Bitcoin Trading, Part 1.
So you’ve been trading Forex, Stocks and have heard about Bitcoin. Now, you want to try trading Bitcoin. I’ve put together a quick guide to get you started. I’m assuming that you already have some trading experience with other financial instruments. This actually gives you an advantage over most Bitcoin Traders.
Bitcoin is a fun instrument to trade. It’s a 24/7 marketplace, high volatility, can start with as little as $10 usd, registration is fast and easy, no need to AML/KYC (if dealing in Bitcoin only, no fiat). But keep in mind it’s also a very illiquid marketplace.
First thing you need to do is look for a Bitcoin Exchange to do your trading. From my experience (5 years worth) i’ve found bitfinex.com the perfect place to start with. They are the most liquidated western exchange and have been around for a few years and is generally trusted by the Bitcoin trading community.
Once you’ve opened an account (make sure to use Two factor authentication to avoid getting your account hacked). It will looking something like this.
At the top you have Three tabs. Exchange Trading, Margin Trading and Margin Funding. Only two you need to care about is Exchange Trading and Margin Trading.
Exchange Trading — Your basic straight up Buy and Sell function.
Margin Trading — Using Bitcoin only you can open a Margin Long (Thinking the price will go up) or Margin Short (Thinking the price will go down) Bitfinex will give you 3.3x margin (priced in USD). Meaning, If you’ve deposited 1 BTC into your Margin account and the current Bitcoin price is $400 your total Margin amount you can trade with is 1,320 USD.
Let’s say you’ve deposited 1 BTC and use all your Margin available (which isn’t a good idea) going Long at $400 with 3.3 BTC the market price of Bitcoin goes up to $450 and you close your trade. Instead of making just $50 off the trade, you’ve made $165. You could just Margin Long 2 BTC instead (giving you some Margin balance left over) instead you would have made $100. I think you can work it out from there.
Depositing Into Your Account.
In the top menu of the page you will see a tab that says “Deposit” and it will take you to a page like this.
The best way to fund your account is by using Bitcoin itself (I don’t recommend sending fiat to the exchange as it can take a while, have to AML/KYC etc).
To do this i would recommend using a local Philippines brokerage site like coins.ph where you can buy your bitcoin from them and send it to bitfinex.
In the picture i’ve removed my Bitcoin addresses, but for you it will show you an address to send the Bitcoin into. Depending on what type of trading you want to do, send it to the appropriate wallet. (If you send it to the wrong wallet don’t worry as you can send it to the correct wallet within the system)
Exchange Wallet = Exchange Trading.
Trading Wallet = Margin Trading.
Bitcoin Trading Resources.
I’m going to leave a list here of some very useful Bitcoin Trading Resources i hope you will find useful. There is more secret advance stuff i will save for part 2. ;)
Watch the chinese exchange okcoin as it is the market leader for price discovery and all other exchanges pretty much follow its action.
Bitcoin Trading Community — https://www.reddit.com/r/bitcoinmarkets
Chat — https://www.tradingview.com/chat/#bitcoin
Bitcoin traders go there to discuss price and share charts.
Bitfinex In Depth — https://www.bfxdata.com/orderbooks/btcusd
An absolute must when trading with Bitfinex. Beautiful visual orderbook depth so you can see where those whale walls are.
If you found this information useful and want to send me a Bitcoin tip, hugely appreciated.