How to start Bitcoin Trading – A step by step guide

Bitcoin & currency 3

Bitcoin is one of digital cryptocurrency that has become extremely profitable for both beginners and professionals. Its market is new, diversified with huge spreads.Manypeople are making money from trading bitcoin as their arbitrage and margin for trading are largely available.

If you have no idea how to trade with bitcoin, how you can do to start trading with it, and how it can help you make a profit without getting into technical problems, this step by step guide is for you. It will elaborate how the system works, how to continue using it to plow back profits without getting into scams. But first, let’s know more about bitcoin.


How bitcoin emerged

It’s of great importance to look at how bitcoin has emerged to become one of the most looked for cryptocurrency online trading. It came into existence in 2008 after Occupy Wall Street accused financial institutions of misusing their client’s money, doing away with some clients, and changing interests rates very often.

Bitcoin pioneers wanted to do away these problems caused by financial institutions to their clients. They believed to do away with middlemen, remove entirely interest rates, put any client in charge as well as to make transactions transparent without corruption being involved. Their ambitious mind came into reality when they created a decentralized system (blockchain), where the client could control funds and know anything going on at any time.

With a span of 8 years, big companies, hospital, institutions, corporations, and individuals accepted this cryptocurrency. Multi-millionaire companies such as Microsoft, PayPal, and dell are indeed making bitcoin their prior currency. Magazines, websites, blogs, and cryptocurrency forms are promoting its publication.

The main problems facing bitcoin are:

Ø  Hackers accounts

Ø  Transactions delays

Ø  Volatile prices

Unlike other currencies that are issued by the banks, bitcoin has no any form of monetary authority. Instead, it’s controlled by a P2P computer network made up of its client’s machines, to produce BitTorrent, file sharing system, and audio chats form and videos on Skype.

Bitcoins are generated by a process known as mining. The computers in this network execute the difficult mathematical task to produce bitcoin. The bitcoin mathematical system was set up in a way that it becomes progressively difficult to mine bitcoin. The maximum number of bitcoin that can be mined is estimated to be around 21 million.


Why trade bitcoin?

Compared to other financial instruments and markets, bitcoin requires only a few requirements to entry. In fact, if you own bitcoin, you can start trading at the same time. In case you don’t own it, there so many trading companies offering this product regarding contract for difference (CFD).

Before you get to know how you can trade bitcoin, it’s important to get familiar with this product and what makes it unique and exciting.


  • Bitcoin trades online 24/7

Unlike financial markets which don’t trade for Saturdays and Sundays, bitcoin does not have any official working days. There are a lot of exchange markets around the globe operating 24/7. Since there is no official bitcoin trading market, it doesn’t have an official price. Bitcoin, therefore, creates arbitrage opportunities for traders, with most exchange markets offering price at the same range and time.

  • Bitcoin is very volatile

Bitcoin prices are well known for their frequent and rapid movements. This automatically creates exciting chances for traders with the ability to make quick decisions and reap quick benefits anytime. By the way, it’s very easy to spot an opportunity from price movements by just looking at the online trading chat.

  • Bitcoin is not affected by external factors

Bitcoin is not like other currencies that are traded online, meaning its price is neither determined by the status of the economy nor politics of any given country. Throughout its trading history, its prices have not been affected by the range of events taking place, the likes of Greek fallen sate of the economy to the devaluation of Chinese Yuan.

Instead, these economic and political panic and uncertainty have caused bitcoin prices to increase notably.  For instance, bitcoin prices increased tremendously in 2013 after Cyprus’s capitals control.


Steps to follow when trading bitcoin



1. Find an exchange market

As earlier said, there is no official bitcoin exchange market. So, finding a good exchange market is not an easy task because choosing one requires considering factors such as:

  • Location – you must select an exchange market that nears you for the purposes of depositing fiat currency as well as an exchange market that accepts bitcoin payments in your own country.
  • Liquidity – to become a successful trader, you need a bitcoin exchange market with high liquidity and in-depth market penetration.
  • Trust – the exchange market should be trustworthy. Don’t choose a market that will run away with your money. Search for those market that has existed in the market for quite some time.
  • Regulations – it’s important to look for a market that regulates its market. At least you are protected against frauds while trading.

The two best-known exchange markets are:

  • Bitfinex – In this market, traders can trade with no verification if cryptocurrency is the method used to deposit.  The market trade about 25,000 bitcoin traded per day, therefore, making it the first bitcoin exchange market regarding USD.
  • Bitstamp – It is one of the oldest bitcoin exchange market founded in 2011. It has it market trading 10,000 bitcoins per day. It is currently the second largest worldwide market based on US Dollars volume.

2. Create account with the exchange market you choose

Every exchange market has it guidelines to open an account with them. The most common are:

i: Create account

ii: Verify the account using your personal email

iii. Once the account is confirmed, you log in to verify personal information

iv: Once verified, you head over to funding

v: Deposit your cryptocurrency

3. Start trading

Let’s look at an example on how you should start trading;Let’s say exchange market X charges $1.5 when you want to purchase $150 worth of bitcoin. Thus, your local bank will charge $151.5, and you now have $150 of bitcoin to trade.Assume the bitcoin has moved to 250% within 250 days for an average of 1.34% gain per day and there are dozens of companies to sell to.Therefore, selling the bitcoin at this particular time of the year is not a bad decision. You will end up ploughing back profit.


4. Analysis

You need to understand more about bitcoins since it is not like a company or stock, rather a computer network for creating and exchanging money. Trading bitcoin occurs when bitcoin prices rise while holding them, very similar to a stock market.

You have to critically analyze the market since its very complex and relies upon o technology blockchain. You have to focus on prices and volumes using technical analyzing concept.

5. Risk Management

Because the bitcoin trading is new and exciting, you have to focus on money management strategy. Price movement is one of the biggest risks in cryptocurrencies trading. Particularly bitcoin is very volatile since it can fluctuate quickly causing huge losses.

You need to include those factors that will encounter any risk. Set a plan indicating the amount you wish to risk and stick to that plan.


Scams to watch out while trading


Ponzi scams

They are more of high-yield investment programs, with high interests than the prevailing rates. You can end up re-directing your money to the wallets of thieves. They keep changing their names to hide their identity. So, watch out!

Bitcoin mining scams

There are scams offering what bitcoin market don’t offer. Be aware that bitcoin wallet doesn’t offer credit cards or PayPal. If you find a market offering this, be warned.

Bitcoin mining scams

There are companies seeking for payments to mine bitcoin for you. Once you have made the payment, you get blacklisted.