How to Trade Bitcoin For Beginners
Getting involved in trading bitcoin is easier and has more risks than you might think. If you begin with caution, here we show what you need to know before you start.
How Bitcoin Works
Some bitcoin exchanges act as intermediaries for currency transactions, converting wealth from bitcoin to national currencies, and then back to national currencies or bitcoin. This is how you can make money, through arbitrage: moving money to exploit the shifting relative values of various currencies, though it is just as easy to lose.
You can get into bitcoin via ‘mining’ but this is slow, expensive and at a point where it is almost impossible to recoup your investment unless you join a mining pool… Still, money and complete strangers can be a particularly combustible situation.
You can begin trading immediately by signing up to an exchange and depositing funding into your account… Fees range from 0.25 to 0.60 percent per trade. As the bitcoin market is volatile, the chances are you can lose a lot of money, especially if this is your first attempt at day trading.
Risks and Rewards
Bitcoin values can rise and fall dramatically throughout each trading day… For example, the value of bitcoin as a whole dropped more than fifty percent over the thirty-six hours after China banned the cryptocurrency.
China banned the cryptocurrency.
The inherent volatility of the BTC market forces investors to offload their coins quickly. Yet only when investors hold longer will the market stabilize…
A super-long view can work. Investors who bought a few shares in 2012 at a sub-USD100 price point would have an excellent return on their investment just by waiting, with April 2017 prices around USD1235.
With big gains come big tax implications. Bitcoin is viewed as a legitimate currency, taxable whenever you cash out or trade it for goods or services—even between bitcoins.
It is also vital to keep your BTC wallet safe and secure from computer faults, hacks or theft.
Advantages Trading Bitcoins
Coinbase Exchange was the first regulated Bitcoin exchange in the US. Regulation will help control BTC markets and bring legitimacy to the space.
There are hundreds of exchanges globally that operate 24/7. With no official Bitcoin price, arbitrage opportunities are frequent, though generally narrow.
Bitcoin’s volatility creates exciting opportunities for traders who can react quickly.
Bitcoin exchanges allow customers to trade without verification if depositing with crypto. Bank deposits may take 1–3 days, while Bitcoin deposits require ~6 confirmations (~1 hour).
