Bitcoin trading involves legal buying or selling coins on crypto exchanges, including Binance, Kraken, Bitmex, etc.
The popularity of the crypto topic among millennials is growing day by day. Thanks to the dizzying volatility, investors and ordinary traders find tons of opportunities to hit big and make profits. Furthermore, CNBCTV18 states
that BTC’s popularity resulted in 10-20% growth just in the last few months!
A trader can use specialized software or applications to trade bitcoins and other cryptocurrencies.
No doubts, if you are taking your first steps using bitcoin Reddit trading rules, your path might be thorny.
SafeTrading created an ultimate trading bitcoin guide for those of you who are taking first steps in trading crypto.
Once read, you’ll discover:
- Top-level strategies for trading bitcoin
- 10 DO's every newcomer in crypto trading should follow
- 5 fatal DON’T's in bitcoin trading you should avoid, like the plague
- Tips from pro traders that have already proven their worth rather than info from bitcoin Reddit trading forums
- Pro tips by tradingview top authors that allowed them to minimize risks and achieve stellar results
If you find that you do not understand or do not know some of the terms in this article - Bear Up!
Keep in mind that the best way to trade bitcoin is to use crypto signals
from experienced traders.
Step by Step Flow of Starting Trading Bitcoin
The whole point of Bitcoin trading is to buy an asset at a low price and sell it at a higher price. However, before you can start trading cryptocurrency, you will need to complete the following steps:
- Register an account on the best bitcoin trading platform (e.g Binance, Coinbase Pro, Kraken, Huobi Global, etc.)
- Provide personal information and verify your identity (you may need to send scanned copies of documents)
- Fund your account using one of the offered payment services
- Open your first position on the exchange by purchasing a crypto asset
Bitcoin Trading Meaning in Simple Words
Simply put, trading bitcoin means multiple "Sell" or "Buy" operations.
Still, seasoned traders also include various bitcoin trading strategies to minimize risks and fatten the profits.
Here are some widespread bitcoin trading strategies:
- Futures trading - a buy/sell agreement for a particular asset to be executed at a predetermined price and at a specified time in the future
- Bitcoin shorting - allows a trader to borrow the coin, and sell it at its current price
- Spot trading - a trade is taken and settled instantly
- Margin trading - buy/sell assets with borrowed money
There is no short answer to the question, "How can I get the maximum profit with minimum risk."
One of the tips you can find on bitcoin Reddit trading forums states: “Don't rush to get rich by trading cryptocurrency on your first day!”
Note: Only scammers can offer you to invest $100 and earn up to $10,000 on a bitcoin trading platform hands down.
Most likely, if you visited bitcoin Reddit trading message boards, you might have heard of such a tool as leverage. If not, then here's an excellent example for you:
A user reloads a "grand," and a broker allows him/her to make transactions for an amount that significantly exceeds the deposit. If you see that a broker offers 1:10 leverage, it means that you can deposit $1,000 and trade bitcoin for $10,000.
Still,the leverage is more suitable for seasoned bitcoin trading players who can use it together with other bitcoin Reddit trading strategies.
That's an interesting question!
If traders had never risked their cash to make big bucks, it's more likely that even the guy in the neighborhood with $100 could become a millionaire in a couple of years.
If you learn to use several effective bitcoin trading strategies (day trading, scalping, trend following, etc.) your chances of success can increase instantly. Don’t worry, we’ll discuss some top effective bitcoin trading strategies for beginners a bit later.
Remember, almost every trader suffers losses from time to time. Therefore, your main task in bitcoin trading is to learn how to trade so that the number of successful transactions and the resulting profit exceed all possible losses.
Characteristics of Bitcoin Trading in 2022
Before you learn about effective bitcoin trading strategies, it is crucial to understand why the coin could capture global traders' minds.
But where does the strength of bitcoin trading lie?
1. BTC - Global Investment Tool
It does not obey the laws and regulations of fiat money. Simply put, bitcoin's value and rate do not depend on any particular country's economic or political situation. Still, there is more in this than meets the eye.
For example, the collapse of the Chinese yuan or the Greek economy's recession could still impact the bitcoin rate. Meanwhile, as soon as investors start to panic and doubt fiat money's stability, cryptocurrency often becomes one of the most reliable investment options.
2. Round O'Clock Availability of Bitcoin Trading
One of the main advantages of the coin is that, unlike the stock markets, traders can buy and sell bitcoin 24/7. Today, you can easily find a vast number of online exchanges that are open day and night.
3. Benefits of High Volatility Rate
Many have heard of bitcoin as one of the most volatile coins in the crypto world. It makes no sense to give any specific examples of its price hikes. Take it for granted that the bitcoin price can change up to 10% within a few days! Bitcoin volatility is an exciting opportunity not only for experienced traders but also for novice ones!
Bitcoin Trading: How to Take Advantage of Its Volatility
If you think that trading bitcoin is used only for buying and selling, then you're mistaken. Just like other crypto assets, including ETH or LTC, the coin can also be used as a tool to pay for goods and services.
Things you can buy with Bitcoin include, but are not limited to:
- Online webpt cards (Walmart, Apple, Uber, Adidas and Amazon)
- Video games and bill payments (Products by Microsoft and online bill payment for AT&T)
- Hotels, tickets and ordering food (Norwegian Air, KFC, Burger King, and Subway)
- Donations, etc.
Some businesses have already adopted BTC for settlements with online users. Such bitcoin Reddit trading trends suggest that the coin may become an alternative payment method globally. It was another reason why trading bitcoin has such a high investment attractiveness.
There are a considerable number of investors who buy bitcoin and use it as a long-term investment vehicle.
A trader can buy bitcoin and keep them in a cold crypto wallet
until the price rises to the desired level. This brings us to the fact that the coin has incredible volatility. While trading bitcoin breaks another all-time high price, the rest of the altcoins do not stay on the sidelines.
Do you want to know the best part?
Fluctuations and instability of crypto coins can swimmingly turn a profit. The law of supply and demand is also relevant for the crypto market. When large investors buy BTC in large quantities, the price will begin to rise.
If you are planning to trade bitcoin, then be prepared for constant fluctuations. In the early stages of forming the crypto market, bitcoin's value could grow by 100% in a matter of days.
Sadly, such bitcoin trading fluctuations remained in the distant past. Or they are not?
The struggle lies ahead!
How to Choose the Best BitcoinTrading Strategy
A profitable bitcoin trading strategy is like icing on the cake for any trader.
Do you think only newbies are looking for a magic bitcoin Reddit trading strategy that might allow them to coin money?
You're a long way out if you believe that a few Reddit experts' tips are enough to succeed. Rather you need to focus on fundamental knowledge to navigate the market better and keep the lights on.
If you have a basic knowledge of market mechanisms, you can choose the best bitcoin trading app on your own. The same is true for the trading bot, which can do all the bitcoin trading routine work for you.
Therefore, spend a few hours of your time learning at least a couple of bitcoin trading strategies. This will help you choose the right bot for trading bitcoin and succeed with a high degree of probability.
Sounds like fun?
I'll bet my last dollar it is!
4 Bitcoin Trading Strategies for Beginners
All strategies in terms of their functionality can be speculative and investment. In simple terms, some bitcoin trading strategies allow you to make money here and now, while others are great to buy a crypto asset and make money in the long run.
Here are some widespread bitcoin trading strategies even a beginner trader can follow.
Buy & Hold Strategy
This strategy is more suitable for users who do not plan to conduct active trading and are looking for profitable investment. Basically, you need to buy assets that have long-term growth prospects and leave them for long-term storage on the account.
Swing Trading Strategy
You've probably already heard that after a sharp rise, almost every coin experiences a price correction. Many traders use this moment to open trade within the price channel and sell the coin at a better price.
Day Trading Strategy
This bitcoin trading strategy involves opening and closing positions within one trading session. In other words, a user does transfer a coin to another trading session.
A trader buys assets and sells them within a 30 minutes period. The profit on these transactions is minimal, but the total gain can be significant due to a large number of trades.
Peculiarities of Bitcoin Trading Strategies
Here's an interesting example - the excitement around bitcoin Reddit trading suggests that the coin's price is unlikely to drop to zero. Too many big names already tied their capital up in it. Therefore, buying a BTC in the bearish market can be considered one of the most influential and profitable strategies.
The strategy's advantage is that bitcoin trading is done with net capital (no leverage needed).
Can you repeat the same thing in plain English?
To successfully trade bitcoin, a trader can buy them when the price falls, using his/her own money. The next thing is to wait until the price rises to the limit you need - and there comes the grace!
Point # 1. Determine the Best Purchase Price
Take a coin price and split it in two. Imagine that the price of a coin on the Binance exchange is $20,000. If you split this amount in half, it'll be $10,000.
This is the conditional border of possible "Ups" or "Downs" during bitcoin trading.
Therefore, if you want to find the best bitcoin trading point to enter the market, buy a coin if the price drops to $10,000.
Minimal risks for any trader characterize this trading approach!
Point # 2. Always Diversify Risks
There is another advanced way of how to trade bitcoin.
If you want to buy the coin in a growing market, you will need to divide the investment amount into several parts to minimize the risks.
Simply put, if you have $5,000, you can make 5 investments of $1,000 at different times and different prices. If the growth of the coin stops or the price starts to sink, your losses will be minimal!
Remember one simple truth - you only earn when you take profits after the sale. When trading bitcoin in the short term, you must continuously monitor price indicators and wait for the right moment to get the maximum benefit.
It sounds like a cakewalk, right?
It looks like it's time to move on to the next important bitcoin trading issue, which covers trading bitcoin in the futures market.
Bitcoin Spot Trading vs. Futures Trading
Today, bitcoin trading can be launched in the futures and spot markets. The difference is that spot trading bitcoin allows you to buy and withdraw coins to a cold crypto wallet at any moment. A cold wallet is a hardware device or an "offline place" where you can store a crypto currency asset - it guarantees maximum possible safety.
Remember once and for all - keeping coins on an exchange is a risky business. If an exchange is exposed to a cyber attack, then you risk losing all investment capital, along with the bitcoin trading assets.
History has proven that even the most secure bitcoin trading platforms can be hacked in a New York minute. Recall cyber attacks on Altsbit (February 2020), Upbit (November 2019), VinDAX (November 2019), Bitpoint (July 2019) and others.
For this reason, cold crypto wallets have gained particular popularity among bitcoin owners.
Imagine that you and only you have physical access to your assets - this is an almost 100% security guarantee. If you plan to trade bitcoin and profit from speculative operations, the futures market is what you need.
This is especially true for those jurisdictions where bitcoin trading is prohibited. Countries that said no to crypto trading include: China, Russia, Vietnam, Bolivia, Columbia, and Ecuador. Still, some scroungers manage to trade bitcoin on derivatives exchanges.
CME Group is a striking case in point. It is one of the biggest and most diverse derivatives marketplaces. The online derivatives trading platform allows you to trade bitcoin futures without going beyond the law. The whole point is that you will buy not the asset itself but a contract to purchase this asset in future periods.
Still, some bitcoin trading exchanges limit users on the minimum amount of coins bought in a single contract. Check out Bitmex Okcoin and Binance Futures - fortunately for us, futures trading is also among their services.
Though, don’t jump to conclusions!
Before trading bitcoin with futures contracts, it is worthwhile to become familiar with exchanges' fundamental principles.
If you do not have an idea how to use leverage in bitcoin trading, then forget to think about using this tool at the outset.
No doubt, an x100 leverage offered by the notorious Bitmex exchange looks really stunning. However, this is a two-edged weapon! If you risk your entire deposit and use this professional tool for bitcoin trading, things can go wrong.
Here's a free tip for you: Study the market mechanisms and test bitcoin trading strategies until you find the right balance between gains and losses. Then you can use leverage as one of the trading tools to skyrocket your profit.
Risk Diversification with a Set of Crypto Assets
One of the main bitcoin trading tips that you can hear from pro traders is risk diversification. If you plan to master bitcoin trading - risk minimization should be one of your priorities. Unfortunately, most newbies focus solely on bitcoin trading and overlook other possibilities.
If you risk the entire amount of bitcoin trading capital just to buy some part of the popular coin, then by doing so, you will put all your eggs in one basket.
By trading different cryptocurrencies, you insure your investments against unnecessary risk. Imagine that your investment portfolio consists of different crypto coins, and one of them gives a price drawdown.
In any case, it's not the end of the world!
The rest of the coins can demonstrate a price increase and compensate or even exceed the falling market losses.
Risk diversification is a great chance to stay in black no matter what. If you have invested wisely and have chosen one or more promising coins, then you may find that you have become the owner of precious assets.
But here's the kicker: Buying too many varieties of coins can be a significant investment for you - try to find a reasonable balance!