If you are a fan of bitcoin and other cryptocurrencies and are planning to trade bitcoin, you need to learn a lot more things first. Bitcoin is the world’s first cryptocurrency that was introduced as a peer-to-peer network independent of government and banks. It doesn’t involve any central authority or intermediary in initiating, verifying, or approving the transactions. If you want to trade bitcoin, you may have heard a complete guide that states strategies and provides tips on bitcoin trading. It might be possible that you may get confused and thought that trading bitcoin is challenging.
Well, trading bitcoin is not difficult, but it requires a complete understanding of the bitcoin market and the factors that could affect bitcoin’s price. It is advised that instead of trading bitcoin through the crypto exchange, you should trade bitcoin through CFD trading. CFD trading means trader takes a position in the market on bitcoin’s price and expects it to rise or fall according to bitcoin’s buying and selling price. Traders may experience some massive fluctuations or swings in the price of bitcoin, which may contribute to both risk and benefit. Visit bitcointrader to learn the different methods of bitcoin trading.
Different Methods of Bitcoin Trading
Bitcoin trading can be categorized into two different types. One type of bitcoin trading involves buying and trading bitcoin on a crypto exchange, expecting its price to increase in the near future to earn a profit. In this type, trading mainly relies on untrustworthy exchanges. The other method is to trade bitcoin based on assuming the price movements of bitcoin without buying cryptocurrency, which can be accomplished through the CFD trading account.
Let us learn about both bitcoin trading methods in brief.
Bitcoin Exchanges
Crypto exchanges are marketplaces that do the work of storing cryptocurrencies. Exchanges in which you’ll store your bitcoins will hold many other cryptocurrencies, which is the prime target of cybercriminals. Hackers have made hacking is a common practice in crypto exchange, and since the invention of cryptocurrencies, there are some notable hacks and thefts that have taken place in crypto exchanges. There is a huge risk of storing or trading your cryptocurrency investments through bitcoin exchanges.
All the crypto exchanges have to follow a set of regulations, but only a few regulations are implemented compared to traditional financial markets. Fewer regulations lead to an increase in the number of scams, decreasing the trust amongst investors on bitcoin exchanges. Central authorities don’t regulate crypto exchanges, and this unregulated nature has made exchanges vulnerable to hacks and scams.
Bitcoin CFDs
CFD trading is an unoriginal invention that is accessible globally and is based on financial influence. In CFD trading, traders can offset the losses that are likely to be incurred by opening a position in the market. Most of the time, this is quite useful in bitcoin’s volatile market, where there are sudden and wild movements in the price of bitcoin and other cryptocurrencies.
What are the Bitcoin trading strategies?
Well, there are many different bitcoin trading strategies, but you need to choose the one that is right for you. Choosing the bitcoin trading strategy completely depends on the time that you want to dedicate to trading, your experience, disciple or seriousness, and the capital invested in trading bitcoin. Each trader has its own goals and requirements, and you must choose the right trading strategy according to your plan.
Swing trading strategy
In a swing trading strategy, traders must only buy or sell bitcoin by considering the market movements and holding onto a single position of sell until the trend is reversed. A swing trader can learn about market movements by using technical analysis and fundamental analysis.
Day trading strategy
Day trading strategy requires traders to buy and sell bitcoin in the same day means in a time of 24 hours. A day trader is likely to close the positions at the end of the day by ensuring that none of the positions stay open overnight.
Scalping trading strategy
In scalping trading strategy, the trader places recurrent traders over a short period. A scalp trader must have a clear strategy of leaving the trade at the right time.