Bitcoin Trading: Everything You Need to Know to Get Started

Bitcoin trading has come a long way.

Whether you’re interested in how it works or want to get started yourself, knowing the basics and strategies will help you make better decisions.

Here we’ll break it down, cover the strategies, and get into some surprising stats and expert tips.

Let’s get into Bitcoin!

What is Bitcoin Trading?

Bitcoin trading is buying and selling Bitcoin, a digital currency that’s famous for its price volatility.

When you trade Bitcoin you’re trying to make a profit by guessing when the price will go up or down.

It’s like stock trading but it’s more volatile, meaning the price can move a lot in a short time.

Features of Bitcoin Trading

Bitcoin (BTC) trading doesn’t happen on traditional exchanges like the New York Stock Exchange.

Instead, it happens on digital platforms, often called exchanges, like Coinbase, Binance, and Kraken.

Here are the basics:

1. High Volatility: Bitcoin’s price can move 30% in a day. May 19, 2021, was a good example of that.
2. 24/7 Trading: Bitcoin and other cryptos can be traded at any time, not like traditional markets.
3. Decentralized: No central authority controls Bitcoin, it’s managed by users and miners on a blockchain network on a crypto trading platform.

These are the reasons why Bitcoin trading is different – and sometimes riskier – than other investments.

Why Trade Bitcoin

People trade crypto for various reasons. Some for the thrill and the big returns.

Others as a hedge against inflation, since there’s only 21 million Bitcoin that can ever exist.

Some see Bitcoin as the future of finance, as it will replace traditional currencies.

Did You Know? According to a survey by Gemini, 14% of U.S. adults own some form of cryptocurrency, and most of them own Bitcoin (Gemini, 2021).

---

Bitcoin Trading Strategies

Bitcoin trading isn’t just about buying and selling randomly. Traders use specific strategies to try to win.

Here are the main types of a crypto trading platform:

1. Day Trading: Catching Daily Price Moves

Day trading is buying and selling within the same day, often multiple times a day.

The goal? Make small profits from small price movements that happen within a day.

• How It Works: Day traders try to take advantage of Bitcoin’s daily price changes. For example, if Bitcoin’s price goes up 1% in an hour, a day trader might buy in and sell quickly to get that gain.
• Tools Used: Day traders use technical analysis, tools like moving averages, Bollinger Bands, and Relative Strength Index (RSI) to read the market and decide on entry and exit points.
• Example: Let’s say you notice a pattern where Bitcoin drops in the morning but bounces back in the evening. As a day trader, you could buy in the morning and sell later in the day for a small profit.

Quick Tip: Day trading can be very profitable but also very risky. Because you’re trading multiple times a day, losses can add up fast so it’s best for experienced traders who understand Bitcoin’s volatility.

2. Swing Trading: Riding the Market’s “Swings”

Swing trading is about taking advantage of Bitcoin’s price cycles over a few days or weeks.

Instead of focusing on daily moves, swing traders hold onto their positions for longer to catch bigger gains from higher price “swings.”

• How It Works: Swing traders look for short to medium-term trends and ride them out until they see signs of a reversal. They use a mix of technical indicators and market news to decide when to buy and sell.
• Example: Let’s say Bitcoin is in an uptrend and you think it will continue to go up for a few weeks. You might buy in at the beginning of the trend and sell at the top for a bigger profit than a day trader would aim for.
• Tools Used: Swing traders use tools like Fibonacci retracement, MACD (Moving Average Convergence Divergence) and price channels to identify potential entry and exit points.

Why Swing Trading? If you don’t have time to check the market all day, swing trading is a more realistic option. You can catch bigger price moves without having to watch the charts all day.

3. HODLing: Long-Term Belief in Bitcoin

HODLing (a typo-originated term meaning Hold On for Dear Life) is one of the simplest strategies in theory but requires patience and strong nerves.

HODLers believe in Bitcoin’s long-term value and are willing to hold onto it through both highs and lows.

• How It Works: HODLers buy Bitcoin and hold onto it, ignoring short-term price fluctuations. They believe Bitcoin’s value will rise significantly over time, and they’re in it for the long haul.
• Example: Imagine you bought Bitcoin in 2017 when it was around $1,000. If you held onto it, you would have seen its price rise to over $60,000 in 2021. HODLing is all about ignoring the short-term noise and focusing on the big picture.
• Why It Works: Many HODLers see Bitcoin as “digital gold” and believe it will be appreciated as more people adopt it. Since there is a limited supply of Bitcoin (only 21 million will ever exist), they view it as a hedge against inflation.

Fun Fact: Many famous Bitcoin investors are HODLers who kept their Bitcoin through multiple crashes, eventually seeing huge gains.

However, HODLing requires patience, as Bitcoin’s price can be highly unpredictable.

4. Scalping: Making Small, Rapid Trades

Scalping is a strategy for those who are quick on their feet and don’t mind making dozens (or even hundreds) of trades in a single day.

Scalpers aim to make tiny profits from minor price changes that occur in short time frames – sometimes within minutes or seconds.

• How It Works: Scalpers look for small price movements and place quick buy/sell orders to “scalp” a small profit. This can involve setting automatic buy and sell limits to execute trades instantly when Bitcoin hits certain price points.
• Tools Used: Scalpers use high-speed trading software and rely on order book analysis and price levels for split-second decisions.
• Example: A scalper might buy Bitcoin when it drops by 0.1% and then sell it seconds later when it recovers. While each trade’s profit might be small, multiple trades can add up to significant gains over time.

Pro Tip: Scalping is often used by advanced traders who are highly skilled and experienced.

It requires a quick mind and nerves of steel to make split-second decisions, making it one of the most challenging strategies.

ANOTHER MUST-READ: Check Bitcoin Price Today

Bitcoin Trading Tools

To be a successful Bitcoin trader, relying on intuition alone isn’t enough. You need specific tools to help you understand market trends, analyze data, and make informed decisions.

These tools are designed to provide insights, assist with security, and keep you updated on critical events affecting Bitcoin’s price.

Charting Software

Charting software is one of the most critical tools for any serious trader.

Platforms like TradingView and Coinigy are popular among Bitcoin traders for their advanced charting capabilities.

These tools provide real-time data and allow traders to view detailed charts, which are essential for technical analysis.

With these charts, you can apply indicators like moving averages and candlestick patterns to spot trends, analyze Bitcoin’s price history, and predict possible future movements.

Crypto Wallets

If you plan to trade crypto or Bitcoin over the long term, you’ll need a secure crypto wallet.

Unlike short-term traders who keep their funds on exchanges, long-term traders (or “HODLers”) often transfer their Bitcoin to secure wallets to avoid the risks associated with leaving funds on an exchange.

Hardware wallets, like Ledger and Trezor, are considered some of the most secure Bitcoin options trading, as they store your private keys offline, making it almost impossible for hackers to access your Bitcoin.

For added security, these wallets use two-factor authentication (2FA) and offer recovery options if you lose access to your wallet.

News Alerts

Bitcoin’s price is often influenced by news events – regulatory announcements, technology updates, or economic crises can all impact Bitcoin’s value significantly.

To stay ahead, many traders use news alert apps to monitor breaking news.

Apps like CoinMarketCap and CryptoPanic provide real-time alerts, allowing traders to react quickly to events that might cause Bitcoin’s price to spike or drop.

Technical Analysis Tools

Technical analysis (TA) is a fundamental aspect of Bitcoin trading, and specific tools make it possible to analyze data in ways that guide trading strategies.

Platforms like MetaTrader 4 and Cryptowatch offer extensive tools to analyze price movements.

MetaTrader 4 is particularly known among forex and crypto traders for its in-depth analysis tools, such as oscillators, trend indicators, and customizable graphs that allow traders to personalize their analysis.

Portfolio Trackers

For traders managing multiple cryptocurrencies, a portfolio tracker is essential to monitor overall performance.

Apps like Blockfolio and Delta let you input all your holdings, including Bitcoin, Ethereum, and any other crypto assets, to see how your crypto portfolio is performing in real-time.

With these apps, you can set alerts for specific price changes, view historical performance, and even see news related to each cryptocurrency you own.

Bitcoin Trading vs. Other Investments

Let’s take a look at how Bitcoin trading compares to other types of investments like stocks and real estate.

Investment Type	Accessibility	Volatility	Potential Returns	Liquidity	Risk Level
Bitcoin	24/7, Online	High	High	High	High
Stocks	Limited Hours	Medium	Medium	Medium	Medium
Real Estate	Limited	Low	Medium	Low	Medium

Bitcoin’s high volatility can lead to high returns but also increases the risk. Unlike real estate, Bitcoin is easy to buy and sell at any time, making it a more liquid investment.

The Future of Bitcoin Trading

Many experts believe Bitcoin will continue to grow, though opinions vary on how much crypto will it grow.

Some say it could reach $100,000 or even higher, while others think it’s overvalued.

With new developments like Bitcoin ETFs (Exchange Traded Funds) and countries like El Salvador adopting Bitcoin as legal tender, there’s no doubt Bitcoin is impacting the global economy.

However, Bitcoin’s future will depend on factors like government regulations, technological developments, and market demand.

Staying informed and adapting to changes will be crucial for anyone interested in your crypto journey.

Conclusion

Bitcoin trading offers both exciting opportunities and real risks. It’s not just about making quick money – it requires strategy, discipline, and constant learning.

If you’re ready to dive into Bitcoin, start small and use a method that matches your comfort level.

Remember, Bitcoin trading is different for everyone. 

Some people find success with day crypto trading, while others prefer holding for the long term. Only invest what you’re willing to lose, and don’t rely solely on luck.

Frequently Asked Questions

How much is $1 Bitcoin in US dollars?

As of today, 1 Bitcoin (BTC) is valued at around $91,644 USD. This price fluctuates frequently based on market demand, crypto trading volume, and investor sentiment.

Bitcoin is known for its volatility, which means it can change in value even within a single day.

Tip: If you’re looking to buy Bitcoin, you don’t need to buy an entire BTC. Bitcoin is divisible, so you can buy smaller portions based on what you can afford.

For example, if you want $100 worth of Bitcoin, you’ll get a fraction of 1 BTC.

How do I trade in my Bitcoin?

If you’re ready to trade crypto or in your Bitcoin, here’s a step-by-step guide to make it easy:

1. Pick a Cryptocurrency Exchange
2. Choose a reliable cryptocurrency exchange. Popular options include Binance, Kraken, and Coinbase. Each has different fees, features, and user experiences, so compare them based on what suits you best.
3. Create a Crypto Account and Verify Your Identity
4. Sign up on your chosen exchange. Most exchanges require identity verification, a process called KYC (Know Your Customer). You’ll need to upload a form of identification, such as a passport or driver’s license, which helps keep the Crypto platform secure and comply with regulations.
5. Deposit Your Bitcoin
6. If you already have Bitcoin, you’ll need to transfer it to your crypto exchange account. Go to the “Deposit” section, find Bitcoin (BTC), and copy the wallet address provided by the exchange. Then, use this address to send your Bitcoin from your personal wallet.
7. Place a Sell Crypto Order
8. Once your Bitcoin is in your crypto exchange account, go to the “Sell” or “Trade” section. Decide on how much crypto you want to sell and at what price. Most exchanges offer two options as an asset class:

• Market Order: Sells immediately at the current market price.
• Limit Order: Sets a specific price; the sale only happens when the market reaches that price.

1. Withdraw Funds to Your Bank Crypto Account
2. After your Bitcoin is sold, you’ll have a balance in your exchange crypto account, usually in USD or another fiat currency. Withdraw these funds to your bank crypto account, following the withdrawal instructions on the exchange. Bank transfers can take a few days, depending on your bank.

Note: Each exchange has different fees for withdrawals, so check these beforehand to avoid surprises.

How much is 1 Bitcoin to buy?

1 Bitcoin currently costs about $91,644 USD, but you don’t have to buy a whole Bitcoin! You can purchase fractions based on how much you want to invest. For instance:

• 0.1 BTC (10% of 1 Bitcoin) would cost approximately $9,164 USD.
• 0.01 BTC (1% of 1 Bitcoin) would be around $916 USD.

Many platforms allow you to buy as little as $10 worth of Bitcoin, which can be a great way to get started without a big commitment.

Prices fluctuate regularly, so always check live pricing if you’re planning to buy.

What is the best Bitcoin trading site?

The best Bitcoin trading platform depends on what you need. Here are a few top options:

• Binance: Great for both beginners and advanced traders. Binance offers a huge variety of cryptocurrencies, low fees, and many crypto trading options, from spot to futures crypto trading. It’s also known for strong security features.
• Kraken: Known for excellent security, Kraken is a solid choice for serious traders. It offers advanced features like margin crypto trading, and while fees are slightly higher than some competitors, its reputation for security makes it worth it.
• Coinbase: Popular among beginners due to its simple interface. Coinbase is easy to use, offers educational resources, and is a well-established exchange with strong regulatory compliance, especially in the US.
• eToro: If you’re interested in social crypto trading, eToro lets you see and even copy the trades of successful investors. It’s beginner-friendly and also offers traditional stock crypto trading alongside cryptocurrencies.