Bitcoin Trading for Beginners
Before putting your hard-earned money into digital currency or any financial product, one must be aware of the type of trader he/she is. If I am looking for short-term profits, I will put in the money for a limited period of time and make use of the volatility to earn. On the other hand, if I am a long-term investor I will buy Bitcoin or any other cryptocurrency at the given rate and not touch it for anything above a year. It sounds simple but many beginners put their money into crypto without any perspective and end up losing it.
Why Bitcoin for Trading?
Bitcoin offers high volatility. For trading, you need significant price fluctuation to make a decent profit
Unlike other markets, you can trade Bitcoin 24*7
Its decentralized nature does not require time-consuming processes like account opening, verifications, and checks.
Different Types of Trading
Day Trading- Traders conduct multiple trades throughout the day. At the end of the day, all the trades are closed
Scalping- Traders make profits on small price changes. It is a quick in and quick out strategy. It is extremely short term trading based on the idea that making repeatedly small profits limits risk
Swing Trading- Swing traders try to enter a trade at the beginning of a price trend and close it at the end of it
Popular Trading Terms
Exchanges- These are online sites where buyers and sellers are automatically matched. Suppose, you want to sell BTC at 30,000$ and some one else wants to buy it for 30,000$. The exchange will automatically take the BTC from you and give it to the seller and deliver you the equivalent fiat
Orderbook- The buy and sell orders are listed in the exchange order book. For example, the current price of BTC is 30,000$ and you want to buy BTC at 25,000$. You will place a bid which will show in orderbook. Similar is the case if you want to sell BTC at a higher price
The BTC price shown in the exchange (32,650$) is the last price at which a buyer met a seller. Other prices shown include 24h High (highest price of BTC is the last 24 hours), 24h Low (lowest price of BTC in the last 24 hours) and 24h Volume (total BTC traded in the last 24 hours)
Types of Orders
Japanese candlestick charts are the most widely used charts in trading. A Japanese candlestick conveys 4 major things. Opening price, closing price, lowest price, and the highest price of the time frame the candlestick belongs to.
A green candlestick signifies that the closing price was above the opening price whereas a red candle tells that the closing price was below the opening price
Support & Resistance
How to Buy Bitcoin?
On Exchanges- Exchanges are marketplaces where buyers and sellers meet each other. Exchange is a mediator which brings the seller to the buyer or vice-versa. Exchanges will charge a fee for providing their services. The exchange will take the money from the buyer and transfer it to the seller while delivering the cryptocurrency from the seller to the buyer. The exchange will ensure the exchange takes place. You do not have to personally contact the seller or the buyer. You just have to place a buy/sell bid and enter the buying/selling price, rest exchange will do everything for you.
Top Exchanges for Buying/Selling Bitcoins or other cryptos:-
Binance is the world's largest exchange by volume (approx. 90 billion $ daily trading volume) and the most trusted one.
FTX is the closest competitor to Binance.
Delta Exchange is an upcoming exchange but they offer a ton of services such as options trading, robo strategies etc.
WazirX is an Indian exchange and one of the top exchanges in India too.
CoinDCX & WazirX belong to the same club of top Indian exchanges but CoinDCX offers leverage trading on cryptos. too
P2P Marketplaces- P2P marketplaces are the platforms where buyers will meet the seller but the platform will not exchange the money and coins on your behave. Rather, you will personally contact the seller/buyer and transfer the money/coins by yourself to the other person's account. The marketplace will act as an escrow between the buyer and seller to ensure a smooth trade.
Paxful is the largest and most trusted P2P marketplace for trading cryptocurrency.