Understanding Bitcoin Trading and InvestmentThe main aim of writing this topic is to help begginers have the fundamental required knowledge on trading and investment, i noticed recently the rate on how begginers raises an alarming call on how to start bitcoin trading/investment as i often come across such in the beginners and help section, this prompted me to create these topic on how a begginer can understand trading and investment properly before getting misinformed into a victim of scam.
Bitcoin Trading and Investment generally involves speculating on the price movement on a short or long term respectively and also has one thing differentiating the two which is the style and strategy used in the process as either a short term strategy (Trading) or a long term strategy (Investment) and the major aim in choosing either trading or investment is to maximize the opportunity profitability.
Trading:This is an act of buying bitcoin using a short term strategy by carefully speculating the volatility of price change before buying or selling in other to make profit within that shortest period of time and this can be done using different strategies as listed below:
Scalping
Day Trading
Range Trading
Swing Trading
Position Trading
source Investment: This is the process of buying bitcoin (mostly in a larger volume) and hodl for a long term in other to maginalize the selling price from the buying price thereby making profit, this is mostly practice by bitcoin whales, institutions, bitcoin firms and some reputable individuals, it is preferred as a means for the store of value (asset) which is most likely to yield a return after a long duration of time as the price rises.
Trading Strategies in details:Scalping: This is the fastest of all kinds of trading strategies, it is done frequently in a day by taking position to trade and realize profit or cut loss within the interval of minutes at several occasions within a day otherwise called spot trading.
Day Trading: This simply means holding a position for trade within the duration of a day, it may involve scalping and range trading only to last within a day.
Range Trading: This is mostly practice with the use of a trading bot, as a particular trade is set to start and stop at a specific range limit, they tend to buy when the flow is at the bottom and set to sell whenever it rises thereby realizing their profit within the interval of the low to high.
Swing Trading: This type of trading requires patience and can be run overnight, within some days or a week, its an advanced day trading technique which run for two or more days and requires total concentration in studying the trend as it moves in other to make trade.
Position Trading: This is sometimes mistaken for an investment, it is a trading strategy that run on a long duration of time with the target to mark an outstanding rise in trading differential volume and price thereby making profit
Meaning of Some Trading TermsPip: This is the graphical representation of the move in price at a specific unit.
Leverage: This is the showcase of interest in taking part in a particular trade having just a little amount with the aim to join and contribute in making the trade.
https://www.ig.com/en/cryptocurrency-trading/what-is-cryptocurrency-trading-how-does-it-work
The above image is an illustration example of taking a leverage position
Margin: This is the particular amount of value invested in Securing a leverage position
What Moves the MarketSupply: the total number of coins and the rate at which they are released, destroyed or lost
Market capitalisation: the value of all the coins in existence and how users perceive this to be developing
Press: the way the cryptocurrency is portrayed in the media and how much coverage it is getting
Integration: the extent to which the cryptocurrency easily integrates into existing infrastructure such as e-commerce payment systems
Key events: major events such as regulatory updates, security breaches and economic setbacks
https://www.ig.com/en/cryptocurrency-trading/what-is-cryptocurrency-trading-how-does-it-workLearn what moves bitcoin price
Pick a bitcoin trading style and strategy
Choose how you want to get exposure to bitcoin
Decide whether to go short or long
Set you stops and limits
Open and monitor your trade
Close your position to take a profit or cut a loss
https://www.ig.com/en/bitcoin-btc/how-to-trade-bitcoinReference links:
https://www.thebalance.com/choosing-a-trading-style-1031062https://www.ig.com/en/cryptocurrency-trading/what-is-cryptocurrency-trading-how-does-it-workhttps://www.moneycontrol.com/msite/wazirx-cryptocontrol-articles/crypto-trading-strategies-you-need-to-know/https://www.investopedia.com/articles/active-trading/11/four-types-of-active-traders.asp
