Even though there are so many different cryptocurrencies, bitcoin is the most popular. As it is the most volatile currencies, you can make amazing profits if traded in the best possible manner. For starters, investing in the right trading platform like cryptosoft crypto software is the most important steps that a trader needs to ensure. Apart from this, there are several factors like price exchange, increasing peak prices, sudden price movements, availability in the market, and so on.
However, bitcoin trading is not something one can master overnight. There are so many things to learn like opening and closing positions, adopting a trading strategy, new currencies based on bitcoin, and so on. Bearing this in mind, we have explained here the top concepts of bitcoin trading that will help you get started with no hassle.
Bitcoin volatility and price movements
Bitcoin is a decentralized currency that means no government or regulatory currency control its price movements. Everything is managed by the demand and supply chain of the crypto market. As its market cap is just 21 million only and therefore, coins are limited. So, unless the miners decode the hash and release coins in the blockchain, the demand will be more due to which price will decrease.
Similarly, if the supply of bitcoins is more in comparison to the demand, the price will increase. This is what we know as price movements and predicting is very difficult. Unless and until you have proper knowledge about the market and the trends, it won’t be easy for you to decide in which direction the price will move for an open trade.
Bitcoin trading strategies
There are several bitcoin trading strategies based on which you can open and close a position. These are the day trading, trend trading and bitcoin hedging. Each of these strategy styles are situation-specific. For starters, if you want to make quick profits with short positions, you should go for the day trading style. Here, opening and closing of the position need to be done within the same day.
Similarly, in Bitcoin hedging, you can easily open another position as a supplementary trade to an existing market position. This newly opened position will be allowed only when the price movement is happening against your prediction. Trend trading is similar to the name itself where you need to open or close a trade position according to the price trends of the Bitcoin market.
Opening and closing positions in the trade market
Let’s say you want to buy or sell coins based on a particular trend of price movement. In such case, you have to open a position in the market that will allow you to trade the coin. If the price is increasing, you can buy the coins as an investment. On the contrary, if the price drops, you can sell your coins to make profits.
Keeping a trade position open for a long time makes you more vulnerable to the price volatility and you may end up closing a trade in loss. Therefore, you should always decide when to close a Bitcoin trade based on the type of position you have opened as well as the price movements.
Choosing Absolute Trading Platform
You cannot trade Bitcoins without the involvement of any trading platform. Therefore, if you choose the wrong platform, either you will end up stuck in a trade scam or you may have to pay a lot of transaction fees. To do so, make sure whether the trading platform is offering bitcoin as a crypto option. Also, it should be licensed and must accept hardware wallets. Besides, look for platforms where the transaction fees won’t be high because that can reduce your profits by a huge amount.
Bitcoin trading scams
Lastly, you need to be aware of different bitcoin trading scams. For example, you will find many trading platforms offering extremely low transaction rates which are not at all reliable. Similarly, do not fall for trading platforms offering security in words only. If your wallet is not protected by double authorization feature, your personal information will be put at stake.
Definitely, trading in bitcoin is not an easy task. But if you can follow these concepts and ensure that your trading strategy is apt and with no room for errors, you can make profits. Also, if you are a beginner, do not directly jump into making long trades or going for difficult trading styles.