Bitcoin is the world’s first digital currency. Many organizations as well as nations now recognize it. Though it is not under any banking system, it has become a serious contender to challenge traditional currencies. When we consider its history, we can see many fluctuations in its value.
We should follow four steps while starting bitcoin trading:
- How to deal with bitcoin
- Factors which affect bitcoin’s price
- Different types of trading strategies
- Start trading
How to deal with bitcoin
Two ways to deal with bitcoin:
- To buy bitcoin. We should have hope that we can sell it at a profit.
- Speculate the value of bitcoin without buying it.
CFD’s work on the second method.CFD means a contract for difference. A CFD allows traders to invest in bitcoin without actually owning it. If bitcoin investors hold their Bitcoins, they can also use short selling bitcoin CFD trades to overcome the losses when Bitcoin prices show a downward trend. The main advantage of CFD is that if you put only a small initial deposit, we can also gain a large exposure.
The functioning of Bitcoin exchanges is similar to traditional exchanges. They help investors to buy Bitcoins from or sell it to another. But Bitcoin exchanges are not regulated properly, and their servers are not reliable. They also impose fees while you withdraw from your account.
Factors affecting bitcoin’s price
Bitcoin’s value is highly volatile. It makes bitcoin both attractive and risky at the same time. We cannot speculate it’s a value that makes them a risky market. There can be a sudden change in the value of bitcoin. As it’s market works 24 hours, the price change can happen even at midnight.
Bitcoin is not under any banking system. So, economic and political instabilities do not affect its value. But some factors affect Bitcoin prices. The bitcoin supply is limited. As of now, it is 21 million. The expectation is that it will be mined by 2040. But the availability will differ according to the rate at which it enters the market. The value of the bitcoin market is also an influential factor for traders. Another important aspect is public opinion. Public perception can affect every currency, but it influences digital currencies very much. If there is a bad impression of Bitcoin in society, it will affect the price. Trust towards bitcoin will boost if it integrates into new payment systems. Bitcoin is recognized by various organizations. But it is yet to be accepted by whole business organizations. We can expect that in the near future it will be accepted by all. In many cases of security breaches are reported against bitcoin, it will affect the goodwill of bitcoin.
Various trading strategies of Bitcoin
Day trading: Closely watch short term fluctuations and take a position on anticipated changes. Close the trading at the end of the trading day.
Swing trading: Consider the trends from the point where it starts and continues in that position until a negative trend is seen.
Scalping: Check minor price movements and hold a position according to it.
Automated trading: We should automate our trading processes and should react according to the changes.
From our website you will get the detailed information regarding different strategies of bitcoin trading.
How to start trading
1.Open an account
We need a trading account to trade CFD’s.
2.A trading plan should be devised.
We have chosen a trading strategy, but for beginners, a trading plan is also needed. It will help us to make good decisions even when the stake is very high.
For building a trading plan, we should have a goal about what we want to achieve. Then we should consider the risks associated with each trade. Then calculate an approximate profit we get that will overcome our losses.
3.Do research on Bitcoins
Before starting bitcoin trading, we should go through the important news related to it. We should have an understanding of the latest prices and risks in the market. When we check the trend of bitcoin for the past few years, we can interpret its behavior.
4.A trade should be placed
Once you made up your mind and have settled at a position, we should place a trade. The first step is to enter the amount we are ready to stake. We should confirm our conditions. When trading is happening not according to our expectations, set a stop to close our position.
If we expect the value of bitcoin will rise, then we can buy it. But if your expectation is that the price will decrease, then we should sell.
These are the four steps we should follow while bitcoin trading.