Bitcoin has taken the world by storm in recent years, becoming one of the most talked about technological trends and attracting media headlines. This unique digital asset was created in 2009 by the unknown Satoshi Nakamoto and devised as a way to give people control over their own financial future. Since then, Bitcoin price has exceeded expectations, making early investors incredibly wealthy.
Aside from facilitating online payments at low cost, one of the main draws of Bitcoin is how volatile its price can be. Big swings in the price of the coin can offer opportunities to traders looking to capitalize by buying and selling their Bitcoin at the right times. While there is money to be made, it’s important to understand how trading works before you get started.
How to Start Trading Bitcoin
Trading Bitcoin is simpler than you might think, but you need to know how it works before you jump in. If you’re a complete beginner, there are a few things you should know first. Follow these steps to begin:
Signing Up to an Exchange
To trade Bitcoin, you need to first join an exchange. Exchanges are where cryptocurrencies are traded, either for other coins or for fiat currency such as dollars. There are many different exchanges out there, and almost all of them allow you to trade Bitcoin with multiple trading pairs supported. Signing up is simple; you just need to provide your full details and show proof of identity before funding your account.
Choosing Your Trading Pair
A trading pair is a set of two different assets that can be traded for each other. For example, if you want to trade Bitcoin, you might choose a Bitcoin/dollar trading pair, which will allow you to sell dollars for Bitcoins or the other way around. Different pairs have different volumes, liquidity, and opportunities, but it’s best to choose one that’s easier for you to use.
Understanding the Chart
When you open your trading pair, you’ll be able to see the current price, open orders, and price chart. This chart gives you a real-time overview of the selected timeframe, allowing you to see current orders being completed and the price movement. Most traders use charts to analyze the market and make their trades, which is known as technical analysis.
Choosing a Strategy
While understanding the chart is important, not every trader uses technical analysis as their main trading strategy. There are lots of ways to trade, including following trends and news, algorithmic trading, swing trading, and many more. Read up on different strategies and try them out to find out which one works best for you. There’s no right or wrong strategy, but it’s important to implement them well and stick to what works.
Stay Up to Date
Even if you’re not trading Bitcoin based on the latest trends and news, it pays to be plugged in and aware of what’s happening. Staying up to date with what’s going on in the market will help you understand price movements and predict future movements, something that can obviously be extremely beneficial.
Managing Risk
All trading comes with risks, but some strategies are more risky than others. If you want to find long-term success, being able to understand and manage risks is essential. Avoid trading more than you can afford to lose, and know when to cut your losses when your trades don’t go well. Above all else, it’s important to take emotion out of your trades, as it can easily cloud your judgment and make you forget your strategy if you’re not careful.
