Several people want to know how bitcoin works and if it can make one rich – therefore, in this post, I will be sharing with you some of the basics you need to know about Bitcoin and how to buy and sell bitcoin for profit.
Ever since the inception of bitcoin technology, it has raised the financial status of several people in human society especially those that embraced this blockchain technology from the onset.
Through the buying and selling of this digital currency, it has provided a lot of avenues for people to take control of their own finances. Similarly, it has also Rekt a lot of people
From investments to buying and selling bitcoins to earn a profit, bitcoin sure has the dynamic financial flexibility that people can use to their advantage and raise their financial status.
This article will touch; how bitcoin trading works also explain how bitcoin price is determined to know if it will go up after your buy, and the different styles of trading.
Bitcoin Trading And How It Works
Table of Contents
So what is bitcoin trading? Bitcoin trading is a process whereby investors buy and sell bitcoin using several trading techniques to get maximum profits. Unlike the trading in the real world where items of goods can be sold instantly bitcoin trading can be held several years after buying to sell for profit.
Bitcoin is a virtual currency that is completely executed online. This means it can be traded around the world. In this sense, bitcoin trading means buying and selling bitcoins or exchanging it for other currency like Ethereum, Ripple, Cardano, Binance, etc. The exchange of bitcoin for other digital currency is know as swapping.
Let’s put this in a practical illustration: If you’re going to Europe for the first time on vacation and all your money is in U.S. dollars. You will have to convert them into Euros. This will require you to go to a currency exchange and have them converted into Euros (it’s important to note that there is an exchange rate or fee for the transaction). This is the same as bitcoin trading, except you’re converting your fiat money into bitcoin. Instead of going to a money exchanger, you go on bitcoin exchange site like Coinbase, Paxful, and Binance. There are a lot of other good bitcoin sites where you can visit to get Bitcoins.
How to trade bitcoin
Before trading your bitcoins, you’re going to have to choose an exchange on which you can trade on and there are two things you should look at.
- Trust – Not all site are trustworthy for your bitcoin trade so you should be careful the bitcoin site you choose to trade with.
- Fees – All bitcoin exchanges charge gas fees also know as getting asset service(GAS). It’s a way for them to earn a profit and in turn, they provide quality services through their website to their users. Explore each platform you’re considering and see how much they’re going to charge you for their services. Note that Binance stands out among the rest for low service fee. If you want quality service and minimal fee, you might want to consider using Binance exchange for buying and selling bitcoin and several other crypto.
How To Buy and Sell Bitcoin
It’s important to note that each bitcoin trading platform has different process when it comes to buying and selling bitcoins. For example, I’m going to go over the trade process using a binance account.
How to buy bitcoin
On peer-to-peer platforms, there are a tons of way to buy bitcoin. This is due to the vast amount of payment options available.
- First of all, created a Bianance ccount and verify your identity which is called KYC.
- Depending on your country of residence you can either buy Peer to Peer or use your Credit card; that’s if your country permits crypto trading.
- For Peer to Peer trading you will pay a seller cash for their bitcoin and wait for him/her to verify the payment and send your bitcoins.
- Once the payment is verified, the seller should then release the bitcoins from escrow (escrow is a service that most peer-to-peer platforms use – it acts as a third party and holds the seller’s bitcoins until payment is made by the buyer and confirmed by the seller).
How to sell bitcoin
The selling process is also just as simple. It’s basically reverse-engineered from the process of buying bitcoins.
- The first step is to create an offer. This is where you can input all your preferences. Preferences include profit percentage, payment method that you’ll be recieving (this includes all the requirements that you’ll be needing), payment window (how long the trade will last), etc.
- Wait for someone to take your offer.
- The trade begins and you’ll have to wait for the buyer to submit all of his/her requirements.
- Release the bitcoins from escrow and the trade is completed.
Proven Styles On How To Buy And Sell Bitcoin
Now that you’re equipped with the basics of trading, it is also important to familiarize yourself with the different styles of trading. This will help you choose the style of trading that suits you most. Each style presents a different way of making money with bitcoin. Here are some of the more popular styles on how to buy and sell bitcoin:
Day trading style
Day trading is the most common type of trade. This trading method is the execution of long and short trades to capitalize on the market price of each day. People that use this method close all trades by the end of the day to prevent open positions overnight.
There are several risks involve in day trading, so make sure to educate yourself to minimize losses and maximize profit. Because bitcoin’s price is so volatile, poor market analysis can make you loose all or some of your funds.
Swing trading style
Swing traders open different positions at short periods of time. This means that traders buy and sell bitcoins during significant raises and dips in bitcoin’s price.
With this style, you have to constantly stay updated with the news surrounding cryptocurrencies. You do this so that you can keep track of bitcoin’s current price. It will help you determine when to hold an open position for trade and how long to hold your position.
This is probably the easiest strategy for traders. This involves buying bitcoins and closely keeping an eye on the cryptomarket for posible dips to accumulate more.
The HODL style of trading popularly called Hold on to Die life is a style of trading whereby investors buy bitcoin with the hope the it will moon in the nearest future.
Like the other methods, this style requires you to keep yourself updated with the news surrounding bitcoin. This method also doesn’t guarantee a fast money-making opportunity for traders immediately however it is very promising in the long run. The market can also get a bit stagnant at times, pressing pause on your trading progress.
Bear market buy
The bear market buy is the process whereby a bitcoin investor buys during the bear market. This is the period bitcoin is oversold. All you have to do is accumulate enough bitcoin during this period, wait till bitcoin is overbought and sells for profit.
If you have any contribution or questions just drop it in the comment section, I would be glad to respond.