How to start Bitcoin trading business
Bitcoin trading is the process of buying and selling bitcoin to make a profit. On the other hand, investing is the act of buying Bitcoin and keeping it for a long time like stocks and shares and relying on its appreciation of the investment until it is eventually sold.
In a nutshell, when investors buy Bitcoin, it means that they want to hold it for a long time. They believe that the price will eventually go up irrespective of the volatility that takes place in the interim period. People who invest in Bitcoin tend to believe in the ideology, technology and in the players that are behind the Bitcoin currency.
Bitcoin’s price is volatile and once the price goes up, new and existing investors want to cut the share of the profits and again as soon as the price begins to nosedive, they are all looking for an exit route. Bitcoin business is speculative such as the business of trading in shares.
The business of Bitcoin is easy to start since the barrier to entry is very low. The reason why you should go into Bitcoin trading business may be as follows:
Bitcoin isn’t controlled by any world power and therefore it is free and no single government of the world can control its use or circulation. It only reacts to world events, political or economic that is serious enough to affect it. Let’s take a look at some of the events over the last few years that has an impact on the price of Bitcoin.
– Brexit
UK’s decision to pull out of the European Union has affected the Bitcoin in some ways. As a consequence of the UK’s departure, the Bitcoin exchange giants Binance had said that they have been “besieged” by insane demand of those who wanted to register for its new Jersey-based trading platform. Binance Jersey lets users to trade euros and British pound sterling with bitcoin, ethereum and right of entry to digital asset management services.
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India’s Demonetization
The Indian government demonetized the currency by stopping Rs. 500 and Rs. 1,000 from being a legal tender. Soon after the demonetization public statement, the price of Bitcoin at Zebpay (Bitcoin exchange body in india) rose from $757 to $1,020. At this time Bitcoin in America was trending for $770.
Trump’s 2016 Election
Soon after Trump’s victory in 1026, the New Stock Market plummeted with the result that even in Austraila, the market lost USD 30 billion. But in the case of Bitcoin, it was a different ball game. Before the US election night, Bitcoin rose to $740, but that was mainly because of the problem the Mexican peso had. But as soon as Trump emerged victoriously, it went up from $705 to $739.
Bitcoin is open 24/7
Bitcoin is open 24X7, unlike the stock market that is being time regulated. The stock markets must dance to the tune of the authorities in which country it is located and usually reflect the working hours and days of the week of that country. Investors can purchase Bitcoin on most exchanges around the world any time any day, seven days a week. By this, it means you can trade Bitcoin 24/7.
Bitcoin is Volatile
Bitcoin is famous for rapid and frequent price fluctuations and as a result, traders can leverage on this price volatility and make an easy and quick profit
How to start Bitcoin trading business
Open an IG CFD trading account
Build a trading plan
Carry out market research and be current with trends
Begin to trade
Trading methods
Conclusion
- 1. Open an IG CFD trading account
IG is a trading platform that gives traders/users access to over 15,000 different markets all over the world, while CFD (Contract For Difference) enables a trader to speculate on the rising or falling prices of fast-moving global financial markets. To become a trader on CFDs, you must have an IG trading account. It only takes a couple of minutes to get registered and you are trading already once you have provided some funds.
By creating an IG CFD trading account, you will be able to participate in a financial arrangement (trading on Bitcoin) in which you are not going to own the assets (Bitcoin currency) but the contract is essentially on the Bitcoin price variation.
So to trade on Bitcoin, it is mandatory to open an account as well as providing some funds to trade on. Your transactions will be based on the funds provided; the profit or loss you make will be to the extent of the funds at stake.
- Build a trading plan
Decide on your trading plan and strategy. The bottom line of your plan is profit and to be able to make a profit, you must achieve your objective. Your trading plan is essentially going to help you make informed decisions. As a newbie to the markets, you should have both a strategy and a plan. The plan is like a roadmap to follow to reach your goal while a strategy is a way you have designed to achieve your profit objective. I would like to list some tips on how to plan in the hope of assisting you to trade professionally in Bitcoin and make a reasonable profit;
Here are the tips for creating a plan:
Set out measurable and specific objectives you want to achieve from your trading, to be broken down into short and long term goals.
Decide on what your acceptable risk level from each trade will be, and in specific terms how much you are going to stake in the overall risk.
Decide on the risk-reward ratio you want to see, this will help you know in advance how much potential profit you need to make to justify your potential loss.
Select which markets you want to trade first; whether you want to begin with just bitcoin, and later expand into cryptocurrency or both at once?
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- Carry out market research and be current with trends
Before you go into trading proper, you must understand how Bitcoin trading works so that you will be able to know and follow what goes on in the exchange market. If you can, partner with an existing trader who will put you through. Learn the trade by doing it and with experience, you will be able to speculate and eventually make a profit.
Research on the latest news on Bitcoin trading and gather as much information as possible on the tricks of the trade.
Be sure you understand how to read and interpret Bitcoin’s market behaviour through charts and graphs. Past data can be an invaluable tool and when combined with factors that can influence the Bitcoin price, you will be able to read and make sense of how the market is moving. Also comparing periods required to invest and seeing results can provide a closer insight into behavioural patterns and emerging trends in Bitcoin trading.
- Begin to trade
Once you have gained enough ground on the logic behind trading on Bitcoin, you are encouraged to place your first trade using a trading platform of your choice. You’ll decide on the amount you would like to invest in the Bitcoin trading and enter it in the deal ticket. You must determine and define your close conditions: fix a stop to bring your position to a close when the market goes against you by a prescribed amount or a boundary for when the market moves in your favour. One of the tools for good risk management is “stops and limits”.
Bitcoin market is like the stock market where prices can go up or down. In the bull market, Bitcoin value is rising or expected to rise. In this case, you go ahead and buy but if on the other hand Bitcoin value is falling or expected to fall (bear market) you sell.
In the language of Bitcoin, to reverse your original trade, you close your position. If you originally bought in the Bitcoin market, you sell the same amount; if you sold, you place a fresh order. To enter into a deal, you will fill your deal ticket with the size of your position, and click buy or sell to close your trade.
Trading Methods
While all traders wish to achieve similar goals, they all try to practice different methods to reach their goals. The following are different methods of Bitcoin trading:
Day trading
This method allows the trader to conduct multiple trades all through the day in the hope of making a profit from short period price fluctuations.
Day traders cultivate the habit of spending all the time watching price movements on their computer screens, but all deals are closed by the end of each day
Swing trading
This method attempts to enable traders to be right there during the movement of the price at the time they form and they hold onto it until the trend makes a U-turn.
Scalping trading
Scalping relies heavily on short-term trading, and the idea is that if you accumulate small profits time after time, you reduce the risks of losing money and instead derive some benefits.
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Conclusion:
Bitcoin trading price movement is one of the most volatility of its kind, the price can sharply rise or fall without prior notice. Therefore it is easy to make a profit as well as make a loss. But be forewarned, many people who have gone into this business, backed out after a short while, simply because they didn’t achieve their profit objectives.
However, if you want to achieve success with Bitcoin trading, you’ll have to give a good reasonable amount of time and commit other resources too. Try to acquire relevant skills necessary to trade like a professional and be diligent enough in your trading. But if you dabble into it to make quick money, then perhaps, it might be too late to make a retreat.