What is Bitcoin Trading, and how to trade Bitcoin for Profit?
If you are a beginner and want to become a profitable crypto trader, this guide on “How to trade Bitcoin for profit” can help you a lot.
Bitcoin trading analyzes the Bitcoin price movements using a CFD trading account to open an order (up or down) for profit.
There are a few different Bitcoin Trading Strategies that are proven to be the most successful. You can choose between copy trading, automated trading (or robotic trading), or manual trading.
Learn how to trade Bitcoin for Profit
To make the most of your opportunities and become a profitable crypto trader, you need to follow some investing rules. In this section, we will present some of the most important ones.
It’s fairly simple to learn how to trade Bitcoin for profit. You need to consider just a few things before you start your very own journey and become a profitable crypto trader.
Never Invest all of your Capital
This is by far the most basic rule of investing in the financial markets. Never invest more than you can afford to lose.
No matter how safe the opportunity seems, you should always follow money management rules. Ideally, you can risk 1% of your capital per position or a maximum of 5%.
Watch out for Market Trends
Most novice traders sometimes stubbornly hold so-called “counter-trend” positions. For example, when the general market trend is up, they take a down position.
But when it is bearish, they take a bullish position. This is a bad habit that needs to be corrected as soon as possible if you want to be profitable.
Experience has shown that you have a 70% chance of a successful Bitcoin trade by following the market trend. This success rate drops to 30% when trading against the trend.
How to Adjust your Leverage
It is essential to keep the leverage to a minimum or not use it, especially if you are a beginner. Leverage tends to focus more on a positive scenario than a negative one. However, both scenarios are possible. To better manage the risks associated with trading, it is advisable to avoid leverage whenever possible.
Regular Profit Withdrawals
Some traders tend to reinvest all of their profits directly into another position. Such an approach to trading is not advisable.
Keep in mind that it does not belong to you as long as your money is with your broker. That’s why you should transfer your profits to a bank account (for example) when you have the opportunity.
Using Trading Signals
One of the best ways to learn how to trade Bitcoin for profit is to use trading signals. More experienced traders usually offer them. So you can learn to predict Bitcoin movements from those who know better.
Bitcoin trading strategies
Depending on the duration of the market position, there are 3 types of trading: scalping, day trading, and swing trading. Each investor profile corresponds to a different Bitcoin trading strategy. It is important to understand the nuances of each strategy before making a choice.
Scalping is a Bitcoin trading strategy that is based on a concise time frame. Generally speaking, when a trader opens a position and closes it after a few minutes or seconds, they are said to be scalping. This Bitcoin trading strategy is challenging because the thinking time rarely exceeds 15 minutes.
We recommend that you choose automatic trading systems if you are interested in this Bitcoin trading strategy. Their speed of analysis and order execution is a major advantage that can make all the difference. The least you can say is that Bitcoin’s hyper-volatility is a good trait for scalping.
If not, you need to train well and insist on mastering technical analysis. Scalpers often don’t have time for fundamental analysis or rely on financial information to take a position. They focus solely on the data on the chart.
In a fraction of a second, BTC charts can capture movements of more than 1%. With good preparation, you can anticipate them and work wonders.
Day trading Bitcoin
Day trading is a Bitcoin trading strategy that is done for a maximum of one day. The duration of an intraday position is usually no more than 4 hours. All of the Day traders close their positions before the end of the day to not pay extra fees for overnight positions.
The liquidity that Bitcoin offers makes intraday trading in this cryptocurrency particularly dynamic and exciting. Bitcoin often shows daily swings of 10% or more, with peaks as high as 25%. This kind of movement can bring you a lot of money, depending on your initial capital. If you also use leverage, such as 1:10, a profit of $250 can easily turn into $2,500.
This Bitcoin trading strategy makes it relatively easy to learn how to trade Bitcoin for profit compared to scalping. It is especially suitable for more or less experienced traders who are only interested in the daily performance of the asset. If this type of trading fits your profile, you can get started right now using a broker like Binance.
Bitcoin Swing Trading
Swing trading is a strategy that involves taking a position in the market and moving it for an extended period of time before closing. A swing trading order can be in effect for days, weeks, or even months.
To be profitable, a trader uses both technical and fundamental analysis to determine the best entry point into the market. There are two types of entry: swing low and swing high.
Between April 2020 and April 2021, Bitcoin went from $3,000 per token to nearly $60,000 per token, increasing by over 2000%. This means that if you opened an order to go up, you could make a profit of about 20 times your original capital. Specifically, with $1,000 in the capital, the profit would be $20,000, all in less than a year and without the use of leverage.
Nevertheless, it’s not too late to invest in Bitcoin.
Almost all experts believe that cryptocurrency will make further impressive moves. It could reach the $100,000 mark soon. To join the gang and start trading Bitcoin for profit right now, we recommend the well-known Binance platform.
Why should you trade Bitcoin?
There are several reasons why you might choose Bitcoin as a cryptocurrency to trade. Here are some of them:
It is the leading cryptocurrency.
This status gives it a certain legitimacy. Indeed, different cryptocurrencies are born every day. With such a wide range of choices, it is sometimes hard to distinguish between fraudulent projects and those not.
With Bitcoin, you don’t have to ask yourself that question. The prominence that Bitcoin enjoys has a direct impact on the general public’s interest in this cryptocurrency. As a direct consequence, it affects the price of the asset.
Cryptocurrency is accepted as a Payment Method
Bitcoin is currently the most widely used cryptocurrency for various economic activities. Many physical and online businesses and stores allow customers to pay for goods and services using this cryptocurrency.
In this case, the Coca-Cola giant has launched vending machines that accept BTC as a means of payment. In addition, more than 40 percent of small and medium-sized businesses in the U.S. and Europe already accept Bitcoin as a form of payment. This is good news for the longevity of cryptocurrency and traders.
Impressive movements on the BTC chart
Looking at it purely from a technical and financial perspective, Bitcoin is a great asset for traders. It’s hard to get bored with the BTC chart. Every minute, every hour, even every day, this cryptocurrency offers endless possibilities.
The Risks of Bitcoin Trading
No income-generating activity is without its share of risk. Even Bitcoin trading can be risky. To become a profitable crypto trader, knowing these risks and developing strategies to manage them are important.
Beware of volatility
It’s no secret that cryptocurrencies are known for their volatility. Bitcoin (BTC) is no exception.
Some ardent critics believe that trading this cryptocurrency is like a casino rather than a stock market. Such a judgment may be harsh, but it is not unreasonable.
In looking at the history of this cryptocurrency, it is clear that it has already had to make a -25% drop in the past. Such a move can be very detrimental, especially for swing traders. To prevent such an event and avoid losing all of your profits, the trick is to change your take profit level as the value of the cryptocurrency rises.
Beware of slippage
Slippage is the difference between the price of an asset when you place your order and the price of that same asset when the broker actually executes the order. Due to the hyper-volatility of cryptocurrencies, in this case, Bitcoin, the price of an asset can move from one level to another, usually without passing through an intermediate level. As a direct consequence, you can lose money simply because your order is executed at a worse level.
Potentially Higher Rates
Before you start trading, you should first check all the commissions associated specifically with Bitcoin trading. While these commissions vary from broker to broker, they are often higher than the commissions associated with other asset classes.
For example, with a broker like Binance, cryptocurrency brokerage commissions are calculated as a percentage of the size of your position. The commission on Binance is 0.1%.
About the risks of Bitcoin trading
In any case, you have to take risks to make a profit with cryptocurrencies. As the old saying goes, no risk, no reward. This is the harsh law of finance.
The good thing is that when you know the risks of Bitcoin trading, you can at the same time develop strategies to overcome those risks.
Therefore, you need to consider every element we have presented in this section or any other information that can help you better manage the risks of Bitcoin trading.
Bitcoin trading is an exciting business that can bring you a lot of money, especially if you choose the right platform and have the right keys to success.
As the world’s leading cryptocurrency, Bitcoin (BTC) has a certain legitimacy. It is nothing less than the cryptocurrency with the highest market capitalization. This is one of the reasons why Bitcoin is so popular in the trading community.
Before getting started, it is important to get a good education to avoid failure. There are a few risks of Bitcoin trading that you need to analyze beforehand carefully.
It would help if you also chose the Bitcoin trading strategy that fits your investor profile before trading Bitcoin for profit. For example, you can choose scalping, day trading, or swing trading. It all depends on you.
If you want to trade Bitcoin right now, we recommend the Binance platform, which in our opinion, is the best offering in this field.