How to Make Money With Bitcoin - Part 2 (Trading)

In this article, I'll continue with the making money with Bitcoin series.

This piece will cover the different types of trading, tips for trading Bitcoin, and how to choose your trading platform.

Bitcoin trading is one of the popular and active ways investors can profit with Bitcoin. Like Forex trading, Bitcoin trading involves studying the market, analyzing trade charts, and fundamental analysis – external factors to predict the Bitcoin price movement.?

Unlike investing, trading is more of a short-term strategy for making a profit – utilizing short-term opportunities. When trading crypto, you're trying to accurately predict whether the price will rise or fall. You can then buy or sell (long or short) based on your predictions.?

Furthermore, there are trading techniques you can use to trade the market depending on your experience and preference.?

Most traders combine these techniques with margin positions to increase their profitability. However, this is quite risky, especially if you're a beginner. You can lose all your trading capital in a minute without proper risk management.?

Day Trading (Intraday Trading)?

This trading form involves opening and closing positions on the same day. This also means that you won't have overnight market exposure and avoid overnight funding charges.?

As a day trader, you're interested in taking profit from short bursts of price? movement within the day. This type of trading technique is great for volatile market movement.?

Trend Trading?

You always take a position that matches the current market trend with trend trading. For example, you always open short positions during a bear market or go long in a bullish market.?

Scalping?

Scalping is a short-term trading strategy that involves opening small and frequent positions (duration ranges between hours to few minutes) to take advantage of the market volatility. As a scalp trader, you use margin trading and try to reduce risk with a short-term position.?

Scalp traders aim to open several positions during the day and make a substantial amount at the end of the day.?

Range Trading?

As a range trader, you rely on experienced analysts to give you support and resistance levels. You then trade the market based on that information.?

Tips For Trading Bitcoin?

DYOR (Do Your Own Research)?

Before you open any trading position, ensure you conduct your own research, even if you rely on an experienced analyst for trading calls.

Don't open positions based on the hype, especially with margin trading. There are two research you should do before trading?

• Fundamental Research?

Fundamental research is getting information about external factors that can affect the market. You want to trade the market with recent news. For example, China's ban on cryptocurrency mining in 2021 affected the Bitcoin price for a while.

Be on the lookout for world news, policy changes, or financial information that can affect the market.

• Technical Analysis

Technical analysis research uses the trading chart and price indicators like support and resistance levels, Moving Averages (MA 20 and MA 50), Volume, and RSI to predict price movement. Ensure that you're sure of what the market is saying before opening your position.?

Create a good Trading Plan?

Before trading, you must create a trading plan to avoid losing all your capital. Your trading plan should include a proper trading approach/strategy and risk management.?

Practice Proper Risk Management?

Avoid trading the market without proper risk management because of the market volatility. The crypto market is generally volatile, so you don't want to trade without adequately managing your positions.?

Risk management techniques like stop loss and position sizing help you to get out of bad trades without losing so much. Your stop-loss automatically closes your position in cases of sudden market movement. This article gives an overview of formulating a trading plan and risk management.?

Avoid Trading emotions like FOMO, greed, and FUD.

Trading emotions like fear, greed, FOMO (Fear of Missing Out), and FUD (Fear, Uncertainty, Doubt) can make open or close positions when you're not supposed to and disrupt your trading plan.?

Keep your emotion in check when trading; you want to avoid influence from people or social media. Stick to your trading plan.?

Choose Your Trading Exchanges Wisely?

The good thing about Bitcoin trading is that it is primarily unregulated, but that can also be bad for newbies. Exchanges can easily manipulate the market to liquidate most traders for their own gain.?

That is mainly because there are few operational compliances for crypto traders and exchanges. Ensure you research thoroughly before choosing

What to Consider Before Choosing a Crypto Exchange?

Authenticity and Security?

The first thing you want to do is ensure the authenticity of the exchange. Research and ensure it is a legitimate and secure platform to avoid falling into pump and dump schemes.

You also want to ensure your bitcoins are secure and not susceptible to hacking attacks. You can lose all your bitcoins if that happens.?

Fee Structure?

The transaction fee structure differs on exchanges; some exchanges offer discounted fees on withdrawals and deposits. Take your time to research this; you want to ensure there are no hidden fees on transactions.?

User Interface and User Experience

You want to choose a platform that you can use intuitively. A clean and user-friendly interface makes it easier to trade efficiently. You don't want a platform where you need to go through a learning curve before placing or closing a trade.?

Trading Platform: Centralized or Decentralized Exchange?

There are 2 major categories of exchanges: Decentralized Exchanges (DEXs) and centralized exchanges (CEXs).?

Centralized exchanges are like the third parties that monitor and secure transactions on behalf of users. Centralized exchanges also require that users verify their information before using their platform.?

On the other hand, Decentralized exchanges don't require third-party intervention for securing transactions. Instead, they use smart contracts and blockchain to facilitate trading activities. Also, you get complete control over your bitcoins.?