Bitcoin Trading Introduction
As a trader, it's your job to understand how the market works and take advantage of opportunities when they arise. Sometimes, they come in the form of entirely new markets. At other times, opportunities come in the shape of benefits within already established currencies. Whether you've been interested in cryptocurrencies for a few days, a few weeks or a few years, this guide will help you get started on the right track. A lot of people are somewhat reluctant to trade because they just don't understand how the entire system works.
A lot of people have a hard enough time reading about cryptocurrency. There's a lot of risk in it, but that's where the guide comes in. The first time most people read about blockchain technology, they get downright confused. Even for those people who go to conferences, cryptocurrency usually makes no sense at all. In fact, for most people, the meetings tend to be confusing, more so than the guides like this you can read online. It's because it's a complicated system when you first get involved.
Having a simple guide that starts from the beginning is the most comfortable and most helpful way to understand how cryptocurrency operates. If you take the time, and study there are a lot of opportunities to be had within the cryptocurrency realm. It can take some time to start trading efficiently, but for the most part, all you'll need is this guide, and a willingness to do what it's says while learning. Not to mention there won't always be significant risks, but it's a lot easier with a quality guide to lead the way, allowing you to learn and glean helpful tips along the way.
Thefirst and one of the most crucial things to know is that cryptocurrencies like Bitcoin are incredibly volatile. This is also why they are so opportunistic - with the potential of significant risks comes the potential for high opportunity. And more importantly, massive returns on an unbelievable scale.
The same can be said about the losses as well; Bitcoin can go up and down thousands of dollars in a single day. Cryptocurrency started with Bitcoin, and it is considered to be the godfather of all other cryptocurrencies. Mainly, it's virtual currency that you buy with real money.
Also, most cryptocurrency is operated on its own platform through the use of blockchain technology. The teams behind the different cryptocurrencies are not usually just creating a new currency, but an entirely new platform that you can use the money on.
To fully understand how this works, you can look at other software that you've probably already used to get an idea. Windows is simple, you pay with US dollars and apply local Fiat Currency on your computer. If you buy a computer that has Windows on it already, then there is a license fee included with the new computer. On Windows, the database is stored on your local computer.
Except with Dropbox, there is a choice — you can get one month or pay for a year or other available plans on the platform. When using Dropbox, you store the files on the server run by Dropbox. For Fedwire, the databases are stored on the Fedwire server. However, when it comes to Cryptocurrencies — they are designed to replace the United States dollar or whatever local currency you use.
You then use them to purchase these software services. The databases used by cryptocurrencies give you unlimited access to the blockchain technology as well. There will be more on blockchain technology in a bit. And let's make it clear, Bitcoin is different than United States dollars in that cryptocurrencies are typically run on a decentralized network and are designed to improve the software systems of other existing networks.
They are their own currency types, unlike PayPal, FedWire or Western Union — where you just send actual fiat from one place to another.
Cryptocurrency allows more freedom than other financial institutions like PayPal, where there are severe limitations on what can and can't be done. For example, you can't work with many different countries when using PayPal, they are considered high risk and off limits.
On the other hand, when using cryptocurrencies like Bitcoin, you can make substantial financial transactions that are available across the world by many different people and financial institutions around the globe. Other currencies tend to have problems that we can talk about later in this guide.
And just to clear it up, many organizations consider cryptocurrencies money. Several methods can be used for trading Bitcoin. One way to trade the currency without owning any coins is through the volatility of the Bitcoin — it works through companies like Plus and Avatrade as well as Fortrade.
It's a risky way of trading, and it's wise to start with a demo if you plan on selling this way. Once you feel comfortable, then you can trade out of demo mode.
You'll then be able to generate consistent profits. To truly make profits on trading you'll also need to learn to understand the market and how to gauge it. Even this guide isn't enough to help you achieve fail-safe trading. You'll need to experiment on your own as well. First, to be clear — there's a massive learning curve when starting your work with cryptocurrency. Newcomers will have to go through about months of studying to get up to current speed with Bitcoin and what's happening in the industry.
There's a lot of basics to learn and adapt your way of thinking too. Like any other new, revolutionary platform, cryptocurrency doesn't coincide with established or traditional ways of doing things. Understandably, not many people have the time or the initiative to learn everything they need to about Bitcoin.
One positive note, however, is that Bitcoin is known to be incredibly profitable. At first glance, it may seem hard and volatile, which is true, but there are always two sides to every coin.
Just this year Bitcoin has gone up in price more than ten-fold. It started off as a mostly free currency in , and in the last eight years has created millionaires all over the world. Most of the people were risk takers, ready to get in on the cash crop. Even though there is a learning curve, thousands of everyday people like you have turned their lives around with Bitcoin. This is truer than ever in a market where many other assets are struggling to be profitable.
There are two different types of people: the people who already own Bitcoin and the people that don't. This guide is for people who don't own Bitcoin but are interested in it. And it will teach you how to buy and save Bitcoin without needing a thorough and in-depth understanding of blockchain technology, mining or segregated witnesses.
Because of the inclusion of Bitcoin as a real-life currency by many different financial institutions and exchanges, anyone can read a price chart to find out costs and trade Bitcoin. It's no longer necessary to have many specialized apps to start as cryptocurrency is much more accessible now. One of the most significant benefits of Bitcoin is its availability on a worldwide scale. It's being distributed all over the globe through the use of different electronic exchanges everywhere.
Also, the trading market is never closed. That means your investment never stops working. Unlike other trading platforms like Forex, Bitcoin never takes days or weekends off. It's one of the purest forms of currency ever created. It means that traders everywhere can buy, sell or exchange any time of day that is most convenient for them.
It doesn't matter if it's during or outside of regular waking business hours or holidays. The currency is known for being incredibly volatile. Also, during the exceptionally volatile periods, price often moves on the scale of double digits. When done correctly, these swings can be some of the most profitable in history over short periods of time. And the more the price continues to move, the more substantial the sum of profit that can be made is as well as any occurring drops.
We can't forget the leverage that can be used with Bitcoin either. It gives traders the ability to generate vast amounts of monetary returns that far exceed their initial investment of a proportionate size.
Most of the platforms used to make that kind of money take severe amounts of functionality to leverage correctly. When mixed with the extreme volatility of Bitcoin, the amount of leverage can be powerful enough to open doors for individual traders. There is usually a very distinct form of professional traders who understand how to capitalize on trading like this. It's a very hands-on, day-to-day-based business you have to keep up with.
Usually, individual traders have a limited amount of free time and capital to keep in an account that is used for trading. When compared to other instruments and assets, leveraging Bitcoin is one of the most potent ways to get some serious bang for your buck in a short time frame. Bitcoin is also incredibly unique. There's no other store of value that is like it and it's one of the world's first widely traded digital currencies.
It's also a programmable currency that has a predictable level of inflation. It's because of this that Bitcoin prices typically move entirely independent of any other currencies or trading exchanges like Forex, stocks or bonds. It's a complete global network and is almost entirely safe from the risks that different currencies face. New developments in Bitcoin's space now and frequently do impact price. There are not standard moves in the market as events are usually relatively rare.
Some examples include the Cyprus bank bail-in, regulatory changes of the legal side of Bitcoin and increasing Chinese control of capital overseas. These are some major external factors that usually have some severe effects on other currencies and markets, but not often with Bitcoin. It's usually easier to trade Bitcoin based on prices per specific action.
For anyone who is just starting with Bitcoin, there is a detailed technical methodology that is used for predicting the changes in prices through the use of studying past market data.
Mainly those involved in volume and rate. That means it's not necessary to pick up every release of data or significant event that occurs for accurate predictions and interpretations.
Market Capitalisation: David Vs Goliath
Reading time: 17 minutes. You may have heard that maintaining your discipline is a key aspect of trading. While this is true, how can you ensure you enforce that discipline when you are in a trade? One way to help is to have a trading strategy that you can stick to. If it is well-reasoned and back-tested, you can be confident that you are using one of the successful Forex trading strategies. That confidence will make it easier to follow the rules of your strategy—therefore, to maintain your discipline. A lot of the time when people talk about Forex strategies, they are talking about a specific trading method that is usually just one facet of a complete trading plan. A consistent Forex trading strategy provides advantageous entry signals, but it is also vital to consider:.
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There are various forex strategies that traders can use including technical analysis or fundamental analysis. A good forex trading strategy allows for a trader to analyse the market and woro execute trades with sound risk management techniques. Forex strategies can be divided into a distinct organisational structure which can assist traders in locating the trasing applicable strategy.
The diagram below illustrates how each strategy falls into the overall structure and the relationship between the forex strategies. Forex trading requires putting together multiple factors to tjat a trading strategy that worrks for you. There are countless strategies that can be followed, however, understanding and being stratrgy with the strategy is essential. Every trader has unique goals and fogex, which must be taken into consideration when selecting dtrategy suitable strategy.
There are three criteria traders can use to compare different strategies on their suitability:. To easily compare the forex strategies on the three criteria, we've laid them out in a bubble chart. Position trading typically is the strategy a strategy that works for forex work for bitcoin trading the highest risk reward ratio.
On the horizontal axis is time investment that represents how much time is required to actively monitor the trades. The strategy that demands the most in terms of your time resource is scalp trading due to the high frequency of trades being placed on a regular basis. Price action trading involves the study of historical prices to formulate technical trading strategies. Price action can be used as a stand-alone technique or in conjunction with an indicator.
Fundamentals are seldom used; however, it is not unheard of to incorporate economic events as a substantiating factor. There are several other strategies that fall within the price action bracket as outlined. Length of trade:. Price action trading can be utilised over varying time periods long, medium and short-term. The ability to use multiple time frames for analysis makes price action trading valued by many traders.
Within price action, there is range, trend, day, scalping, swing and position trading. These strategies adhere to different forms of trading requirements which will be outlined in detail. The thhat show varying techniques to trade these strategies to show just how diverse trading can be, along with a variety of bespoke options for traders to choose.
Range trading includes identifying support and resistance points whereby traders will place trades around these key levels. This strategy works well in market without significant volatility and no discernible trend.
Technical analysis is bicoin primary tool used with this strategy. There is no set length per trade as range bound strategies can work for any time frame. Managing risk is an dor part of this method as breakouts can occur. Consequently, a range trader would like to close any current range bound positions. Oscillators are most commonly a strategy that works for forex work for bitcoin trading as timing tools. Price action is sometimes vorex in conjunction with oscillators to further validate range bound signals or breakouts.
Range trading can result in fruitful risk-reward ratios however, this bitxoin along with lengthy time investment per trade. Use the pros and cons below to align your goals as a trader and how much resources you. Con s:. Trend trading is a simple forex strategy used by many traders of all experience levels.
Trend trading attempts to yield positive returns by exploiting a markets directional momentum. Trend trading generally takes place over the medium to long-term time horizon as bitcoij themselves fluctuate in length. As with price action, multiple time frame analysis can be adopted in trend trading.
Entry points are usually designated by an oscillator RSI, CCI etc and exit points are calculated based on a positive risk-reward ratio. Using stop level distances, traders can either vorex that distance or exceed it to maintain a positive risk-reward ratio e. If the stop level was placed 50 pips away, the take profit level wold be set at bigcoin pips or more away from the entry point. Example tor Identifying the Trend. The opposite would biycoin true for a downward trend. When you see a strong trend in the market, trade it in the direction of the trend.
Using the CCI as a tool to time entries, notice how each time CCI dipped below highlighted in blueprices responded with a rally. Not all trades will work out this way, but because the trend is being followed, each dip caused more buyers to come into the market and push prices higher. In conclusion, identifying a a strategy that works for forex work for bitcoin trading trend is important for a fruitful trend trading strategy.
Trend trading can be reasonably labour intensive with many variables to consider. The list of pros and cons may assist you in identifying if trend trading is fr you. Position trading is a long-term strategy primarily focused on fundamental factors however, technical methods can be used such as Elliot Wave Theory. Smaller more minor market fluctuations are not considered in this strategy as they do not affect fkrex broader market picture.
This strategy can be employed on all markets from stocks stratwgy forex. As mentioned above, position trades have a long-term outlook weeks, months or even years!
Understanding how economic factors affect markets or thorough technical predispositions, is essential in forecasting trade ideas. Entry and exit points can be judged using technical analysis as per the other strategies. The Germany 30 chart above depicts an approximate two year head and shoulders patternwhich aligns with a probable fall below the neckline horizontal red line subsequent to the right-hand shoulder.
In this selected example, the downward fall of srrategy Germany 30 played out as planned technically as well as fundamentally. Brexit negotiations did not help matters as the possibility of the UK leaving the EU would most likely negatively impact the German economy as. Fkrex this case, understanding technical patterns as well as having strong fundamental foundations allowed for combining technical and fundamental analysis foeex structure a strong trade idea.
List of Pros and Cons based on your goals as a trader and how much resources you. Day trading is a strategy designed to trade financial instruments within the same trading day. That is, all positions are closed before market close. This can be a thwt trade or multiple trades throughout the day. Trade times range from very short-term matter of minutes or short-term hoursas long as the trade is opened and closed within the trading day.
Traders in the example below will look to enter positions at the when the price breaks through the 8 period EMA in the direction of the trend blue circle a strategy that works for forex work for bitcoin trading exit using traidng risk-reward ratio. The chart above wor,s a representative day trading setup using moving averages to identify the trend which is long in this case as the price is above the MA lines red and black. Entry positions are highlighted in blue with stop levels placed a strategy that works for forex work for bitcoin trading the previous price break.
Take profit levels will equate to the stop distance in the bircoin of the trend. The pros and cons listed below should be considered before pursuing this strategy. Scalping in forex is a common term used to wodks the process of taking small profits on a frequent basis. This is achieved by opening and closing multiple positions throughout the day.
The most liquid forex pairs are preferred as spreads are generally tighter, making the short-term nature of the strategy fitting. Scalping entails short-term trades with minimal return, usually operating on smaller time frame charts 30 min — 1min. Like most technical strategies, identifying the trend is step 1.
Many scalpers use indicators such as the moving average to verify the trend. Using these key levels of the trend on longer time frames allows the trader to see the bigger picture. These levels will create support and resistance bands. Scalping within this band can then be attempted on smaller time frames wrks oscillators such as the RSI. Stops are placed a few pips away to avoid large movements against the trade. The long-term trend is confirmed by the moving average price above MA.
Timing of entry points are featured by the red rectangle in the bias of the trader long. Traders use the same theory to set up their algorithms however, without the manual execution of the trader. With this practical scalp trading example above, use the list of pros and cons below to select an appropriate trading strategy that best suits you. Swing trading is a speculative strategy whereby traders look strrategy take advantage of rang bound as well as trending markets.
Swing trades are considered medium-term as positions are generally held anywhere between a few hours to a few days. Longer-term trends are favoured as traders can capitalise on the trend at multiple points along the trend. The only difference being that swing trading applies to both trending and range bound markets. A combination of the stochastic oscillator, ATR indicator and the moving average was used in the example above to illustrate a typical swing trading strategy.
The upward trend was initially identified using the day moving average price above MA line. Stochastics are then used to identify entry points by looking for oversold signals highlighted by the blue rectangles on the stochastic and chart.
Risk management is the final step whereby the ATR gives an indication of stop levels. The ATR figure is highlighted by the red circles. This figure represents the approximate number of pips away the stop level should be set. For example, if fo ATR reads
How to Trade Crypto and Forex! Most wont tell you this........
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In fact, you can use this as a trade guide for any type of trading instrument. They allow you to trade Bitcoin without ever having stratsgy use. It's at this point that the trends typically start to crash at an alarmingly, almost violent rate. Trading platforms Web platform Trading apps Advanced platforms Compare features. Bitcoin exchanges work the same way as traditional exchanges, enabling investors to buy the cryptocurrency from or sell it to one. Visit Broker Markets. However, there are a few drawbacks:. And without correct knowledge of how to trade, the risk is even higher than one can imagine. You can also read our best Fro Fan trading strategy. They can, in turn, predict future prices with the given information. Many forex trading sites offer demo trading to get you started. TradingGuides on December 16, at pm. The best traders often specialize in one type of trading but have a deep understanding of several different trading methods. For the most part, the fluctuations that happen throughout the day rarely bother. Bitcoin Advantages and Disadvantages. Ether trading Go long and short on ether, the token of the ethereum network. At first glance, it may seem hard and volatile, which is true, but there are always two sides to every coin.