Those interested in cryptocurrency are well aware of how unstable Bitcoin can be, which is why any tips on how to properly trade it are always useful.
But if you are more of a beginner, let’s start with the basics!
What is bitcoin trading?
Bitcoin trading involves a level of speculation on the currency’s value in order to make the best decisions and maximize one’s profit.
This usually means purchasing bitcoin via an exchange with the hope that its value will go up as time goes on.
To speculate on these rising and falling values, traders use more and more derivates, attempting to make the best of the currency’s unstable nature.
One trusty way to track everything and learn more is using platforms like Bitcoin Storm.
Such resources can really help traders make the right decision when it comes to financial derivates like CFDs and the price of bitcoin in general.
This way, you can take full advantage of the value’s fluctuations without taking actual responsibility for the bitcoin tokens’ security.
Before you can seize the opportunity, you need to understand more about what exactly impacts the value of bitcoin.
What are the factors that affect Bitcoin’s price?
– Supply. The currency’s supply is capped at 21 million, and this sum is expected to be exhausted in around 120 years. The supply of bitcoin being limited means that if demand for it rises in the near future, the value of the cryptocurrency could increase.
– Integration into new payment and banking systems. If successful, the demand may rise, which can lead to bitcoin’s equal rise in value.
– Negative press coverage. News on topics such as bitcoin’s value, security, and longevity being questionable or concerning can, on the other hand, lead to it dropping in value.
– Other notable events. Things like security breaches, regulation changes, and macroeconomic bitcoin announcements can also influence the value it possesses. For instance, a rise in value could also be a consequence of users agreeing on how to speed up the network.
Furthermore, you should also pick a trading strategy:
– Day trading. This means that you decide to open and then close a position in just one trading day. This way, you won’t have to worry about overnight market exposure, and as a result, you’ll also avoid overnight funding charges. This strategy is useful for those who wish to profit from the token’s short-term value fluctuations.
– Trend trading. This method involves making a choice that matches the latest trend.
– Hedging bitcoin. Basically, this means mitigating your exposure to risk by simply choosing the opposite position to another one you already have open. This is the best choice if you are worried about the market heading in a different direction than previously anticipated.
– ‘HODL’ bitcoin. This strategy means purchasing and holding onto bitcoin and is a good decision if you are anticipating a long-term increase in value. Naturally, if your research suggests selling will limit your loss or simply help you profit quicker, do that instead!
How can you get exposure to bitcoin?
– Leverage and margin: CFDs are traded with leverage, so to get full market exposure, you’ll need to put up the margin (aka a deposit).
– Trading bitcoin derivatives. As mentioned before, derivates are important as well. Doing this using platforms like Bitcoin Storm involves speculating on bitcoin’s value with CFD instead of owning the currency.