- Bitcoin has become the new-age gold. As big techs and institutional investors hop into the blockchain space, it is obvious to want to start trading Bitcoin.
- Before you jump in, there are several things from choosing the right exchange to spotting the right opportunities that you need to learn.
- In this article, we explain to you exactly how you can embark on your Bitcoin trading journey even if you’re just a beginner in the world of cryptocurrencies.
You very often end up asking yourself, “is it smart to invest in Bitcoin?”
Bitcoin has become like that crush from a recent party. You know what you feel and you feel it strongly. But you just can’t muster the courage to admit it in front of her.
We’re not sure if we can help you with your crush, but we can with Bitcoin.
How do you trade Bitcoin?
The first question most beginners struggle with is: how much money do I need to start trading Bitcoin?
All you need is the amount you’d spend on four cafe mochas from a Starbucks. You can start trading Bitcoin with even 0.0001 BTC, which is approximately $5.4 at the rate of $54,000 per Bitcoin.
Now, how do you trade Bitcoin? Here are the steps.
Step 1: Choose the right Bitcoin trading platform
Without the right trading platform, trading Bitcoin can be a nightmare. Here are the things you need to note before choosing a platform:
- Trading and withdrawal fees: Before you jump on an exchange, understand its fee structure and do your calculations accordingly. Otherwise, you may lose all your profits in trading and withdrawal fees.
- Deposit and withdrawal options: Not all exchanges allow you to deposit and withdraw fiat currencies. As a new trader, you may want an exchange that support fiat deposits and withdrawals.
- Trading volume: It is easy to execute trades at your desired price on exchanges with a high trading volume. So, choose an exchange accordingly.
- Security and legality: Check whether an exchange has the legal clearance to operate in your region. And then, do more research and find some testimonies about the exchange’s security measures.
Once that’s done, it’s time to embark on your Bitcoin trading journey.
Step 2: Select a way to trade bitcoin
There are four popular ways you can trade Bitcoins.
- Day Trading: Day trading is the process of buying and selling Bitcoin within a single day to book your profit or loss. Your trades may range from a few minutes to a few hours.
- Swing Trading: Swing trading usually includes buying Bitcoin and holding it for the next few days or weeks unless Bitcoin reaches your target price.
- Scalping: This is a high-risk trading format where you buy and sell Bitcoins in a very short period of time, maybe a few minutes or less. This usually requires you to invest large capital to make considerable gains with even small price movements.
- HODLing: Hodling is the practice of buying and holding Bitcoin for the long-term. It is the easiest way to invest in Bitcoin that has brought hefty returns over the past years.
Step 3: Set up a Bitcoin trading strategy
If you can set up the right Bitcoin trading strategies, you can create a long-term source of income for yourself. For that, you need to learn how to analyze markets, read order books, spot price movements before they happen, and book your profits and losses on time.
Once you are well-versed with these terms and phrases, you can create your own trading strategies or try strategies that experts share on trading platforms.
Step 4: Choose a place to store your Bitcoin
Once you start growing your total Bitcoin holdings, you will need a secure place to hold your funds. In that case, there’s no better option than to put your Bitcoin in a hardware wallet like the Ledger Nano and avail its live functionalities using the Ledger Live application.
Is trading Bitcoin profitable?
Let’s be honest, that depends on how well you learn the skills to trade Bitcoin. But for the start, here are the benefits and drawbacks of trading Bitcoin:
Benefits of Bitcoin trading
- Price Swings: Bitcoin is subject to greater price swings than traditional assets. This may allow you to book bigger profits as a trader.
- Long-term benefits: Bitcoin seemingly has a promising future as a hedge against inflation and a store of value. All while you trade Bitcoins, you will also hold it for the long term, And if its price appreciates, so will the net worth of your Bitcoin holding.
- Exposure to crypto economy: Cryptocurrencies are not just about Bitcoin, but trading Bitcoin is an amazing way to get exposure to the cryptocurrency economy.
- 24×7 trading: Bitcoin markets never close like stock markets. They are open all day, seven days a week, 365 days a year. So, you can trade whenever you want.
Drawbacks of Bitcoin trading
- Volatility: Bitcoin is a volatile asset. You need to stay aware of wild price swings, especially during a bear market.
- Regulation: Cryptocurrency regulations are still not well defined. You may want to ensure whether or not your local laws consider Bitcoin trading legal.
The way forward
There’s no doubt that trading Bitcoin can be challenging as a beginner. But if you put in the right efforts to learn Bitcoin trading strategies, you can make a profit off of it. As you embark on this journey and go forward, you can always come back to Ledger for Bitcoin trading advice and other educational material.
Be smart. Study the risks. And trade only when you are ready for it.