So with the latest Bitcoin jump and the number of people getting involved in either mining or trading, the question that gets asked a lot is how does the process of Bitcoin trading work? How do you get started, what to do and where to do it? This article today will answer some of those questions with the help of bitcoin-code.io.
If you scroll social media, and the web there will be a lot of financial and non-financial advisors telling you what to do and how to get rich quickly. What we like to do is dissect the process of everything so you can understand it better and use that knowledge to yourself, without having to listen to anyone.
If you by some chance do need some additional explaining or some pointers that these places are OK to look at. They shouldn’t be your only source of information because there is a lot of scammers out as well as people trying to make quick cash by referring others to shady sites, apps or trading places.
Stick with us as you have so far and you will get nothing but facts that will help you be informed and let you decide for yourself, based on that. Let’s get started!
Table of Contents
The markets
img source: forbes.com
If you are looking to trade Bitcoin then you have to know that there are several markets where you can do this. What you will almost always hear is that there are high risk and low-risk markets. That is only partially true. All markets carry some sort of risk and there is no such thing as a market without risks. If there was one everyone would be trading there and this world would have more billionaires than it has now. So understand that every market has risks, and that you should trade only if you are willing to take the risk of losing all your money or Bitcoin, and that you shouldn’t trade more than what can afford.
There are more and less volatile markets, that part is true, but those markets are hard to follow especially if you are just starting to trade. More volatile markets tend to have huge up and down swings or changes that can go from 20% to 40% daily. Those experienced ones can utilize these to make some big, quick cash but beginners might get stomped pretty quickly and probably lose everything in a trade or two that went sideways.
The type
When it comes to markets and earning money on them there are two options to do that. You can either be a trader or an investor.
Asiaforexmentors reports that investors role is to purchase some crypto in this case Bitcoin and hold on to it for some time. The period in which you hold a certain amount of anything can be short term and long-term. Short term is calculated to up to a year while long-term is holding anything over a year. Your main task is to make a profit here and you will do that by waiting for your asset to reach a certain price after some time, that you would be satisfied with. Short term investors are maybe more suited for beginning if you don’t know a whole lot about these things. You should limit yourself to a period of few months because it’s easy to follow trends in those periods, and easy to predict the potential downfalls in the price and value of your asset. More seasoned investors will opt for the longer periods but they have to watch out for a lot of information, movements and a whole bunch of other factors that could spoil their plans at any point in time.
Trader typically focuses on short-term profits and day to day trading. This means that you would purchase certain crypto (Bitcoin) and pretty much bet on it rising or falling in price that minute, day, hour… What you do here is use the short term volatility of the market to make a profit. How do you do that? Well, the basic rule of thumb is – Buy Low, Sell High. This means that you should enter every trade at its lowest point and try and predict where and when the asset might hit its next high to earn some cash out of it.
The start
img source: ironx.io
If you want to start trading crypto then your first trade has to be FIAT to Crypto trade. What this means is that you have to find an exchange that is the most reputable, that have easy to access fee structures and most importantly good security. When you find an exchange that fulfils all these requests then what you do next is to make a trade for whatever coins that exchange offers. That means transferring your FIAT currency for cryptocurrency. That is your first successful trade!
Next thing is to go to a market where you can trade one crypto for another, an example being let’s say Bitcoin for Ethereum or vice versa. That is how it all starts. But don’t think that these are only markets where you can trade Bitcoin. There are centralized and decentralized markets that trade crypto with and for crypto, but you are also a crypto trader on all other markets that use all FIAT currencies to trade crypto if they have them offered at the said market of course. So don’t think that you have to trade the only crypto with crypto, you can also get on a public market and trade anything from stocks, bonds to cryptocurrency if the market has it offered.
The conclusion
Although this all might seem a bit overwhelming it isn’t. It is easy to figure out, the only thing you have to be aware of is that you have to take extra precaution when buying crypto for yourself to store or trade on. You have to choose the right exchange with at least two-step authentification and that has a good reputation. After that, you have to choose your crypto wallet that has to be rock solid as well.
Trading is easy as long as you get the basics and you are willing to educate more while you trade. Learning on the go isn’t always the best thing but if you can pace yourself and not trade huge amounts right off the bat you can learn on your good and bad moves on the market. With more experiences, the mistakes will disappear and your confidence will rise. Maybe in a year or two, you go from a trader to a big-time investor, you never know!
