Are you a beginner in the cryptocurrency world? Do you want to understand how the trading process functions? Well, you are in the right place.
It is not a secret that Bitcoin is the most popular crypto in the world. People that do not possess any knowledge about this industry have heard about this cryptocurrency. Because of that, there are so many questions that they would want to ask.
Many people analyzed different aspects of BTC. For example, bmmagaine.co.uk also explained how bitcoin trading works and we suggest you check their website as well.
Anyway, in this article, we will start from the very beginning.
Bitcoin Trading vs. Investing
It seems to us that many beginners do not see the difference between these two things. When someone invests in BTC, their goal is usually not to trade it to other people. They did that because they are expecting that the value of one coin is going to rise in the future. Logically, they are also prepared for many ups and downs that could potentially happen. When you look at the history of this cryptocurrency, there were a lot of them. Despite that, their goal is to HODL the currency. More precisely, they plan to keep their coins for a longer period.
When we talk about Bitcoin traders, things are a bit different. Their goal is to sell and buy this crypto in a short period. For traders, BTC is nothing more than a tool that can serve as a tool for making a profit. They usually do not invest a lot of time in analyzing and understanding the changes of this crypto.
Types of Trading
The beginners already know that everything associated with Bitcoin is somehow complex. If you thought that only one trading method exists, then you are wrong. More precisely, there are three of them – Day Trading, Swing Trading, and Scalping
The name itself says a lot about this method of trading. It involves conducting multiple trades during the day. It is a perfect choice of traders that want to make some profit from short-term price movements. For this method, you will have to spend your entire day in front of your computer. In most cases, this sort of traders accomplishes all the trades at the end of each day.
Well, this method helps traders to take advantage of the natural “swing” of the price cycles. For example, swing traders tend to identify the beginning of a specific price change. They enter the trade only in case they spot something like this.
We like to say those swing traders usually like to get out of the box. Their goal is to see the big picture without spending their entire day in front of their computer screen. In some cases, swing traders can open a trading position and hold it open for a couple of months. They won’t finish their trading before they get the desired results.
We placed this method of trading in the last place because it became popular among users lately. This type of traders makes a substantial profit on small price changes. As they say, this method is often referred to as “picking up pennies in front of a steamroller”.
So, this type of trading is good for those that want to focus on extremely short-term trading. It became popular among BTC users because they do not need to take risks a lot. Some people make even hundreds of trades per day through this method of work.
Fundamental vs. Technical Analysis
Logically, you are not a psychic. Even when you work hard, you can’t ever be sure that you can predict the price of the BTC. Yet, some methods are making the price prediction a bit easier. They can help you make a profit in the long run.
Your goal needs to be that you have a positive balance when the day ends. It doesn’t matter if you lose money during the day a couple of times. You must be “satisfied” when the day ends. That’s why you should know that 2 different types of analysis can help you understand Bitcoin better.
This method of trade analysis requires deep research. For example, you will use important market statistics that will tell you a bit more about the price changing. This includes pieces of data such as trading volumes and past price movements. Traders try to identify future changes based on these patterns.
There is one thing that you should know about technical analysis. It doesn’t matter what is currently happening in the BTC market. It is proven that the ups and downs of the price have repeated many times during the BTC history. They might not give you the exact predictions. Yet, they can give you directions on how to react.
This method of analysis is usually popular among swing traders because it shows a bigger picture. Let’s imagine that you pick this sort of analysis. You will have to analyze the BTC industry every moment. This includes analysis of technical developments of BTC, the most popular news about this field, regulations around the world, etc.
People that use this method usually look at BTC’s value as a technology regardless of the current price. Despite that, they also look at external factors that will determine the future of this currency. For example, if they notice that some countries banned BTC, then they will believe that the price will drop. On the contrary, if new businesses start accepting BTC as a payment method, that will convince them that the value will go up.
We can’t say which method of these two is better. The point that we wanted to share with you is clear. You can’t always predict what is going to happen with BTC in the future. If you see the current situation, the value of the BTC tends to grow in the future once again. That’s why we suggest you use the benefits of both types of methods. They won’t give you a clear picture, but you can get some directions.