You should start trading now
Bitcoin trading. Keeping an eye on new opportunities in the markets is crucial for traders who want to take advantage of them while they are still at an early stage.
Sometimes, these opportunities come in the form of completely new markets. Digital currencies existed even before 2009 when bitcoin was first introduced.
However, the real spread of digital currencies did not begin to record records that reached 10,000 dollars until November 2017, and since then digital currencies have attracted the attention of traders strongly due to the great opportunities provided by the rapid pace taken by those markets.
While the number of people involved in cryptocurrency trading is increasing, these markets are young, volatile, and full of opportunities for a trader who is willing to understand their mechanisms.
Bitcoin trading for beginners
The first step to getting started in cryptocurrency trading is to understand the different options available to you.
Whether you believe in the long-term value of digital currencies or you want to take advantage of the numbers that are doubling daily as a result of their price movements, below we offer you three methods that are the most widespread in digital currency trading
Purchase and retention
Since the launch of the digital currency bitcoin, early investors have made gains in millions from this digital currency.
The return on investing only USD 100 in bitcoin in 2010 was estimated at more than USD 5 million at the end of 2017.
Add to this the innovative technology used by digital currencies, and this explains why some investors view digital currencies as representing good long-term opportunities.
However, buying and holding bitcoin and other digital currencies requires a more in-depth understanding of the technology used in those currencies.
To buy digital currencies, you first need to open an account with one of the online trading exchanges or agencies.
Since banks do not deal in digital currencies, the responsibility for storing and keeping digital currencies will fall on you.
Following the bankruptcy of the Jabal Gox exchange, the first bitcoin exchange in the world to offer digital currency to the average investor, customers lost access to millions of dollars, and traders also lost confidence in unregulated exchanges.
That is why digital wallets are often recommended, for the owner of the digital currency to be fully responsible for the security of his coins.
Trading bitcoin and currencies on one of the exchanges
Another way to trade digital currencies is to speculate on the price of Bitcoin, Ethereum, Ripple, Litecoin, and other digital currencies on an exchange. The astronomical rise of bitcoin prices has led to a similar astronomical rise in several other cryptocurrency exchanges.
The most important task of a trader before starting trading is to evaluate the elements of securing his account provided by the exchange.
Due to the lack of accreditation in the cryptocurrency markets, these exchanges are not managed in the same way as other financial institutions and therefore it is recommended to fully exercise due diligence before opening an account and before transferring any funds.
In addition to the problem of account security, traders who are serious about cryptocurrency trading should make an assessment of the leverage levels and payment methods available.
As for traders who want to take control of deals with a capital larger than the amounts with which they started, they should first check whether the exchange provides a margin for trading, which is also known as leverage.
Although some exchanges already offer you options, the levels of leverage available can vary widely. An in-depth analysis of the available payment methods is also extremely important since it is currently not possible to make a deposit simply by using your card on all exchanges.
In some cases where cards are accepted, the applicable fees are so high that traders prefer to deposit via bank transfer, which may be less fast but more cost-effective.
Trading through a broker
- For those wishing to take advantage of cryptocurrency price fluctuations, without having to deal with a digital wallet or worry about the security of their funds, trading through an authorized broker is the most widespread option.
- When it comes to account security, funds deposited with an authorized broker in the UK will be protected up to GBP 50,000 in case the company goes into liquidation or insolvency.
- It is worth mentioning that some brokers offer even higher levels of protection at no additional cost.
- The second benefit of trading through a broker is leverage. With the increasing number of cryptocurrencies offered by traditional brokers, traders can get exceptional leverage on a wide range of cryptocurrencies. This is an excellent way to consolidate your earnings regardless of the low or high of your initial capital.
- However, you need to note that leverage is a double-edged sword that should be used with caution to limit possible losses.
- Cryptocurrency trading is similar to forex trading in many respects. Cryptocurrencies are priced against the US dollar or the euro and traders can speculate on the differences in price spreads or use CFDs to take advantage of price fluctuations.
- Most of the well-known brokers provide trading applications that you can rely on to keep you up to date with the latest developments in the cryptocurrency markets, so it's no wonder that more and more traders are coming to these exciting markets.
Examples of bitcoin and cryptocurrency trading
Let's look at a couple of examples to find out how bitcoin and other digital currencies are traded in practice.
Let's say your research on cryptocurrency markets suggests that the price of bitcoin will rise. Based on this, I opened a buy position with a volume of 0.1 lots on the bitcoin pair (BTC/USD) at a price of$40,041.
This represents one-tenth of one bitcoin and your profit or loss is calculated by the amount of the difference between the opening price and the closing price divided by 10.
Within a few days, the price rebounded and reached$44,560. That's when you decided to close your position and take your profits. Hurray! She made a profit of$451.90.
After thorough research, you are convinced that the recent surge in bitcoin prices is about to fade .. Based on your belief that the price of bitcoin will fall short, you decided to open a 0.1 lot short position on the bitcoin pair (BTC/USD) at$45,550.
This is one-tenth of one bitcoin and your profit or loss is calculated by the amount of the difference between the opening price and the closing price divided by 10.
Three hours later, a new purchase from large institutional investors pushed the price towards new highs of$ 48,100, as your stop loss order was activated.
Your loss is the difference between the opening price and the closing price. As a result, after reaching the stop loss order, your loss is$ 255 not including commissions for the transaction.
Suppose, after analyzing the market, you become confident that Ethereum prices are about to rise and record a new high.
Your technical analysis suggests that a good entry point is at around$2900. You open a position and buy 1 lot on the Ethereum pair (ETH/USD), which represents one Ethereum coin.
Despite your conviction, the price of Ethereum has reversed and retreated towards the level of$2600. That's when you decided to exit the trade and close your position. Your loss is the difference between the opening price and the closing price. As a result, after closing the deal you lose$ 300 before commissions.
In an alternative scenario, your analysis suggests that Ethereum prices are about to fall after news of a major wallet breakout break. Your point of view on the market is that prices are about to fall and you decided to open a 1-lot short position on Ethereum (ETH/USD), which corresponds to one Ethereum coin at$3300.
As the news about the hack spreads, the price of Ethereum is falling towards the level of$2900. Your take profit order is activated at$ 2950 and your position is closed. Your profit is the difference between the opening price and the closing price. As a result, after closing the deal you earn$ 350 before commissions.
Best Bitcoin Trading Platform thin e UK
Trading companies in the UK are always offering options for those wishing to enter the world of bitcoin trading.
This is due to several reasons, most notably the extensive experience and long experience in the field of currency trading and forex, and it also belongs to a country where there is the most prestigious stock market, the London Stock Exchange (LSE), which was established in 1801.
EToro is one of the best trading platforms, as it is famous for its reputation and customer confidence in it.
Post a Comment