Bitcoin Trading 101: 5 Things Every Beginner Trader Must Know


Today’s digital money is blockchain-based, meaning it uses a technology where transactions are organized and recorded in a chain of blocks that all users can see via a global distributed ledger. And unlike traditional money, your digital assets are not subject to regulation by central banks, so you can use them to send or receive payments without going through clearinghouses.

Indeed, cryptocurrencies like Bitcoin is revolutionary in so many ways, which is why there’s so much interest in Bitcoin trading nowadays. If you’re thinking of becoming a trader of Bitcoin, then you’re on the right track. Bitcoin trading can be a profitable venture as long as you have a thorough understanding of the cryptocurrency world.

Use these tips to equip yourself with that knowledge to get started on Bitcoin trading.

  1. Know the difference between trading and investing

    Just like other financial products, Bitcoin is a tool that can be used in trading and investing. Trading and investing are related concepts because they both allow you to gain profits, but their difference lies in the methods used to achieve your goal.Investing is a long-term financial strategy where you use your resources to purchase, fund, or own something. You can’t expect to make a profit right away from your investments. For example, you may invest in Bitcoin now, but you may have to wait for a few years before selling it at a higher price.

    On the other hand, when trading Bitcoin, you’re buying and selling coins for the short term to take advantage of the frequent movements in the trading market. The Bitcoin value changes very often, so you want to time your enter and exit positions based on daily, weekly, or monthly trends.

  2. Learn the languageCrypto can be a complicated subject that uses a special or technical language. This makes it crucial that you familiarize yourself with terms commonly used in the crypto space. Here are a couple of examples:
  • Wallet—This is similar to the traditional ones where you store your money, but Bitcoin wallets come with a public address where you can receive your Bitcoins and a private key that enables you to unlock your wallet to send funds to others.
  • Public key—While a private key is what you use to access your Bitcoin wallet, the public key is what others use to verify that the Bitcoin address you use is really yours since it’s associated with your private key.
  1. Choose your exchangeYou’ll need to open an account on an exchange to start trading Bitcoins. The exchange refers to a marketplace where the buying and selling of Bitcoins happen. 

You can choose between a fiat-to-crypto and crypto-to-crypto type of exchange. As the names suggest, the first type of exchange allows you to use traditional currencies to buy or sell Bitcoin, while the second only lets you trade from one cryptocurrency to another.

You could begin trading on a fiat-to-crypto exchange since the assumption is you don’t have enough digital assets yet to deal exclusively using cryptocurrencies.

  1. Know how to manage the risks

    Just like all financial undertakings, Bitcoin trading can be risky in the sense that its price is constantly fluctuating. There’s no definite way of telling what’s going to happen to your digital assets, but you can manage those risks by paying attention to industry trends as well as political events since these two usually go hand in hand.Aside from price fluctuations, you should also be prepared to face potential security issues, such as cyberattacks, on crypto exchanges. To counter this, you should choose exchanges with strong security measures in place. You should also be diligent in making backups of your private keys securely since they are almost impossible to retrieve in the event that you lose or forget them.
  2. Learn from different resources

If you want to know more about Bitcoin and cryptocurrencies, you need to devote time to learning the subject matter. Read online resources, sign up for training, join a forum—there are many ways that will allow you to expand your knowledge of the cryptocurrency world, which you can then use to trade with higher chances of success.

Now Happening: Bitcoin Trading

These are exciting times for trading enthusiasts like yourself. Bitcoin has been making news since its launch in 2009, which tells you that it can be an excellent trading instrument, provided you understand everything there is to know about it.
