Everything you need to know about Bitcoin trading
Everything you need to know about Bitcoin trading

Everything you need to know about Bitcoin trading

By Thuy Dung - 14 Oct 2021

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Bitcoin trading, the origin

Bitcoin is a booming cryptocurrency that has become the primary choice of many investors, including billionaires, over the past couple of years. The digital coin was first introduced back in 2008 when Satoshi Nakamoto authored its white paper. Till now, the real face or identity of its founder is not clear. Over a decade, the asset rose in value from $0 to nearly $70000. The future also looks bright as more companies look over to accepting crypto as a form of payment. 

How can you trade bitcoin?

Investors can access cryptocurrency through exchange and brokers. The companies present good trading conditions with minimal commissions and quick executions and provide educational material for the best support. 

Traders are able to sign up easily by visiting one of the exchanges. Depending on the conditions set by the company, they may have to verify their identity. After that making a deposit and cashing out is super easy through various methods available by the brokerage.

Characteristics of Bitcoin Trading

CM trading is much similar to trading other assets such as forex and stocks. Traders can also contrast it with CFD trading. However, there are certain things that traders must know and learn to trade the asset with perfection.

Trading hours

Unlike other markets, Bitcoin is available 24/7 to trade. The brokers are open and available all days of the week, and traders can jump and execute their positions anytime they desire.

Volatility and liquidity

Bitcoin offers a good price movement and liquidity for traders. Traders rarely have to worry about their positions not getting filled in or latency. The up and down in the price action is affected by the supply and demand and the varying fundamental factors surrounding the digital asset.

Keeping an eye out for news from different countries and Billionaire investors can help traders gauge the coin’s future. To understand better, let us consider the effect on Bitcoin when China said that all forms of cryptocurrency transactions are illegal.

Bitcoin trading
The green arrow indicates a drop in Bitcoins value when China announced that all crypto transactions are illegal on 24 Sep 2021.

Bitcoin Mining

Bitcoin mining is a good way to earn a passive income, provided one has the right hardware. A GPU or a specialized miner can achieve the mining process. The related hardware works to solve a complex mathematical puzzle on the blockchain network. The reward is presented in the form of a coin. 

Mining can be achieved at a local level. Some investors purchase many graphic cards and set them up to form a mining rig or a farm.

Bitcoin Trading Strategies

There are a couple of trading strategies that revolve around Bitcoin. Many traders employ algorithms to trade the digital asset on auto mode. 

Arbitrage is a common method of automated trading that involves capitalizing on the latency in the price feed of different brokers. 

Grid trading techniques involve placing respective buy or sell trades at certain market levels and then cashing out once the market moves in your favor.

Traders can also employ various technical trading strategies that may involve the use of indicators and support and resistance levels.

Bitcoin trading
The daily price action chart on BTCUSD shows that a trader has plotted support and resistance lines that also act as key levels. Notice how the price bounces to and fro from these points.

The benefits 

We can list a few benefits of Bitcoin trading as follows:

  • Bitcoin is becoming one of the common methods to make payments with most merchants. Paypal is a good example of a company that has recently started to accept Bitcoin as a mode of payment
  • As mentioned before, the digital asset offers a good amount of liquidity and volatility for traders
  • It allows traders to diversify their investments
  • In contrast with other payment methods, Bitcoin offers lower costs


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