Unlike trading other instruments, the cryptocurrency market is available 24 hours a day, 7 days a week. In addition, you can start trading with any amount. If you were to trade stocks, you will need anything from $2,000 – $30,000 as your initial investment before opening a brokerage account. However, you can start trading Bitcoin with any amount you have. Then there is the other advantage of trading in an environment that is not dominated by financial institutions that are trying to manipulate the prices in their favour. Trading Bitcoin can, therefore, be a lucrative venture – as long as you know how to trade bitcoin safely.
Here are the three basic steps for how to trade bitcoin:
Learn to trade
Before you start trading, take some time and learn what it entails. Contrary to common belief, trading Bitcoin is not merely buying it and waiting for the price to rise. For you to be a profitable trader, you must learn and know exactly where to enter and exit a trade. You can look for exchanges and brokers that allow for paper trading then use them to learn to trade without risking any money. Your goal should be learning how to trade bitcoin using the different indicators as well as studying the charts and candles. These will help you know exactly how to trade bitcoin, where to enter a trade and when to take profits.
Create a strategy
Once you have learned how to trade bitcoin, the next thing you want to do is create a trading strategy. A strategy will help you eliminate emotional whims from your trades. If you trade without a predefined strategy, you will react the wrong way and this is a sure way of losing your money fast. The place to begin is to establish whether you want to be a day trader or a swing trader. If you are starting with little money, you may want to find a strategy that will help you build the small account. There are lots of free resources on the internet that can help you create a winning trading strategy.
Open an exchange account
Once you have learned to how to trade Bitcoin and have devised a strategy, open an exchange account, purchase your bitcoin and start trading. The exchange you settle for will mostly be determined by your trading strategy. For instance, if you only want to concentrate on trading Bitcoin against Ethereum, USD, and Tether, then coin base would be a great exchange. However, if you are looking to trade altcoin pairs, you might have to go for other exchanges that support more cryptocurrencies.
The thing to remember when considering how to trade Bitcoin is that some traders lose money while others make a killing. The main difference between profitable traders and those that make losses is emotional trading. If you want to make money as a bitcoin trader, you must remove your emotions from the equation. The only way to do this is to prepare well by learning and developing a strategy.