Bethel Brill
Nov 2 · 5 min read

All You Should Know About Bitcoin/Crypto Trading

The year 2009 will always be remembered as the best year in the cryptocurrency world. It was the year the Bitcoin network was launched. Interestingly, since then, the crypto has become not just the most popular but also the most valuable crypto in the world.

Bitcoin and other cryptocurrencies in general have received so much attention in the last couple of years. People now invest and trade them for profits. While more people are becoming interested in these “new technologies", some have totally confused ideas of what they do and how they can be used.

We would like to discuss the difference between cryptocurrency trading and investing.

Bitcoin Trading vs Bitcoin Investing

Generally, when people invest in Bitcoin, it is to buy and hold for a long period of time. We can rightly say that people invest in Bitcoin and other cryptocurrencies with the intent that it would rise in the future and they will make huge profits from this rise in value. Also, people may decide to invest in either Bitcoin because they love the ideology, or they love the team of developers, etc.

Bitcoin trading, on the other hand, is different from investing. People who trade Bitcoin buy and sell short term. They sell their coins when they think that profit could be made. Unlike the investors, these traders do not buy Bitcoin because they believe in the ideology or team of developers, they buy solely for profit making. Not to sound controversial, some traders may actually buy a crypto because they like the ideology but that is definitely not their main aim of doing so.

Bitcoin Trading

Now that we have understood the difference between crypto trading and crypto investing, it is best that we dive fully into our topic.

Since you already know what Bitcoin trading is, it is important that you also know and take these to heart (especially if you are planning on becoming a trader).

  1. The crypto market is volatile; you probably must have heard these words on every crypto blog or site but one of the things they don’t tell you is that volatility could be a disadvantage and an advantage depending on which side of the coin you are on. Let me explain this to you. If you check your dictionary for the meaning of “volatile" you would see things like “being temporal or ephemeral”. This simply means that it is not bound to last for a long period of time. Now let’s bring this to Bitcoin and cryptocurrencies. Volatile in a crypto sense means that the price of a crypto (be it Bitcoin, Ethereum, Ripple, Litecoin, etc) will not remain the same for a long period of time. So if the value of BTC is at $9,000 right now, it could either rise to $9,500 or $10,000 in less than an hour or fall below the $9,000 mark. This is exactly why it is an advantage and a disadvantage. Since no one knows the future, crypto traders will have to rely on statistics and predictions (and most of the time intuition) if they are to make profits.
  2. The crypto market is open 24/7; this is another thing all prospective crypto traders should bear in mind. Unlike some of the other traditional markets that have closing times, the crypto market does not. This simply means that you can buy and sell Bitcoins whenever you deem fit.

In addition to these, it is important to remember that being unregulated, it is quite easy to start trading Bitcoins.

Bitcoin Trading Types

For beginners, it is best that you familiarize yourself with the various trading types.

  • Day trading - as the name implies, it has to do with making trades throughout the entire day with the intent being to make small but steady profits from slight rise in value. Day trading requires constant attention if you are to make profit. Most of the times, these day traders close all their trades by the end of each day.
  • Scalp trading - it is currently one of the most popular trading types. These traders trade with the intent of making tiny profits on small price changes. This trading type is built on the ideology that making small and steady profits limits risk.

Bitcoin Trading Platforms

Bitcoin trading platforms are simply platforms that match buyers and sellers automatically. It is important that you remember that a trading platform is different from a broker platform or a crypto exchange. One of these trading platforms is Bitfinex

Trading Mistakes To Avoid

While some people have made huge profits from Bitcoin trading, others have lost huge funds to it. To be on the safer side, there are a couple of mistakes you should avoid.

  1. Trading more money than you can afford to lose; being a volatile market, things could go south in a couple of minutes. To be on the safer side, it is advised that you trade only the amount of money you can afford to lose.
  2. Not having a trading plan; this is one of the most common mistakes most traders make. Before venturing into this risky but profitable market, it is best you have a clear plan. You should have a specific stop amount when you see that you are losing more.
  3. Fear of missing out (FOMO); FOMO is one of the most common ways new cryptocurrencies trick people into buying and trading their token. To do this, they pay influencers who sweet mouth people into believing that it is the next big thing. As a trader, sometimes you do not have to give in. Stand your ground!

Crypto trading is one of the most profitable financial investments anyone can make at the moment. Do not let fear hold you back.

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