Trading in bitcoin involves speculating the movements in price movements of bitcoin. Traditionally, bitcoin is bought and sold through exchanges. While trading, people hope to anticipate the prices to rise so that they can benefit from it. Bitcoin is inherently volatile. Due to this volatility, it has garnered a lot of interest in the trading world.
To be able to anticipate the price movements of bitcoin correctly, traders need to understand the factors that cause such movements. Such factors include the supply of bitcoin which is fixed at 21 million with about 18.6 million in circulation, any sort of negative news that has an ill effect on the price, or key events affecting the prices. Bitcoin is not under the control of any central authority. This means that its price reacts to a variety of events. For more information, you can visit website here.
Some Facts about Bitcoin Trading
Types of Trading
There are two types of trading that can be done with bitcoin – Day Trading and Trend Trading.
- Day trading involves opening and closing a trading position within a day. Traders participate in such trading to gain from the short term price movements of bitcoin. They close their position every day at the end of the day.
- Trend trading involves observing the current trends in price movements and taking decisions accordingly. This type of trading involves traders trying to gain from the natural movement in the prices of bitcoin. They can hold such accounts over weeks or months.
Some Current Events that have Influenced Bitcoin Price Movements
- Brexit – UK’s decision to leave the European Union had a positive impact on bitcoin prices as there was a surge in demand which results in the rise in their value.
- Demonetization – Post demonetization in India, Bitcoin’s price was seen to go up in most of India’s leading exchanges.
- Donald Trump being elected as President – After his election, Bitcoin market faced massive sporadic changes.
- Unlike other trading markets, Bitcoin markets are open 24×7. This is because the timings of other markets are different for the different countries they operate in. However, in the case of bitcoin, anyone can trade in bitcoin on any exchange.
- Bitcoin exchanges link consumers to the bitcoin market. It is in these exchanges that users can buy or sell bitcoin. These exchanges are designed to make the user experience as comfortable as possible, to offer competitive pricing and to provide the expertise of professional traders.
Exchanges are of two types:
- Fiat to Crypto Exchanges – These allow you to buy bitcoin in exchange of fiat money.
- Crypto to Crypto Exchanges – These allow you to buy cryptos for other cryptos.
Traders make use of their knowledge about the volume of bitcoin which means the number of bitcoins being traded at any given time, to observe the trends in prices movements and how significant they are. Such trends are generally significant when the trading volumes are significant in size. For example, an upward movement will generally be a response to a price rise in high volumes or a price fall in low volumes.
There are three kinds of orders in bitcoin trading:
- A Market or Instant Order can be set on the trading platform and they will be executed instantly at any feasible price. One is only required to order the exchange with the amount of bitcoins one wants to buy or sell and such an order will be executed instantly at any possible price. The trading platforms have the responsibility of matching the buyers and sellers. One can expect to match not with one, but with multiple buyers and sellers and at various prices.
- A Limit Order involves placing an order to buy or sell Bitcoin at a particular decided price. The execution of the order depends on other buyers or sellers being available to trade with you at your determined conditions.
- Stop Loss Order involves determining a specific price at which one can sell their bitcoins in the future in case of a fall in price.
Useful recommendations for starters:
It would be wiser to start with platforms that deal with a larger number of orders daily. They can connect buyers and sellers easily. Due to a large number of users, popular trading platforms require a lower commission.
Some qualities to look out for in a good platform are:
A good platform will have high liquidity due to a significant number of buyers and sellers using them. This will increase the speed of transactions and even provides security. They will allow you to trade without any fears of getting hacked and they must have a trustworthy customer support system. There are apps that bring a brokerage or stock market to your mobile screens. It is designed to make trading as accessible and convenient as possible. It tends to give users an overall picture of trading without restricting them to any specific types of trading or bombarding them with technical information. It provides the opportunity to trade over a variety of markets such as bitcoin, forex, CFDs or commodities and assets.
Brian is the news author at Research Snipers which mainly covers Technology News, Microsoft News, Google News, Facebook, Apple, Huawei, Xiaomi, and other tech news.