If you’re reading this right now then perhaps you’re interested in making some money learning to trade Bitcoin. Whether you’re a novice or a full-time trader this article has something new for everyone. Without a doubt, cryptocurrency investments can really give a boost to your overall portfolio. However, it’s not recommended you completely put all your capital into crypto, it’s important to diversify your investments. There is an abundance of information out there currently on how to trade Bitcoin. Some of it is good and some awful. Regardless, we’ve extracted all the relevant and useful material for you to get on the right track when learning to trade Bitcoin.
Learning how to trade Bitcoin can be a very profitable pursuit. Not only from the standpoint that you can profit off the coin itself but you can also develop a skill set and teach your new found knowledge to others through an online course, e-books, mentorship, and website. There are countless opportunities to be made in this pursuit of learning to trade Bitcoin. And if that didn’t motivate you enough, it’s pretty obvious that Bitcoin can create overnight millionaires such as the Winklevoss twins.
In the following article we’re going to take you through;
- What is Bitcoin
- Why trade Bitcoin
- Things to consider before trading Bitcoin
- How to trade Bitcoin
What Is Bitcoin?
For those of you that are completely novice and don’t exactly understand what Bitcoin is but hear about all the buzz surrounding it, let me explain;
Bitcoin is a cryptocurrency, which is essentially an electronic form of currency just like your dollar, yen or euro. However, Bitcoin itself is an unregulated currency meaning that it has no lender of last resort. In essence, it’s a country without a residence. Furthermore, it allows the user to exchange payments without passing through a central authority such as a bank. As you can see from this, no one person controls the network. Bitcoin is essentially pure capitalism at play. The market for buying and selling is what determines Bitcoins value (along with other factors). In addition, bitcoin is limited in value. Unlike traditional currencies, a central authority cannot issue more of the currency to fight inflation.
This factor also adds to Bitcoins value. As demand spikes and supply remains the same in return the value will increase drastically. Just like a limited edition baseball card.
Another great feature of Bitcoin is that it offers semi-anonymity meaning that no central authority can verify your identity. As a result, you’re only identified by a unique key relating to your account and nothing more.
Other interesting factors of Bitcoin include,
Being able to break down a single unit of Bitcoin into a tiny fraction or decimal. While is not possible with traditional currencies. For instance, you can’t break down €1 into .0000001 cent. It’s not possible however with Bitcoin it is. However, Bitcoin does come with its inconsistencies too. For example, once a transaction is made, it cannot be undone.
Why trade Bitcoin
Including Bitcoin in your investment portfolio was something unheard of up until recently. As of now, it’s a mainstream recommendation. However due it’s nature and as we previously mentioned, it’s important to not include all your capital in Bitcoin. Despite the fact that it can have major upside returns it can also have major downfalls. Bitcoin is still a relatively new investment vehicle and people are still trying to find there ground with it. On the contrary, there is so many reasons as to why you should trade Bitcoin;
- Bitcoin is a fiat currency – For those of you unaware of there terminology, Bitcoin is essentially a currency without a nation. In this case, it’s price isn’t dictated by policies, interest rates or the economy of a nation.
- Trading Bitcoin is 24/7 – Just like the FX markets, the trading Bitcoin never stops.
- Arbitrage Opportunities – Bitcoin trades on countless exchanges 24/7. As a result, there is no official Bitcoin which can lead to countless riskless opportunities to be made. Especially with the recent introduction of Bitcoin futures.
- Bitcoin is very volatile – Meaning you can either lose all your money in an instant or become a millionaire in a day. It really depends which end of the spectrum you’re on. Regardless, having said that, if you know what you’re doing, stick to your trading strategies and make certain assumptions about the future, you could be eligible for the millionaires club.
Things To Do & Consider Before Starting To Trade Bitcoin
If you’re new to this you’re probably a bit lost but don’t worry. Firstly, you’re going to need to set up an account with an exchange, assuming you’re not interested in mining Bitcoin. Using an exchange is the easiest way to gain access to buying and selling. Ensure that you choose a reputable exchange for Bitcoin trading such as Coinbase or CEX.
Once your account is set up you’re good to go. However, as we mentioned earlier it’s important to understand what you’re buying and can you afford to buy. With that said, it’s important to do your research. Understand how the blockchain network works, Bitcoins future developments, how does it stand out from competitors, your current financial position, your future cash outlays, your contractual financial obligations etc. It’s important that you know what you own and why you own it. Never get into an investment blindfolded. Make rational decisions and ignore everyone rushing you into it. It’s important you separate emotion from logic when investing.
How To Learn To Trade Bitcoin
Finally, the moment you’ve all be waiting for. In this section, we’re going to show you exactly how to learn to trade Bitcoin. Firstly, before you even learn how to trade you’re going to need to get set up and have a proportion of your overall capital set aside to trade. When deciding how much capital to allocate to Bitcoin trading I would never recommend anything more than 5% or anything you can’t afford to lose. It’s an extremely dangerous trading Bitcoin, especially if you’re a novice. Once you’ve decided what amount you’re willing to invest from your overall portfolio then you need to set up a digital wallet and pick an exchange to trade on.
Following on from this you then need to develop your investment strategy. Over time this strategy will change with various factors. Regardless, you need to stick with it through thick and thin and make the adjustments necessary. There’s no exact strategy that’s right. Trading Bitcoin is more so an art than it is an exact science. In fact, you can use a combination of trading strategies, some can be winners and others can be losers. Furthermore, the winner that you had one day could be a loser the next. Overall, it’s important to know when to walk away and when to double down. There are various other tools out there at the moment that can really assist you in trading. Here is a list of resources that can really help you learn how to trade Bitcoin
Be sure to check them out. Each platform offers free or paid access when it comes to learning how to trade Bitcoin.