HOW TO TRADE WITH BITCOIN?

Updated 2024

Bitcoin was created in 2009. It was the world’s first cryptocurrency and remains the most popular and well-known.

A cryptocurrency is a digital or virtual currency that is secured and traded using cryptography, a system of complex algorithms or mathematical codes.

Bitcoin was created by an anonymous person (or group of people) known as Satoshi Nakamoto. Their goal was to establish a fully decentralized electronic cash system that would operate on a peer-to-peer basis.

Bitcoin is not owned by a central authority or government institution. It can be sent directly from one user to another without the need for intermediaries, such as a bank.

Users can remain anonymous by using encrypted keys so that bitcoin transactions cannot be traced back to them. Bitcoins can also be transferred and withdrawn anywhere in the world.

Bitcoin is notoriously volatile, as has been well documented in the media in recent years. This high volatility means there is the potential for good profit margins. But never forget that this carries risks.

With the added incentive of low entry levels, bitcoin trading has become an attractive option for many. However, anyone trading in any market should be aware that there are always risks.

In this article, we explore the basics of trading bitcoins, discuss how the cryptocurrency operates, the reasons to consider trading bitcoins, and what you’ll need to know before you get started.

THE GOAL OF INVESTING IN BITCOIN

Bitcoin is the world’s first digital crypto currency and remains the most popular. Today, thousands of merchants around the world accept this currency as payment for their products or services. Bitcoin can also be exchanged for regular money using specialized exchange points or trading platforms.

The characteristic that makes bitcoin an attractive asset for investors is that its production is limited, which protects it from inflation. Furthermore, the issuance of bitcoins is decentralized: the production of new bitcoins is carried out by those who wish to use the power of the processing capacity of personal computers anywhere in the world. There is no center that can issue this encrypted currency. Also, there is no fee charged for transferring bitcoins.

The unconditional advantage of this encrypted currency is its anonymity. All an investor can see is the wallet address to which the funds will be transferred. Likewise, the investor does not need to provide any information about himself.

The total number of bitcoins in the world is limited to 21 million, while the speed of launching (mining) new bitcoins decreases approximately every four years, more or less, twice. Therefore, over time, the creation of new currencies becomes slower and more resource-intensive, and therefore the cost of bitcoin also increases. This when investing means that Bitcoin will increase its market value (price) in the long term and over time you can obtain a very good profit.

OBJECTIVES AND GOALS OF INVESTING IN BITCOIN

The potential growth rate of Bitcoin is almost unlimited in relation to even the strongest currencies in the world, the euro and the dollar, allowing this cryptocurrency to be converted into an asset very reliable investment. Of course, we must make money using this information, the growth that Bitcoin has and will have with respect to the euro and the dollar. The main goal when investing in Bitcoin is to create a flexible long-term trading strategy. The investor should avoid the temptation to “get rid” of the crypto currency at the moment when the bitcoin rate shows an unexpected decline. It should also be remembered that the very principle of cryptocurrency provides a stable growth of its rate, and the security of Bitcoin is in no way inferior to the similar characteristics of the same euro and dollar. At the same time, the Bitcoin rate is much less subject to fluctuations that occur with world currencies due to high-profile political and economic events.

Bitcoin Trading vs Bitcoin Investing

Bitcoin Trading and Bitcoin Investing are two different approaches to the cryptocurrency market.

Here are some differences between the two:

Time horizon: Bitcoin trading generally focuses on short-term price movements, while investing in Bitcoin focuses on long-term growth.

• Risk: Trading Bitcoin is generally considered riskier than investing due to its volatility and short-term nature. Investing in bitcoin is considered less risky, but still carries some risk due to the unpredictability of the market.
• Strategy: Bitcoin trading requires a more active and hands-on approach, as traders need to constantly monitor the movements of prices and make decisions based on technical analysis or other indicators. Investing in Bitcoin is a more passive strategy, as investors buy and hold bitcoins for the long term and do not typically make frequent transactions.
• Knowledge and Skills: Bitcoin trading requires a higher level of knowledge and skills , as traders must understand technical analysis, chart patterns, and other Bitcoin trading strategies. Investing in Bitcoin requires a basic understanding of the technology and the market, but does not necessarily require advanced trading skills.
• Profitability: Trading Bitcoin can potentially offer higher returns in the short term due to its volatility, but also carries greater risk. Investing in Bitcoin may offer more stable returns over the long term, but may not offer the same level of potential returns as trading.

Ultimately, trading or investing in bitcoins depends on your personal goals, your risk tolerance and your knowledge of the market.

Trading Bitcoin may be better suited for those seeking short-term gains and willing to take greater risks, while investing in Bitcoin may be better suited for those seeking long-term growth and willing to take a more passive approach. .

HOW TO TRADE BITCOIN IN THE FOREX MARKET?

If strictly speaking we refer to trading, then there are two options:

1. Bitcoin accounts

This option is the simplest. Some brokers allow you to open trading accounts in bitcoins. That is, your balance will be, for example, 1,523 bitcoins. You make some trades, let’s say you trade the pair EUR USD, and you make profits or losses in BTC. By withdrawing your funds, for example, in euros, if the exchange rate of Bitcoin against the euro has grown, you will get additional benefits. And if not grown, you will get losses. Completely analogous to the situation when you have an account in euros.

2. Trade directly with Bitcoin

In this option we will obtain profits thanks to the fluctuations in the cryptocurrency exchange rate. The symbol is called Bitcoin, or BTC USD. To successfully operate with Bitcoin, it is mandatory to have the best brokers that allow you to operate with Bitcoin.

Without a doubt one of the best brokers that currently exist to operate safely with Bitcoin is eToro.

Other additional methods to buy Bitcoins are:

Get a Bitcoin Wallet

Before you can buy Bitcoin, you will need a digital wallet to store your cryptocurrency securely.

There are several types of wallets, including software wallets (online, desktop or mobile), hardware wallets (physical devices), and paper wallets (printed or written records). Choose one that fits your security preferences.

Choose a Bitcoin Exchange

To buy Bitcoin, you will need to use a cryptocurrency exchange.

Some popular exchanges include Coinbase, Binance, Kraken, and Bitstamp.

Research different exchanges and choose one that is accessible in your region and provides the services you need.

Sign up and verify your account

Create an account on your chosen exchange and complete the necessary identity verification procedures.

This typically involves providing personal information and verifying your identity with documents such as a driver’s license or passport.

This step is necessary to comply with Know Your Customer (KYC) regulations.

Deposit Funds

Once your account is verified, you will need to fund your exchange account.

Most exchanges accept deposits in multiple currencies, including fiat currencies such as USD, EUR or GBP.

Place an order

Once your funds have been deposited, you can place an order or request to purchase Bitcoin.

There are different types of orders, including market orders (where you buy at the current market price) and limit orders (where you set a specific price at which you want to buy).

Specify the amount of Bitcoin you want to buy and review your order.

Set order parameters

Choose the amount of Bitcoin you want to buy. You can enter the amount in BTC or your preferred fiat currency (e.g. USD, EUR).

Set your preferred order type. Common types include:

• Market Order: Executes immediately at the current market price.
• Limit Order: Specifies the price at which you want to buy Bitcoin. It will only be executed when the market reaches that price.

Please review the order summary, including fees, before confirming the order.

Confirm the order

After setting the order parameters, click “Open Trade” or a similar button to confirm your purchase.

Stay informed

Stay informed about the cryptocurrency market and security best practices. Beware of phishing scams and regularly update your wallet software for security patches.

Reasons to buy and sell Bitcoin in 2024

While mining bitcoins is not a viable option for most, trading bitcoins is quite simple once you understand the basics.

As mentioned above, bitcoin’s volatility is one of its main attractions for traders. This means that we can see rapid price swings both up and down, and if bitcoin traders anticipate the market correctly, they can make some quick Bitcoin profits. Of course, they can also suffer significant losses.

Another benefit of Bitcoin for beginners is that you can trade 24 hours a day. Most stock markets are limited to the business hours of the countries where they operate.

However, you can buy and sell Bitcoin on exchanges around the world, so trading is possible day and night. And since bitcoin is a global currency, it is not affected by the financial stability or situation of any particular country. In fact, it can rise while other markets fall.

Finally, the relative lack of regulation makes it easy to get started in the market, as there is no need to go through a lengthy verification process.

TRADING STRATEGIES FOR BTCUSD

Now we are going to recommend a few ways to trade to make profits trading the BTC USD pair.

1) FOLLOWING THE GLOBAL BULLISH TREND

Of course, this currency pair is still too young, compared to mastodons like USD JPY, but now without a doubt , with which many analysts agree, we can speak that the BTC USD pair has an overall bullish trend. This must be taken into account when opening long-term positions.

2) IT CAN TRADE 24 HOURS A DAY, 7 DAYS A WEEK

Due to the peculiarities of this currency, Bitcoin is really traded non-stop. It can be operated even on weekends. However, I advise you to refrain from making transactions on non-business days, for volume reasons.

3) FOLLOW THE NEWS

Bitcoin is very vulnerable to the news. Its consequences have a lasting effect on him. Keep an eye on economiccalendar: If you see that a large fund has invested hundreds of millions of dollars in Bitcoins, then consider opening long positions in the coming days. If there is a sharp drop in a major stock exchange or some country has banned BTC, consider opening short positions.

4) THE TECHNICAL ANALYSIS WORKS VERY WELL

With the technical analysis you can even operate simply based on a moving average, whether it is one of 200 periods or one of 21 periods, among others.

5) DO NOT SCALP WITH BITCOIN

Due to its high spread, it is not recommended to trade with low time frames. It is advisable to operate in timeframes of one hour (H1) or longer.

6) TRADING THROUGH GAPS

Although Bitcoin is traded every day, there is a possibility of gaps appearing due to lack of liquidity during the release of unexpected news.

THE RISKS OF INVESTING IN BITCOIN

The risks of investing in the Bitcoin cryptocurrency are related, first of all, to the peculiarities of Bitcoin itself. Although today this cryptocurrency is decentralized, little by little Bitcoin will increase its desire to be centralized. This is because the Bitcoin exchange rate is becoming more active and is beginning to influence the stock market, where this cryptocurrency is bought and sold. In addition, bitcoin “mining” itself is gradually being concentrated in the hands of a fairly small circle of people, owners of the latest technology, which will make it possible to add new bitcoins to the market if they want. More and more middle class people prefer not to pay a high price to obtain bitcoins, and what they do is buy other cheaper cryptocurrencies and exchange them for bitcoins. This trend leads to the creation of some “bitcoin mining centers”, which in itself threatens the decentralization of this cryptocurrency.

Another risk when investing in bitcoins is due to the fact that all operations with this cryptocurrency are open. Therefore, many people can see how many bitcoins have been purchased, and the case that suddenly there is a purchase of a large number of bitcoins, and cases of cryptocurrency price manipulation are quite frequent.

Is it safe to invest in Bitcoin? How to trade Bitcoin with minimal risk in 2024?

Trading bitcoins can be risky due to their volatility, but there are steps you can take to trade them safely. Here are some tips to help you trade bitcoins safely:

Educate yourself

The first step to trading bitcoins safely is to educate yourself about it. Learn how bitcoin works, the technology behind it, and the factors that affect its price.

This knowledge will help you make informed trading decisions.

Choose a Reliable Bitcoin Exchange

When trading bitcoins, it is important to choose the best Bitcoin exchange that has a good reputation and takes security seriously.

Look for an exchange that has strong security measures such as two-factor authentication and cold storage for your funds.

Use a strong password

When creating an account on a bitcoin exchange, be sure to use a unique and strong password.

Avoid using common passwords or reusing passwords from other accounts.

Enable two-factor authentication

Two-factor authentication adds an extra layer of security to your account.

Requires you to enter a code from an authenticator app or text message in addition to your password when you log in.

Keep your funds safe

Don’t keep all your bitcoins on the exchange. Instead, transfer your bitcoins to a hardware wallet, like Trezor or Ledger Nano, which stores your private keys offline.

This will protect your funds from hacking and theft.

Start Trading Bitcoin with Small Trades

If you are a beginner Bitcoin trader, start with small trades to minimize your risk.

As you gain experience and confidence, you can gradually increase the size of your trades.

Use Stop Loss Orders

To limit your losses, use stop loss orders when trading bitcoins.

A stop loss order automatically sells your bitcoins if the price falls below a certain level, helping to avoid large losses.

Don’t panic, sell Bitcoin

Bitcoin is known for its volatility and prices can fluctuate quickly. Don’t panic if the price drops suddenly.

Instead, stick to your trading plan and use stop loss orders to limit your losses. Choosing when to sell Bitcoin should be a calculated decision, independent of emotions.

Stay up to date

Stay up to date with the latest news and trends in the bitcoin market.

Follow trusted sources and stay informed about regulatory changes and market developments that could affect the price of bitcoin.

Common mistakes in Bitcoin trading

Here are some of the most common mistakes traders make when trading bitcoins, along with tips on how to avoid them:

• Failing to do proper research: It is important to do your due diligence and thoroughly research a cryptocurrency before investing. Avoid making hasty decisions based on hype or speculation.
• Emotional Trading: Trading based on emotions, such as fear or greed, can lead to losses and poor decision making. Follow a trading plan and avoid making impulsive trades.
• Do not use stop loss orders: Stop loss orders help protect your investment by automatically selling your bitcoins at a certain price level to minimize losses . Failure to use them may result in higher losses.
• Ignoring risk management: Proper risk management is essential for successful trading. This includes setting stop-loss orders, avoiding trading a large portion of your portfolio in a single trade, and using appropriate leverage.
• Chasing Losses: It’s natural to want to recoup losses, but chasing losses by making larger trades can generate more losses. Follow your trading plan and avoid making impulsive trades.
• Overtrading: Overtrading can lead to exhaustion, errors and losses. Set realistic trading goals and avoid overtrading.

Failing to stay updated with market news: Stay informed about the latest news and trends in the cryptocurrency market to make informed trading decisions.

Conclusions

There has been a lot of media interest and excitement around Bitcoin in recent years, with reports of people making millions trading and investing in the cryptocurrency.

Bitcoin and other virtual currencies have made trading more accessible, with lower entry levels and the opportunity to trade anywhere in the world, as long as you have an internet connection.

As a young and volatile market, bitcoin offers interesting opportunities, but also carries many risks. With the potential to make a lot of money, there is also the potential to lose a lot.

If you are considering trading bitcoins, you should make sure you have learned everything you can about the market, researched your trading strategy, and identified a reliable exchange platform. And, as with all types of trading, you should never invest more than you can reasonably afford to lose.