The world of Bitcoins can be incredibly confusing due to its complexities and the fact that it is still relatively new compared to other channels of financial investments. But that in no way should stop you from exploring this rather exciting cryptocurrency trading. There are two common ways you can jump into the world of Bitcoins; either trading them or investing in them.
Bitcoin trading involves analyzing and forecasting what the cryptocurrency’s prices will be. And that isn’t all that easy given the highly volatile nature of Bitcoins. But with increasing awareness and interest in this trading, traders are ready to take the necessary risks. It doesn’t mean you dive deeper than you can afford because there is a fair chance that you might lose everything that you invested.
Trading Bitcoins is a lucrative way to enter this arena, but before that, we must take a look at how much does it cost to start bitcoin trading in the first place? So let’s dive right in!
How Much Does It Cost To Start Bitcoin Trading?
Just like with stocks, cryptocurrencies are prone to risks, and hence careful and calculated steps are the only way forward. You might be aware of this, but reiterating this crucial point is always crucial before investing anywhere. The rise and fall in Bitcoin prices are feasible for your finances only until you follow this thumb rule; do not invest any money you cannot afford to lose.
Although the risk is present and alive, humans have a knack for figuring out what’s valuable and adding more value to it in the future. The ultimate goal of both trading or investing in cryptocurrency remains the same; selling it for a higher price than you bought it for. The strategy to achieve this goal might be different for everyone, but there are some fundamentals that one can consider to ensure smooth sailing. But before you move on, let’s go over a few things.
Table Of Contents
- Conduct Your Research Well
- Choose Your Trading Style
- Taking The Initial Step
- Deciding If It’s Long Term Or Short
Conduct Your Research Well
For any good financial decision, thinking it through isn’t enough; supplementing it with thorough research is what makes the decision as fool-proof as it can be. The same goes for Bitcoin trading. If you want to be a Bitcoin trader, you must research what this market constitutes and all factors that play a role in its rise and fall. This involves constantly monitoring market activity to look for any indicators that will help your decision-making. It would also be better if you compile all the reasons you think you should start Bitcoin trading in the first place. You must know the risks involved, like fraud, cyber attacks, dependency on technology, etc., in and out.
Once you get a hold over the basics, Bitcoin trading isn’t as twisted as Bitcoin mining is. And unlike other stock markets, working hours aren’t limited to a set period in the day. You could trade all day at any time! Plus, it isn’t affected by countries’ economic situations as it is a global currency and is independent of any such fluctuations. The key is to understand everything well enough to up your chances of thriving in this cryptocurrency market.
Choose Your Trading Strategy
You can begin Bitcoin trading by first choosing how you plan to procure the cryptocurrency. Then, you can either buy them from a Cryptocurrency exchange or use brokerages, although the second option usually charges higher. If you sign up with a Cryptocurrency exchange that deals with Bitcoins, make sure they have a two-factor authentication system in place for extra security.
Trading Bitcoins is different from investing in them, as the former involves active participation. These are the various trading strategies and details you must about them:
- Day Trading –This is for traders with enough capital to survive the daily volatility of Bitcoin trading. Day trading is when a trader makes all their trades and closes them before the end of the trading day. This escapes any overnight market exposure and the subsequent funding charges. Day trading has that extra element of risk, given it is highly dependent on the short-term price movements of Bitcoins. So you should move ahead with this option only if you have a reasonable risk margin.
- Trend Trading- The name is self-explanatory to some extent. In this kind of Bitcoin trading strategy, the trader will have to analyze and update themselves with current market trends constantly. The trader must base their next steps on the market trends. For instance, you would go long-term if the market shows a bullish trend and vice versa.
- Swing Trading- This trading strategy is the opposite of what Day Trading is. You hold a position for more than one trading day. Hence, this requires good prediction skills to analyze Bitcoins’ prices over time and buy or sell accordingly. You will have to look at the bigger scheme of things and then study the market carefully. Then, you can capitalize on the natural ups and downs of the Bitcoin market if your insights are correct.
- Scalping- Scalping is an extreme version of day trading that doesn’t even involve one full trading day! Traders hold a position only for a few minutes or even seconds before buying or selling their Bitcoins. You can start with significantly less capital to begin Scalping as you can spread out your risks by making many small trades instead of one big trade.
The Cost Of Bitcoin Trading
Coming to the main focus of this article, let’s discuss the capital involved when getting started with Bitcoin trading. Before putting any money on the line, begin with a dummy account and do all its experiments. You might be aware of how investing in stocks comes with a considerable amount of fees. It’s the same for Bitcoin trading. Here are some of the monetary aspects you will have to keep in mind, but know that not all Cryptocurrency exchanges charge the same fees:
- Trading Fees: The fees you have to pay to buy or sell Bitcoins on a Cryptocurrency exchange
- Taker Fee: The taker fee is levied when you buy Bitcoins immediately without having the price fall below a specified point. A market order is an example of this.
- Miner Fee: This is the fees paid to the people or computers that mine the Bitcoins in your case.
- Maker Fee: This is the opposite of what taker fees is. You pay the maker fee, and the purchase will be made only when the price of Bitcoins will be below a limit you have specified.
The media hype around Bitcoins has made it a highly popular topic of interest for traders and the general public alike. And you can ride this wave too. But you must tame your emotions and greed to ensure you make profitable and rational decisions. Always know, as much money that can be earned by Bitcoin trading can also be lost to it. The key is to have a sound trading strategy that you abide by and having a reputable exchange for making trades. If you are planning to get started with trading, you can start with platforms like bitcoin lifestyle login and also can check bitcoin evolution review before starting.