How do I start Bitcoin trading for beginners?

Launched in 2009, Bitcoin is a decentralized digital currency that is being traded peer-to-peer without acquiring a third-party program. Unlike stocks, Bitcoin and other cryptocurrencies are not controlled by central banks or other financial institutions.

Bitcoin trading involves buying or selling Bitcoin for another currency, such as US dollars, euros, or other cryptocurrencies. You can trade Bitcoin on cryptocurrency exchanges, which are platforms where buyers and sellers can trade Bitcoin for other currencies. However, to trade in Bitcoin, you should abide by some of the most basic and important trading strategies available. Bitcoin trading for beginners can be composite initially, but obtaining proper guidance and analyzing market trends accurately can seize hefty profits.

Most common strategies used while trading in Bitcoin -

Mentioned below are some of the most common Bitcoin trading strategies to adhere to:

• Day trading - In this strategy, a trader buys and sells Bitcoin within the same day to take advantage of small earnings by increasing price movements. However, this strategy requires close monitoring of market trends and quick decision-making simultaneously.

• Swing trading - This is one of the most effective trading strategies, where traders hold a particular digital currency for several days or weeks to take advantage of fluctuating price movements within a trend. In this strategy, a trader generally looks for short-term price fluctuations within a larger trend and tries to earn profit from them.

• Scalping - Scalping, like day trading, is a short-term trading strategy that involves buying and selling Bitcoin quickly in order to make moderately small profits. In general, this trading strategy relies on fast decision-making and high trading volume to generate hefty profits.

• HODLing - Contrary to scalping, HODling is typically a long-term trading strategy that involves the process of buying and selling Bitcoin and holding it for an extended interval, with the belief that its value might appreciate over time.

• Technical analysis - Technical analysis is a magnifying strategy that involves using charts and technical indicators to survey market trends and make trading decisions. Traders look for patterns and signals in price movements and use this information to predict future price movements.

• Fundamental analysis - Fundamental analysis is also one of the most effective strategies because it involves analyzing the underlying factors that drive Bitcoin's value, such as market trends, economic indicators, news events, and many more. Generally, traders in the cryptocurrency market use this information to anticipate future price movements of a particular or overall digital asset.

Fundamental steps one should take while trading in Bitcoin - 

Before starting to trade in digital currency such as Bitcoin, it is essential to follow the fundamental steps listed below:

• Conduct your research: First of all, it is essential to understand the basics of Bitcoin, how it works, and the benefits and risks involved in it. You should exercise due diligence and also learn about the different ways to trade Bitcoin, such as buying and holding, day trading, or investing in Bitcoin-related stocks.

• Choose a definite exchange: It is imperative to opt for a reputable Bitcoin exchange with a good track record of security and reliability. Before adhering to a crypto exchange, research various exchanges to compare their fees, accessibility, and security features.

• Create an account: After choosing a reputable exchange, create an account and complete the verification process. However, most exchanges require ID verification to act in accordance with anti-money laundering regulations.

• Fund your account: Add funds to your account by linking your banking account or other financial instruments, such as a debit or credit card. Also, check the fees linked with every funding method before selecting the one that is accurate for you.

• Acquire Bitcoin: After funding your account, you can buy Bitcoin. It is significant to buy Bitcoin at the current market price or set a limit order to buy at a particular price.

• Store Your Bitcoin: You can store your Bitcoin on the exchange or safeguard it in a digital wallet. A digital wallet is a secure online storage space that secures your Bitcoin from theft or loss.

• Monitor your holdings: Keep an eye on the Bitcoin market and track the value of your asset holdings. You can also use technical analysis tools to help you make trading decisions more confidently.



• Consider Tax Indications: Remember that gains acquired from Bitcoin trading might be subject to capital gains taxes. However, consult a tax professional to acquire in-depth knowledge of the tax implications of your Bitcoin trading.

• Anticipate volatility: As Bitcoin is the most popular, it is also a highly volatile asset, and its value can fluctuate perilously in a short period. It is important to be prepared for sudden price swings and set stop-loss orders to minimize losses.

• Manage Risk: Manage your risk by diversifying your portfolio and only investing what you can afford to lose. Consider setting up a trading plan that includes stop-loss orders and profit-making tactics.

Advantages and Disadvantages of Bitcoin Trading

Here are some advantages and disadvantages that can help you decide whether to opt for Bitcoin trading:

Advantages: 

1. Bitcoin is a highly liquid asset, which means it can be easily bought and sold on cryptocurrency exchanges.
2. Bitcoin is a decentralized digital currency, which means there is no governmental authority involved like the central bank or other financial institutions.
3. All Bitcoin transactions are recorded on a public ledger known as the blockchain, meaning it ensures transparency and reduces risk.
4. Bitcoin is eligible to be traded 24/7, unlike traditional financial markets that operate for a specific period of time.
5. In general, Bitcoin has low transaction fees as compared to the traditional financial system.

 Disadvantages:

1. Bitcoin is a highly volatile asset that can fluctuate rapidly, which means it can lead to significant losses for traders who don't know how to manage risk.
2. As Bitcoin is not regulated in several countries, it can create regulatory uncertainty for a trader.
3. Currently, Bitcoin is not yet widely accepted as a payment method, which can limit its value and adequacy as a currency.
4. Bitcoin trading can be complex and require plenty of technical knowledge and time, which can be a hurdle for some traders to enter Bitcoin trading.
5. Digital wallets in Bitcoin trading can be vulnerable to hacking and other security breaches, as they are not regulated and do not have tight security measures.

Conclusion 

Bitcoin trading is comparatively complex in comparison to other financial trading systems. Additionally, Bitcoin trading can be difficult, as it involves several possibilities to look out for. However, to acquire legitimate and accurate market knowledge, you should consult with a market expert. Market professionals are eligible to guide you on how to trade in such a volatile market using the market trends appropriately. Moreover, before adhering to any market, it is imperative to research it carefully. Most importantly, a trader should have an inherent tolerance for risk because gaining profit can be rewarding, but due to market volatility, you can also face substantial losses from which it will take a prolonged period to fully recover.