That’s amazing right. You are interested in it, but then you don’t know how to go about Bitcoin trading or investing and you don’t have the capital to hire a professional to lecture you. That’s why I made this tutorial: The Bitcoin Trading guides and Strategies for Beginners.
This Tutorial To Bitcoin trading guides and strategy for beginners probably sounds like this:
A dream job, reserved for the fortunate few who trade or invest in Bitcoin from home, set their own hours and perform nothing more strenuous than clicking a mouse or watching a screen, and of course making money.
But then, Bitcoin investing and trading doesn’t always end in profit, especially when there’s no winning strategy. The harsh reality?
The overwhelming majority of new bitcoin traders lose money and quit within a year.Johnmiracle Ejikeme
Why is this so?
- Firstly: To the intrinsic unpredictability of markets. The human mind, which excels at pattern recognition, struggles with random outcomes.
- Secondly: Trading is emotionally taxing, involving long hours of boredom interspersed with periods of intense stress.
Do People Lose Money In Bitcoin Trading and Investing?
The short answer is Yes they do.
As traders risk their own capital in an endless zero-sum game, trading is an occupation that bears a close resemblance to professional gambling. Even successful traders frequently succumb to burn-out due to the pressures involved. Except in the marketing of trading courses, products, or services, trading Bitcoin is no glamorous road to easy riches.
Rather it is an activity demanding great patience, control, and discipline. New traders are likely to lose money as they develop their skills and achieving consistent profitability is never guaranteed, even for the most experienced Bitcoin trader.
The Difference Between Bitcoin Trading Vs Bitcoin Investing
Trading Bitcoin is similar but distinct from investing in Bitcoin. Most new people who fancy Bitcoin and are ready to delve into it normally do mistake Bitcoin investing and trading.
This is an act of HODL strategy, i.e buying and holding Bitcoin for the long-term with the goal such as portfolio diversification, fiat risk hedging, business or ideological objectives, etc. Bitcoin investors are generally insensitive to price volatility and unlikely to exit their positions, barring some dire eventuality.
This is all about constant buying and selling base on the current market capitalization. By contrast, most Bitcoin traders maintain only short-term positions, staying in a trade for a maximum of a few months – but often for no more than a few hours. Bitcoin traders are also extremely price-sensitive, striving for perfect entry and exit prices and abandoning their positions immediately if they prove unprofitable.
4 Ways to Trade Bitcoin/Cryptocurrency
There are different unique ways to trade Bitcoin, and each of this ways includes:
1. P2P Trading
P2P which means (Peer 2 Peer) is the easiest way to trading bitcoin that doesn’t involve the understanding of crypto market charts, analysis and people have been using this strategy to make money for themselves. See it as the normal buying and selling that happens in the marketplace where you are negotiating directly with the seller, without a third party. Normally there’s a high risk when dealing with a seller directly, but then the emergence of decentralized P2P services (Like Binance P2P) helps to cut down the risk of not getting paid after a negotiation.
The screenshot above is the Binance exchange P2P trading service, You can see how traders market their prizes and awaiting negotiations. Read this guide to Learn How to Trade P2P on Binance.
2. Spot Trading
In this aspect of Trading an intermediate knowledge is required, and that includes understanding the different order types such as:
- Market Order
- Limit Orders
- Stop Loss Orders
Each of this order types has their unique functions.
The screenshot above is an extract from Binance spot trading. So from the screenshot, it tells that you will need to understand how to read the trading chart to be able to spot trade, unlike the P2P.
3. Margin Trading
Margin trading is a kind of trading that involves loan taking, you are leveraging on borrowed money to trade and later you pay back with interest.
Margin is the money borrowed from a broker to trade and is the difference between the total value of an investment and the loan amount. It is a method of trading using funds provided by a third party. A margin trading account allows you to access greater sums of capital.
What happens is you borrowed $400 extra of which you are going to pay back with interest, but then, the risk is on you whether or not you won or lost the trade, you must pay back your Margin.
4. Futures Trading
Futures trading allows traders to speculate the price of Bitcoin or other cryptocurrencies. They enable traders to wager upon the future price of an asset. It is a super-advanced kind of trading that requires professional knowledge and a winning strategy, it has a high risk of losing money and also a high profit margin when you win a trade. This kind of trade is set aside only for experts, who are able to device winning trading strategies, knowing when to go Long and Short, and with the help of the STOP-LOSS ORDER, they will be able to manage their risk.
How to Minimize your Risk When Trading
Initiating a trade without a clear exit strategy is a recipe for disaster. Determine beforehand the price at which you’ll cut your losses if the market moves contrary to expectations. This level is known as a stop-loss and it’s critical to market survival.
Limit your losses below 25% of your position size. A stop-loss is wisely placed on the other side of a level at which price has reversed previously, the more times the better. The converse of a stop loss is the profit target; the level(s) at which profit is taken when the price behaves as expected.
Profit targets are best-placed slightly before previously significant levels. If the price exceeds your expectations by penetrating significant previous levels and maintaining a strong trend thereafter, consider substituting your target(s) for a trailing stop; this acts as a ratchet on your profits. Example of a successful long trade with target and stop set. Entry-point is the yellow oval.
Finally, know your breakeven point; the price at which you can exit a trade without incurring any loss due to trading fees. If you enter a trade only for the market to meander sideways, consider exiting at breakeven rather than wasting time and energy on monitoring a flat market.
Exercising discipline in regards stop-losses and targets is the best way to manage greed and fear. Placing stop loss and profit target orders immediately after entering each trade is a good habit to acquire.
Types of Crypto Traders
The various types of Bitcoin traders are primarily distinguished by the time-frames they employ.
1. Scalp Traders
Bitcoin scalpers usually trade on a 5 minute or lower timeframe, sometimes following tick charts which record every single trade without reference to time. Scalpers seek to profit from fleeting imbalances between buyers and sellers. They may make hundreds of trades over the course of a single day. For obvious reasons, such traders are particularly common on Bitcoin exchanges which offer zero or minimal trading fees.
2. Day Traders
Those who seek to profit from larger Bitcoin price moves during the course of their session are known as day-traders.
3. Swing Traders
Swing traders or trend traders are those who maintain positions for days, weeks, or even months. Such Bitcoin traders attempt to capitalize on large swings within a range-bound market or major trends. They generally follow daily charts, with occasional reference to weekly charts for greater context. They may consult lower timeframes to study price action at important levels or to achieve greater precision on exits and entries.
Successful Bitcoin Trading Tips For Beginner’s
- Hang around traders online or in person and you’ll soon discover countless, sometimes contradictory, rules of thumb.
- Buy low and sell high.
- Buy fear, Sell greed.
- Go short (sell high and buy low)
- Sustained price moves result from either buyers or sellers being more aggressive in crossing the spread.
- Always set a limit for-profit and loses
- Be updated with current news
Best Platform for Bitcoin Trading
For convenient trading, select an exchange which also offers decent volume and a real-time, responsive trading interface. Here are my 4 recommended Bitcoin exchanges:
Binance is one of the world’s largest exchanges where users can trade cryptocurrencies. They support many of the most commonly traded cryptocurrencies. Binance provides a Powerful crypto trading platform for traders, where they can store their electronic funds.
2. Okex Trading Platform
Trade crypto more effectively with a variety of crypto pairs, derivative trading instruments, and order types such as limit order, market order, stop order, or iceberg order. Convert over 30 local currencies into Bitcoin, Ethereum, USDT, or other cryptocurrencies in minutes using your Visa, Mastercard, or other convenient payment methods to find the lowest prices and fastest conversions
Hotbit has already accumulated more than 700,000 registered users from more than 210 countries and areas all over the world. Constantly introducing and listing high-quality digital currencies from all over the world, providing users with various types of transactional services in most digital currencies.
Get in, trade, cash out, repeat. Buy Bitcoin with your credit and debit card from your Poloniex wallet. Put your crypto wallet to good use with 100+ spot trading pairs and 25+ margin trading pairs.
Discover the Wealth In Cryptocurrency and Blockchain Technology
To really understand what is special about Bitcoin, and Cryptocurrency, we need to understand how it works at a technical level. We’ll address the important questions about Bitcoin, such as:
- How does Bitcoin work?
- What makes Bitcoin different?
- How secure are your Bitcoins?
- How anonymous are Bitcoin users?
- What determines the price of Bitcoins?
- Can cryptocurrencies be regulated?
- What are ICO’s and How to Make 100x Profit from ICO?
- How to Spot Fake Token & Crypto scams
- How to Pick the Best Coins to Invest
- What might the future hold?
- And a lot more
After this course, you’ll know everything you need to be able to separate fact from fiction when reading claims about Bitcoin and other cryptocurrencies. You’ll have the conceptual foundations you need to engineer secure software that interacts with the Bitcoin network. And you’ll be able to integrate ideas from Bitcoin in your own projects.
For every buyer, there’s a seller. This expresses the simple truth that there are two sides to every trade. Generally speaking, trades occur because sellers consider the price high and buyers consider it low. So I believe with this tutorial you are able to get a not just basic but deep insight into what bitcoin trading is all about. For more intense knowledge and guide, you can become a member of our Bull Community where you get non-stop tutorials and as well successful trading signals.