Buying Bitcoin is one of the bravest decision anyone made in his life. Bitcoin has grown from $0.001 to $5500 (and touched $20,000) in the past 10 years. There are very few people who enter the Bitcoin space in its early days. The main question is What is Trading? How to Earn Bitcoin From Trading?
Everyone wants to make more money from trading and the dream to double or triple your amount is just a couple of trades away, especially in Bitcoin Trading. Many people leave their jobs for full-time trading in Bitcoin and Altcoins.
We will cover the basic of Trading and the advantages and disadvantages of Trading.
- What is Trading
- Different Types of Trading
- How to Trade on Exchanges
- Benefits of Trading
- Drawback of Trading
- Risk Management
- How to Earn Bitcoin From Trading
1 What is Trading?
Trading means to exchange one thing for another and vice versa. In simple words Trading is “Buy Low Sell High“. Trading looks very easy from the table but when you entered into the market you will learn about different situations and how the market reacts to them.
Trading needs times and efforts. A good trader can make 6-8 successful trades out of 10. A trader must know how the market works and how market reacts on different situations.
2 Different Types of Trading
- Scalp Trading
- Intraday Trading
- Swing Trading
- Momentum Trading
- Position Trading
- Range Trading
- Fundamental Trading
- Revenge Trading
- Technical Trading
3 Scalp Trading
In Scalp trading you buy and sell points are close and the trade will close with small profits of 1-2 percent. The same can be done many times a day for better profits.
Example: You buy a coin at $100 and price goes up to $102 then sell the coin and again buy at $101 and sell again at $102.5.
The profit per trade is small but when done by several times (10-50 times) that good for a day.
4 Intraday Trading
In Intraday Trading the trade will be closed on the same day (at the end of the day) whether it is in profit or loss. Intraday trading will cover your daily expenses and bills. Intraday trading needs good attention to charts and price movements.
5 Swing Trading
Swing trading is short term trading. The trade position will be held for 1 day to couples of weeks. Swing trades most likely to be close in profit. Most traders do swing trading and earn a good amount of money. Swing trading does not need close attention to market just place your buy and sell orders and wait for a price increase or decrease.
6 Momentum Trading
Momentum trading is based on support and resistance points. A trader should have a close look at the price movement and when price breaks a support or resistance points the trade should be open or close.
Momentum trading is mostly used in the Forex market where market always reacts on support and resistance. Crypto market is very volatile and sometimes not drop from resistance and continue to rise. To handle that a trader must learn about the risk management, we will discuss that later in this post.
7 Position Trading
Position trading is the same as swing trading however the time period of the trades is more. The trades can be held for mid to long term that will be several weeks or months depends on the profit targets and market conditions.
Position trading is for that trader who is not much active in the market and cannot see price movements frequently.
8 Range Trading
When a coin/assets continue to trade in a fixed range then traders can take entry at the low price and sell at a high price. The price continues to trade in the same range and traders can take benefit from that. Range trading can be done multiple times until the support or resistance is broken.
9 Fundamental Trading
Fundamental Trading is based on the upcoming news of the coin/assets. Traders should check frequently the upcoming upgrades and partnership of the project. Positive news affects dramatically and can surge the price drastically. That can be true with negative news that will lead to a massive selloff and the price may decrease very fast.
10 Revenge Trading
When a position/trade is going into loss then the trade will be closed in loss and wait for a further price drop to buy back. Revenge Trading is based on the quantity of trade.
Example: A trader bought one Bitcoin (1 BTC) at $6000 and the price drops to $5000 then the position should be closed in loss and wait for a further drop.
The price of Bitcoin dropped from $5000 to $4000 then the trader should buy back one Bitcoin (1 BTC) at $4000. Now he has 1 BTC and $1,000. So the focus is on Bitcoin quantity.
11 Technical Trading
Technical Traders focus on chart reading and technical analysis. They are looking for trend lines and chart patterns to find convergence and divergences that will help in buying and selling targets.
Technical analysis take time and efforts to be perfect. Technical indicators are not 100 percent accurate but give a idea about the next movement.
12 How to Start Trading on Exchange
There are many cryptocurrency exchanges that provide good liquidity for Bitcoin and Altcoins. A good exchange will provide better security and more features.
Binance is the leading cryptocurrency exchange by trading volume. Binance provides 473 different trading pairs. Binance security is good (hacked back on 8 May and hacker stole more than 7000 BTC, users get a refund from Binance). OkEx is another good exchange for trading. Huobi exchange provides good security and among the top 10 exchanges.
These exchanges are very easy to use. Just register a new account go through the exchange UI, deposit you Bitcoin or USDT and start trading with the different trading pairs.
Bitmex exchange provides leverage/margin trading. Bitmex allows users to trade with 1x to 100x leverage. Margin trading is very risky and one should use a stop-loss.
13 Advantages of Crypto Trading
- Make Good Profits
- No Involvement of Middleman
- Have More Income Sources
- Understanding About Investment
- 24 Hour Open Market
- Use Leverage/Margin Trading
14 Disadvantages of Crypto Trading
- Highly Volatile Market
- Sometimes Unpredictable
- Manipulation in Prices
- Risk of Losing all Money
- Exchange Hack Risks
15 Risk Management in Trading
Risk management is a must skill everyone have in the financial world. A trader has control over his emotions. Fear and Greed plays important roles in the market. When greed is at an all-time high the market will probably drop and vice-versa.
Traders should use stop-loss always to minimize the loss (when a trade goes the wrong way). Market will not always move as expected there are many factors that will affect the price movements.
If the risk is high the reward is also high (same as no pain no gain). Risk can depend on what type of trading you are doing and what is your trade timeframe.
Every investment involves some degree of risk, which may be close to zero in Government bonds, moderate in mutual funds, stocks, high in Bitcoin and cryptocurrencies.
16 How to Earn Bitcoin From Trading
Everyone wants to increase the amount of Bitcoin one is holding. Trading will help you to increase the amount of Bitcoin or Fiat (whatever you prefer).
There are many opportunities in the crypto world to double (or even more) the amount you holding. You must look and grab the opportunity at the right time. Trading Altcoins is also another option to earn bitcoin from trading.