everyone but you should not by any means reveal your private key to anyone.

Thus, this is what is bitcoin trading and how bitcoin works. Now let’s look at how you can get some on your hands, and learn the first step towards how to trade bitcoin?

Bitcoin Trading: Exchanges — The gateway to Cryptos

The exchange is known as the most critical function in the cryptosystem. It behaves as a portal between the Fiat world and the crypto world. A cryptocurrency system is just like a stock exchange but focusing on the cryptocurrency tokens. A cryptocurrency exchange is nothing but a platform where customers buy and sell cryptocurrency tokens. This platform is designed to make the process beginner-friendly, offer competitive prices, and also to provide a platform to all the experienced professional cryptocurrency traders. There are two forms of crypto exchanges:

· Fiat to crypto exchange

· Crypto to crypto exchange

Fiat to Crypto: This exchange has been designed to be beginners-friendly and helps you buy cryptocurrency in exchange for Fiat money. Bitbuy and Coinbase are some of the best fiat-to-crypto exchange. Bitbuy can be used directly to buy Bitcoin, Ether, Bitcoin Cash, and Ripple.

Crypto to crypto: These exchanges help you trade certain cryptos like BTC, ETH, BCH and so on for different cryptocurrencies. Binance is a fine case of a crypto-to-crypto trade. These are the trades that are outfitted more towards the experienced traders than the beginners.

Some of the major exchanges include, Binance, Okex, Bitfinex, Huobi among many others. Almost all exchanges provide fiat-to-crypto transactions to make a conducive environment for new investors.


Bitcoin Trading: Cryptocurrency wallets

All the exchanges have their own wallets but they are not the safest options. If your intention is to hold on to your crypto for a long period of time then you should look into cold wallets. There are two types of cold wallets that are hardware wallets and paper wallets.

Hardware wallets

A hardware wallet is physical from storing your cryptocurrency. The form physical device like USB stick typified by the Nano Ledger. Albeit many swear by them, hardware wallets are as yet inclined to settle. Right off the bat, you’re believing that the organization who made your wallet hasn’t logged all the private keys with an arrangement to attack wallets later on. 

This applies to those purchased from the organization themselves, yet especially if an equipment wallet has been gained by second hand. By no means should anybody ever utilize a pre-owned hardware wallet. Despite the fact that misfortune or harm can spell disaster for the ill-equipped, hardware wallets can be restored. In this way, it’s similarly as imperative to back up your hardware wallet, as it is your online hot wallet. Some equipment wallets that you can use are Record Nano S, Trezor, and Keepkey.

Paper Wallet

Paper wallets are an offline cold storage method that helps in saving cryptocurrency. It incorporates printing out your public and private keys in a bit of paper which you then store and spare in a protected spot. The keys are imprinted as QR codes which you can scan later on for every one of your exchanges. The motivation behind why it is so safe is that it gives unlimited authority to you, the client. You don’t have to stress over the well-being of a piece of hardware, nor do you need to stress over hackers or any bit of malware. You simply need to deal with a piece of paper. You don’t have to pay any cash to make paper wallets. This makes it an economically reasonable choice. You can go to Wallet Generator to make your own Bitcoin paper wallet.

Bitcoin Trading: How to Trade Bitcoin?

There are many ways in which Bitcoin and cryptocurrencies can be traded and it is completely dependent on what you are expecting to gain from your investments and for how long you are willing to trade. There are four main kinds of trading such as:

· Day Trading

· Scalping

· Swing Trading

· Passive Trading

Day Trading:With one single trading day the day traders open and close their positions. This strategy works best for investors who want to gain benefits from short-term opportunities in the bitcoin market.

Scalping:This is making several intra-day trades on small price changes. It is for the traders who would want to make several small frequent profits rather than just wait for a huge opportunity.

Swing Trading:These swing traders catch the trend in price movements the minute they form and hold on to it until the trend experiences a reverse. If you are an investor who is looking to take advantage of market momentum then this strategy is perfect.

Passive Trading:This trading is pretty simple you wait for the price to drop to a certain level and then make a purchase. Then you wait till the prices go up to a certain level to sell them. This strategy is best for investors who are looking for a long-term hold or if you just want to get into the crypto market and try out your hand in it.

Bitcoin Trading: Fundamental Analysis vs Technical Analysis

Fundamental and technical analysis are the two important tools to keep in mind while trading.

Fundamental analysis

Fundamental analysis looks at the bigger picture rather than just the price fluctuations. When you are doing a fundamental analysis of a coin you should consider:

· The developer activity surrounding the coin

· The mainstream integration of the coin

· Important world events that can lead to the change in the price of the cryptocurrency

Technical Analysis

This is a tool that is used to predict the future price fluctuations of a stock, a cryptocurrency pair, or a currency pair. This helps you gain a deep perspective of a coin. The assumption that is made in technical analysis that no matter what is currently happening in the world, the price fluctuation speaks for itself and tells a story that will help you predict the future.

Bitcoin Trading: Common mistakes to avoid

· Itchy trading finger:Trading in cryptocurrency is just like gambling and isn’t an exact science. People generally tend to overtrade in. order to keep with the trend. It is not advised to overplay especially when you lack disposable income. You can surely gain a lot, but you can lose a lot as well.

· Emotions:The two common emotions in investors are greed and fear. You should not get into emotions, you should try to stay as rational as possible.

· Blind Trading:You should always trade with a strategy. Always make sure to take your time and do the research about which coin will benefit you before you trade.

· Learning from mistakes:You might be a beginner or an expert, everyone will make mistakes and you got to learn from it. It is simple if you misread the patter the first time then it is a mistake, but if misread it the second time then it’s completely on you and you haven’t learned from your mistakes.

By this article, we hope you have understood about Bitcoin trading and how it works. Keep learning more and more in order to gain more knowledge about bitcoins and trade in a better way.

 


 

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