There has been a lot of ongoing debates about the true identity of Bitcoin as regards to whether it should be classified as a cryptocurrency or commodity. With both sides presenting valuable arguments on this subject, it is of general support that it should be regarded as both a cryptocurrency and commodity. Whatever the debate is, what is more important is that traders are able to make significant returns on their investments on either short or long term periods.
What Is Bitcoin Trading?
Bitcoin trading is the process in which a trader purchases Bitcoins at a particular price with the hope of selling them at a higher price, thereby making profits. Also, should the price movement trend against the trader’s speculation, they can decide to sell them at a loss or hold on to them till the price reverses.
There are two types of traders in the Bitcoin market: the short term traders and long term traders. Both types of traders are defined by how long they are willing to hold on to the trading asset. Long term traders analyse the price movement over a long period of time, after which they can decide to buy and hold the cryptocurrency for a long time. Once their targets are met, they can sell it off at a higher price, making profits. On the other hand, short term traders analyse the intraday behavioral pattern of Bitcoin’s price movement, and search for opportunities to take swing trades – purchasing bitcoin at a lower price level and selling it off at a higher level. These Bitcoin traders are able to cash in on market volatility.
Rules Of Trading Bitcoin
Bitcoin is a profitable trading platform if you handle it the right way. Making profits is based on understanding the market movement pattern. Here are the following set of rules that are important to having successful trades:
- Never put all your capital of a single trade; you should divide it into smaller lot sizes to give you enough leverage to trade. You can invest a specified amount using various price levels as your entry positions.
- Do not invest any money that you can not afford to risk – this includes your life savings or money that can have a huge impact on your life. The reason for this is based on unforeseen circumstances that you may face when trading.
- In order to maximize significant profits, it is important that you take full advantage of available technology that will enhance your trade.
- You should keep in mind that the market is dynamic. Sufficient time, concentration and effort would be needed to achieve the best trading results. It is essential to stay updated with the latest trends in the Bitcoin world via research and other available means.
- Know when to close your trades and exit the market. Factors such as greed, fear and excitement can make a trader lose a trade. Stay focused and professional.
- It is important to take note that losing, just like winning, is an integral aspect of trading and should not affect your emotions, trading strategies and patterns. What is more important is that a trader end up with more cumulative gains.
Once, these criteria are being met, trading becomes less frustrating and more profitable. If you wish to learn more about Bitcoin trading and start trading, please check out this link: Bitcoin Trader
