How to Trade Bitcoin? for beginners
This is a simple beginners guide for people new to trading Bitcoin.
Basic Bitcoin trading facts
- Bitcoin trading is done on the internet.
- Trading is done most commonly on a "Cryptocurrency Exchange".
- Bitcoin can be traded for other cryptocurrencies, such as Ethereum or Litecoin.
How do you trade Bitcoin?
- First off you'll need to register an account on a crypto exchange.
- The exchange should ask you to verify your identity in order to deposit funds.
- You can deposit either Australian dollars or Bitcoin into your crypto exchange account.
- If it was dollars then you can buy Bitcoin with your AUD.
- You can then start trading your Bitcoins with other cryptocurrencies.
- For example, you could sell 1 Bitcoin for 50 Ethereums, hold it for a while and sell your 50 Ethereums back to 1 Bitcoin. There are a few common trading strategies people use.
- You then have the option to transfer your Bitcoins back to Australian dollars, or hold them both in your crypto exchange account or transfer your dollars back to your bank account.
Why do people trade Bitcoin?
- To try and make a profit.
- To get other cryptocurrencies and use them for something.
- For fun.
Where can I trade Bitcoin in Australia?
- For your safety, only trade on an ASIC regulated and reputable australian trading websites.
Is it safe to trade Bitcoin?
- Before buying or trading Bitcoin, you should do research about what and how to do it and the risks involved.
- If your Bitcoin is held on a crypto exchange. They essentially hold your "wallet" and if they lose your Bitcoin, it is lost and might never be recovered or reimbursed.
- Stay away from scams such as "ponzi schemes", "ICO's" and "pump and dumps". If you are not sure what they are do the research before buying.
- Remember to only trade with what you are prepared to lose. The crypto markets are new, highly volatile, and are not regulated like the stock market is.
Different types of trading?
- Trading vs Investing - In simply terms, traders usually are looking to make a quick profit. Investors are usually buy and hold for longer term profits.
- "Day trading" - people that try to make a profit with multiple trades during a day.
- "Scalping trading" - people who try to make small profits on trades, pennies on the dollar. Then get in, they get out.
- "Swing trading" - people trying to make profits on price cycles such as they see it going up, they buy in and wait until momentum dies and then get out. They could hold for days, weeks or even months before selling.