What Is Bitcoin Trading and How Does It Work?

There has been a debate on the identity of Bitcoin whether it is a commodity or currency. With the right amount of support on both the side, Bitcoin can be considered both a currency as well as commodity. No matter what you call it, Bitcoin offers the traders a constant variation in price giving them an opportunity to trade and make profits by trading in it, either as a short term or as a long-term investment.

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So, what is Bitcoin trading? In general, Bitcoin trading process is as follows:

When you purchase Bitcoin at a particular price and then sell it at a higher rate, you earn profit of the difference between the two prices, minus any commission which you need to pay. However, sometimes the price may fall against your speculation and you may have to sell it at a loss or hold it for a longer time in the hope that one day the price will go back up.

You have two kinds of traders in Bitcoin trading- the long-term trader and the short-term trader. Each of the traders hold the coin according to their strategy of trade.

Long term traders are basically involved in studying price patterns over a long time period. It is about buying and holding Bitcoin for a prolonged time period with the hope that it will go higher than its original entry point. This strategy is based on the assumption that with the rise in the demand of Bitcoin and increase in technology, the demand for Bitcoin will automatically rise and increase its vale and hence the price will eventually go up.

On the other hand, short term traders evaluate the intraday behaviour of Bitcoin price and take advantage of the price swings. They flourish because of the volatility in the market. Sometimes the swing is so high that you can end up making 70% of profit in an hour.

The Trading rules

Bitcoin trading is very profitable if you have the right strategy with you. And, it all depends on the movement pattern of the market. Bitcoin value may rise and fall dramatically every day. Here are some rules for amateurs who are looking forward to trade in Bitcoin.

  1. Never put all your money in one place. Break your capital into small lots and invest in different positions and different price levels.
  2. Don’t put all your savings together. In the beginning you are bound to make mistakes and with the uncertainty which prevails in the Bitcoin market, you need to be a lot more careful.
  3. The advantage of the present technology to make highest profit.
  4. Know the market first by investing time, concentration and effort. It is important to do proper research and be updated with current market trends.
  5. Also know the time to cash in. It is important to separate your emotions from trading.
  6. Don’t focus on winning or losing. It is the cumulative gains which matter

Choosing the right trading platform like RoyalCBank is your key to success in cryptocurrency trading. So, make sure that you choose the right platform and follow the best strategies to get success and make decent profits.

Hopefully with these tips, you can definitely earn big with Bitcoin trading.

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