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Trade Bitcoin

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 where once a block is decrypted, bitcoin is shared, depending on how much work your rig contributed. The level of security among pools varies greatly, but the anonymous nature of bitcoin lessens the risk of identity theft. 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 and then watch for opportunities to make money. 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, jumping in whole dollar amounts increasing your risk of loss than if you trade hard currencies. 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 as quickly as possible to avoid getting caught in a crash. Yet only when investors hold onto their digital commodities for longer periods of time will the market stabilise, which creates a situation where there is no solution, since individual investors often cannot afford to sit on their Bitcoin and wait for a better day.

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 your bitcoin for any hard currency (dollars, Euros etc.) or when you trade a bitcoin for a tangible or intangible object. This even applies if you're trading 1 bitcoin for another bitcoin.

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 United States. Regulation will bring BTC markets under control, push out the criminal element, and make them safe for commercial interests to enter. Regulation will also reign in the currency's wild value fluctuations.

There are hundreds of exchanges around the world that operate around the clock. With no official Bitcoin exchange, there is also no official Bitcoin price, creating arbitrage opportunities, though most of the time exchanges stay within the same general price range.

Bitcoin’s volatility creates exciting opportunities for traders who can reap quick benefits at any time.

Bitcoin exchanges allow customers to trade with no verification if cryptocurrency is used as the deposit method. Deposits made using the traditional banking system will take anywhere from one to three days. Bitcoin deposits require six confirmations, which is about one hour.

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