(Newswire.net — January 15, 2020) — Bitcoin being the world’s first cryptocurrency, poses a contending challenge to the fiat or paper currencies. Analyzing its price history, there has been a trend of market volatility. To begin with, we need to understand what Bitcoin is. Bitcoin is a decentralized digital currency which is independent of any country, and can be used by anyone on the internet to conduct financial transactions. Bitcoins are stored electronically in an online wallet known as Bitcoin Wallet.
How do you then trade bitcoin? Firstly, you need to decide if you need to deal with it. Also, you need to learn the factors that control the price movement of bitcoin. Afterwards, you can choose the strategy that will suit you best in trading the cryptocurrency. Finally, you can then execute your first bitcoin trade.
There are 2 ways to trading bitcoin: the first one would require that you buy the cryptocurrency with hopes of selling it on at a profit. The other one would need you speculating on its value without even owning it which is how CFDs (Contract For Difference) works. A CFD is a leveraged product via which one trades a contract based on prices in the underlying market. This means that with a small deposit, you can open a much larger position in the market. This helps you as a trader increase your profit significantly, but can have an adverse effect in the case of a loss.
Action Steps To Take
For you to start trading bitcoin, there are some due steps that must be taken.
Open An Account:
Trading bitcoin requires that one opens an account first. There are several notable brokers which provide such option for you on their platforms. Usually, it takes minutes to create an account. You will be needed to fill in your personal details and submit some requested documents before an account can be created for you. However, for a bitcoin exchange, you do not need an account – except if you were to purchase and sell bitcoin.
Create A Trading Plan:
If you are new to bitcoin trading, then it is advisable that you come with a trading plan even if you already have a trading strategy. With a trading plan, you can make objective decisions. This ensures that you do not leave you trades opened for too long, or close them too early. To begin with, you can follow these steps:
- Map out what your short and long-term trading goals are.
- Know your risk for each trade.
- Select a reward-risk ratio to determine your potential profit against your potential loss.
- Identify the market you want to trade, which in this case is Bitcoin.
Conduct Your Research:
Ensure you get updated with the ongoing trends and news in the bitcoin world before you start trading. Doing so will help you understand the bitcoin price movement. Charts can be an invaluable tool when it comes to understanding and interpreting the cryptocurrency behavior. With the use of historical data, you can anticipate the market trend while comparing timeframes to generate insights into what to expect.
You Can Place Your Trade:
Having locked in your position, it is time for you to place a trade using a broker trading platform. To start with, you can enter the amount you are willing to invest in a particular trade, then set a stop limit which helps close your trade and limit your loss in the case of a negative trade. This will help you maintain a good risk money management strategy. Based on your analysis, you can place your trade in the direction of your choice.
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