A very useful guide for newbies who wants to start trading Bitcoin. All needed tools, equipment, and trading strategies will be explained.
Want to profit from the continuous rise of Bitcoin but have no clue about cryptocurrency trading or setting up a trading account? You have come to the right spot! In the coming 5 minutes, I will explain the basics of how to become profitable as a bitcoin trader.
How to Start Trading Bitcoin for Profit
Almost a decade now, since 2009, Bitcoin has been part of the web and has been growing ever since. In the early days right after launch, the community of Bitcoin was mainly populated by controversial types like libertarians or internet anarchists who liked the freedom property of the coin. The internet has no leader and this should also count for a digital form of online money. Another popular property of bitcoin is that it’s a digital asset and therefore one could trade with it.
Total cryptocurrency market since 2013
Back in 2013, the value of bitcoin blasted through the 1000$ barrier for the first time. This was the start of cryptocurrency being introduced to a bigger audience. The 1000$ border was a very important psychological barrier. By breaking this barrier and gaining popularity also new coins were being introduced to the market. Since then the total market cap of the total cryptocurrency market has been grown from about 7 billion at the end of 2013 till 285 billion nowadays.
The interest of new traders
As we all know right now the cryptocurrency market has grown immense but also had a lot of bearish crash moments were daily selloffs of 20% were no exception. This volatile market with no rules or central leadership gained a lot of interest from bold traders worldwide trying to conquer with this ‘online money beast’. Of course, there is a lot of risk in this market but also a lot of profit to make!
I’m one of those ‘bold traders’ trying to win this zero-sum-game in my favor. In the early days of bitcoin back in 2013, I participated mainly as an investor or ‘HODLER’ of bitcoin. Since 2016 I also got more interested in altcoins and started to buy Ethereum, Litecoin, and other cryptocurrencies. I did this first on Poloniex and after that, I also started to use Kraken and Bittrex. One of the advantages of Kraken is that I could open a euro account(I’m from Europe) buy BTC and deposit/withdrawn Euro with it. This differs from Poloniex and Bittrex where you can only lock your BTC profits in USDT or Tether. So how do we start from here as a new bitcoin trader?
Do research and choose a platform
So when you’re new to this or do not have much experience with trading cryptocurrency all possible online trading platforms out there could be a little bit overwhelming. Don’t worry too much about that. Currently, the biggest and most reliable exchange out there, in my opinion, is Binance. This online trading platform has its headquarters in Tokyo, Japan. With more than 1.4 million transactions pro-second and low transaction fees, it’s a very good option to start. All you have to do now is setting up an account there and you’re good to go.
Find reliable resources
Before you start buying into coins, it’s very important to do some research. There are several ways to do this but a good place, to begin with, is Coinmarketcap. This website gives in a glimpse a total overview of the current market and has hyperlinks to every coin out there. Also, do some research into the technology of blockchain networks. A good place to go to is Blockchain.com. This site gives a deeper insight into this network and has an interesting graph about current transactions and network statistics. So now that I have a set up a trading account and have done my research, am I ready to go and start getting profitable? The answer is no.
Start using Twitter
Nowadays social media is being used particularly by every human being under the age of 40 and to be profitable trading crypto, it’s a must to have social media to get the most actual information about the markets. The best place to go is Twitter, so it’s crucial to set up an account there. On a daily bases, a lot of information is being shared by professional traders and it’s very easy to start following them. Here I will give you a list of my favorite CT* accounts:
Of course, I’m also on Twitter and you can make a good start with trading Bitcoin for profit by start following me at this social media platform.
After you have done all this setup, you’re ready to enter the world of the bitcoin traders. In my opinion, there are two types of traders: long-term trader(swing trader) and short-term traders(daily). It’s up to you to choose which best fits your character. Whether you choose to trade short-term or long-term you need some extra tools to make good buying decisions. First, you need to know how to do technical analysis which is the study of price patterns. A good place to learn this is Investopedia. There are also several tools out there for using daily charts, but the most popular is Tradingview. You can start there with a free account and add(up to three) technical indicators in your charts. In my opinion, a must when trading Bitcoin for profit!
What are the Benefits of using TradingView
TradingView’s diverse offerings make it palatable to most types of traders but I think there is a bias among the members towards medium-short term trading. First off, the free account plan is perfect for most investors and longer-term swing traders who don’t require more than three indicators on their charts. Besides them, I think the general demographic of TradingView is a technical based swing and intraday swing traders.
Below I have listed the overall advantages and disadvantages of using Tradingview when trading Bitcoin.
|✓ Very smooth charting for any kind of market||✗ No level 2 data (DOM is available if you have a CQG account)|
|✓ Amazing free plan||✗Very limited broker support|
|✓ Library of community produced indicators|
|✓ Proprietary, easy to learn, scripting language (Pine Script)|
|✓ Great backtesting tool|
|✓Huge amount of functionality in one charting package|
Implement a trading strategy and become profitable
If you are willing to trade and don’t have the patience to ‘HODL’ bitcoin for years, to be profitable in this volatile market, it is to be very disciplined and you have to start implementing a short term trading strategy. Proven fact: retail traders who don’t use a trading strategy just throw their funds away and lose it all in the end. I’m going to show you how to avoid this and how to set up a profitable trading strategy. So how do we go from here as a starting bitcoin trader?
Basic trading rules for a bitcoin trader
To start winning trades and be profitable in the end is to use a system and stick to it at all times. This means you should be disciplined and avoid too many risks. Below some basic rules for being a consequent crypto trader.
- Avoid any emotion
See trading as a game where you can win but also lose and I will assure you, every trader has to deal with losses. If you lose a trade, never set up a new trade to cover your loss, it’s not a casino!
- The trend is your friend
It’s very important to see the bigger picture of the market. If the market is bullish(in an uptrend) your strategy should be buy-the-dip, if the market is bearish(in a downtrend) your strategy should be to sell high and buy back lower. So to be profitable, never catch a falling knife!
- Know what you are doing
If you want to go short the market, find more info about it and also know the consequences when you are trading this way. In my opinion, you should avoid at any time trading with leverage.
- Always have a plan
When entering a trade the market can turn against you at any moment. Have a plan and also use targets. It’s very important to use targets otherwise profits will go away.
- Track or back test a strategy
If you want to use different strategies, first do some paper trading and do some testing. It’s very important to enter trades by using a system.
- Risk only what you can afford to lose
Trading Bitcoin for profit is all about finding setups with low risk / high reward opportunities. To avoid high risk, every trade you make should never be higher than 5 – 10% of your total portfolio.
- Always use a stop loss
Like I said before, the market can turn against you at any time, it’s very important to avoid big losses. Trading Bitcoin for profit comes with responsibility. Therefore, any trade you make should have a stop loss
In my opinion, these are the basic rules for being successful as a bitcoin trader when trading bitcoin for profit. Of course, it’s also possible to use these rules when trading other cryptocurrencies. If you are a bitcoin trader and are trading frequently in the markets, what is your favorite trading platform?
*CT: Crypto Twitter, a slang in the cryptocurrency community
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