Just like other fiat and digital currencies have a value, bitcoin is also a digital currency that has value. In today’s time, bitcoins are widely used as a medium of exchange in the peer-to-peer network and has a decentralized nature. Decentralized currency is the currency that doesn’t involve any third-parties like banks or central authority for keeping track of users and their transactions. Bitcoin network provides control to its users to send and receive bitcoins and know the cash flow. Here is the complete guide for a beginner to start with bitcoin trading.
The bitcoin network works on blockchain technology that uses cryptography to save and secure the funds of users. This currency came into existence in 2009 by a mysterious programmer named Satoshi Nakamoto, whose main goal was to create a system that eradicates the need for government or financial institutions. The thing that must be focused on is the unpredictable market of bitcoin. Its value keeps on fluctuating regularly.
When bitcoin was invented, its price was nearly negligible, and a person bought two pizzas for 10,000 bitcoins. Over time, its value has increased but still keeps on fluctuating. Beginners who are planning to invest in bitcoin should know several things that include a digital wallet, personal identification documents, a bank account for currency exchange, and a secured internet connection. You can understand more by visiting the site of techdotmatrix.com.
Let us move forward and understand the steps that you need to follow while starting with bitcoin trading.
Pick a trading platform
The first thing you need to do for bitcoin trading is to find a trusted and well-reputed bitcoin trading platform, also known as a bitcoin exchange. There are several trading platforms, but all of them cannot be trusted as several people use bitcoins to fool people and do frauds. So, you must be careful while choosing a platform and consider all the necessary factors.
Learn factors affecting bitcoin price
Once you have selected a bitcoin trading platform, now you need to gain some information about the price of bitcoin. If you want to be a successful trader, then you must be able to predict the price fluctuations at the right time. For that, you need to have proper knowledge of all the factors that can affect the price of bitcoin.
There are numerous factors responsible for the change in bitcoin prices, such as supply, news, rumors, integration, etc. You must learn about all these factors and use them for analysis and make the right move at the right time.
Choose a suitable trading strategy
Bitcoin trading is not easy as there is stiff competition in the market; if you want to keep things in your favor, then you need to have an effective bitcoin trading strategy. There are different types of trading, such as day trading, scalping, etc, and each one of them requires a different strategy. So, you must pick a trading style that suits the most to your goals and objectives.
If you are looking for quick profits without holding the currency for a long time, then day trading is perfect for you. It allows you to make profits out of daily fluctuations in the price of bitcoin. Another way to trade is by following the market trend, which means if the trend is upwards, then you go long, and if the trend is downwards, then go short. It is a great style if you want to take a minimum risk and make a good profit.
Establish some limits
It is the most important thing that every beginner bitcoin trader needs to learn. To start with bitcoin trading is full of uncertainties as the price of bitcoin is highly volatile and can change at any moment. So, you must take your precautions by setting some stop losses and limits. It will help you to manage the risks better and maximize your profits.
There are numerous online trading tools available that can help you in risk management and increase your profits to a great extent. Some of the common types of stops in bitcoin trading are normal stops, guarantees stops, and trailing stops. Each one of them serves different purposes, so you must choose accordingly.
To conclude, if you are planning to start with bitcoin trading and enter the trading world, then you need to make some preparation beforehand. Above are a few steps that you must follow to stay long in the market.