Let’s agree that only a fraction of traders make money on crypto currency exchanges. Sure, making extra cash on the trade deals is a pure pleasure. However, if you wonder how to trade bitcoin, you probably wonder how to do it right, because, truly, a lot of people lose their money.
Before even thinking how to trade bitcoin, take care of the basics:
Your cold wallet is up and running. Hardware wallets are suggested for complete peace of mind: keep all the funds that won’t be used in trading or investments there, if possible. Full Bitcoin node is an alternative to specialized hardware wallets.
An online wallet is somewhat less safe as a main stash of the crypto assets. But if it is open source and security technologies are implemented, such as in Trustee Wallet, such a wallet can be used without fear.
- Your private keys and a seed phrase are securely stored in multiple places.
- Now that you are all set up, let’s learn how to trade with bitcoin.
The general rules of trading apply here.
Bitcoin should not be the only crypto asset you possess. Some trading advisors recommend splitting the portfolio into low, medium, and high risk assets, with varying percentages of value invested in each of them. The foundation of your profits and future trades should consist of low-risk assets.
We’ve mentioned the risk levels but we didn’t even specify, which level the Bitcoin itself is. The rule of a thumb is to look at historical price surges up and down: the broader the price range, the higher the risk.
Don’t panic. Newbies tend to sell their stock as soon as they see a first large red candle on the price graph. Take it cold blood and don’t sell all of it at once. Some traders would buy more crypto during the fall, not sell it.
First learn not to lose. Learn the algorithms that mitigate the losses and maximize the gains. During the fall, don’t panic and wait until the price recovers: it is extremely likely in case with Bitcoin. When you’re ready to sell, sell just enough to cover 125% of the initial investment and leave the rest of the coins in place because the price will eventually break through another historical high. It is only one example of a trading strategy.
Stick to a local crypto community and find an experienced mentor in the vicinity. Collective intelligence does wonders, it just cannot be denied. From a practical point of view, a group of small‑volume traders can buy out a large quantity of coins during the ICO stage of ICO for the best price.
Constantly educate yourself, read the Twitter of the crypto world celebrities and stay tuned for important news. Is Bitcoin banned somewhere? Is it taxed? Is it adopted by MasterCard yet? Is Ripple winning the case against the SEC?
Before even thinking about how to day trade bitcoin, make sure that your long term price predictions are correct and that you understand the market well enough.
How to day trade bitcoin
Day trading is certainly not for the newbies, it takes skill and experience that an ordinary passer-by simply does not have. One should better be attentive and fast to act, too.
Generalities aside, what you need is to keep an open eye for Liquidity and Volatility. The former is expressed in the Traded Volume number. If no one buys or sells it today, then you can’t make much, right?
Any of the available crypto exchanges online can give you the freedom to trade as much as you want. The more popular the exchange, the better, because it will reflect on the Liquidity positively. Lose or gain? It’s up to you! The earnings directly depend on the skill to predict where the price will go next.
If you’re serious about it, you may even lose interest and ditch the idea to learn how to day trade bitcoin. Why? Because NFTs and certain altcoins hold a lot more lucrative opportunities. Or because it’s better to KEEP CALM AND HODL.
You’ll need to read a ton of guidelines, master the trading platform tools and techniques, perhaps even tinker with trading bots. So be ready for the challenge.
How to trade bitcoin options
As you can see, the risks associated with day trading are immense: bitcoin is anything but cheap. As a safer alternative, there is a way to bet that the bitcoin price will hit a certain mark at a certain moment in future. Following the bet itself, you would then look for people who agree to buy or sell bitcoin for the set price at the set time and then wait for the moment to come and see if your bet was correct.
Such kinds of deals are options and futures. Futures oblige both the buyer and the seller to trade regardless of the market price when the contract expires. Options leave the choice to the buyer: take it or leave it.
An options contract is an agreement between the seller and the buyer, which gives the buyer the right to exercise the conditions of the contract on a specified date, at a specified rate. Bitcoin options trading, therefore, is the process of entering into an agreement with buyers or sellers, using an options contract. — Source.It can’t be stressed enough that engaging in these deals takes special expertise and should not be taken lightly. This is not a technical analysis article, and diving into too much detail would bloat its volume; neither is it financial advice.
To further learn how to become a successful bitcoin options trader, familiarize yourself with the process of registering an account on a suitable exchange (these include CME, Deribit, LedgerX, IQ Option, Quedex, Bakkt, and Okex) and study the details.
How to trade bitcoin for cash
Unless crypto is massively adopted, it must be turned into USD or another fiat currency so that something can be bought for it in a regular store. Then how to trade bitcoin for USD?
The obvious solution to this is to tie your bank card to an exchange account. Of course, this data will deanon you once and for all, if the data you previously provided hasn’t already.
Trustee Wallet, on the other hand, is safer that an online exchange account because, unlike the latter, it is has an open source code and is thus much harder to break into. Storing your crypto assets there is both convenient (it allows to encash or exchange the coins anytime) and safe.
There are many popular services that support trading fiat currencies for Bitcoin and back. They also allow operations with Ethereum, Ripple, Litecoin, and dozens of other altcoins.By the way, the latter is useful if you wondered how to trade bitcoin with no fees.
Bitcoin ATMs are known for unpleasantly high exchange rates but they are very fast and convenient when it comes to encashing BTC into dollars or what have you.
How to trade bitcoin for profit
Now, here is an actual secret: most people lose money on the crypto market because they are already in the state of scarcity when they enter it. What differs a successful investor from an unfortunate one is time that they can afford to wait until the investment pays off. You may think that it is too late to ask how to trade bitcoin for profit right now. But a limited supply of bitcoins and its ever increasing mining complexity are the strong arguments in favor of the price increase in the long run.
Even if you decide to buy BTC now, when the prices swing back and forth, there is a solid chance to make profit if you have enough patience and don’t lose the nerve selling it prematurely.
Good luck then!