Bitcoin Trading

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  • What is Bitcoin Trading

Bitcoin trading differs from investments in Bitcoin. Investing in Bitcoin means you are buying for the long-term believing that the price will rise regardless of the ups and downs associated with investments. People invest in bitcoin because they believe in the technology, ideology or the people behind it. Bitcoin Hodlers buy and keep for the long term while Bitcoin traders buy and sell in the short-term believing that profit can and will be made. Traders don’t really care about the technology or ideology behind the product they are trading though many people invest and trade at the same time as some do believe in the technology and ideology but at the same time wants short term gains on the product.

BITCOIN TRADING ADVANTAGE

  • If you study and anticipate the market well you can make a nice amount of profit as bitcoin is very volatile
  • Unlike traditional market bitcoin trading is open 24/7, traditional marketing like stocks and commodities have an opening and closing time but with bitcoin you can buy and sell whenever you please
  • Bitcoin’s unregulated landscape makes it relatively easy to start trading

TYPES OF TRADERS

  • Day Traders: They conduct multiple trading throughout the day and trying to profit from short term price movements. They spend a lot of time staring at computer screens following up on price movements and closing their trades on time
  • Scalpers: They are also day traders but seek to make substantial profit on short price movements. They focus on extremely short-term trading based on the idea that making small profits throughout the day limit risk and creates advantages for traders. Scalpers can make up to 100 trades in one day
  • Swing Traders: they try to take advantage of the natural swing in price cycles, they try to spot the beginning of the price cycle and enter the trade then they hold on until the movement dies out then take the profit. Swing traders can open their trading positions for weeks or months

METHODOLOGY OF BITCOIN TRADING

Traders usually follow two methodologies when trading bitcoin which is fundamental analysis and technical analysis

  • Fundamental analysis: It looks at the big picture. In the case of Bitcoin fundamental analysis follows and evaluates the news about the industry, technical analysis of bitcoin, regulations around the world or any form of new that will affect the future price of bitcoin, Traders here look at the value of bitcoin and not its current price to make a decision
  • Technical Analysis: This looks at predicting the price by studying market statistics such as price movements and trading volumes. It tries to identify patterns and trends in the price which may suggest what will happen to the price in future
  • Trading term explained
  • Bitcoin Exchanges: They automatically match buyers and sellers; they usually have lower fees compared to bitcoin companies
  • Order Book: Is a complete list of buy order and sell orders which can be viewed on the exchange. The buy orders are called bids since people are bidding the prices to buy bitcoin. The sell orders are called Ask since they show the asking price the sellers request to buy bitcoin
  • Price: When people refer to price, they are talking about the last price bitcoin was sold on a specific exchange

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