Bitcoin’s soaring price over the last few months has brought with it a feeling that a sea change is occurring with the cryptocurrency. More of a feeling than scientific fact, the latest rise has given Bitcoin fans and investors the feeling that the time to get on the Bitcoin express is now.
To understand how this works it is important to understand how trading works. There are good sites that can educate and here you can learn trading Bitcoin with resources like these which are featured on bestbitcoinbroker.net.
There are different types of trades which can be used in the Bitcoin space. By understanding these trades you can make informed decisions to hopefully maximise gains.
Long trades are when you physically buy the stock, in this case, Bitcoin. Traders make money here by buying low and holding the stock until the price is high enough to make a considerable profit. If you bought Bitcoin a few years ago when 1 Bitcoin was worth around $2,000 USD, you would be enjoying a 400% profit plus as 1 Bitcoin is currently worth around $8,000 USD.
As you can see the art is to buy at the lowest possible price and sell at the highest or hang on to your Bitcoin until you need to sell. By looking at market forces and understanding the nature of Bitcoin you will in time be able to buy when the currency is at it’s lowest or near its lowest price and sell when it is near or at its highest price.
Short trades are executed when the stock price is falling or expected to fall. Here, you sell stock that you do not own at a lower price than current prices. The idea is that when you come to buy the stock to sell on to the deals you have secured, the price would have fallen to the point where you make a profit.
So if you sell Bitcoin stock at $4,000 per unit and the price falls to $2,500 per unit, you make a profit of $1500 per unit.
The trick is to identify when the stock is falling and make an educated guess as to how much you can sell it for to make a sizeable profit.
Trading and Bitcoin
Historically, Bitcoin has had dramatic price rises followed by equally dramatic crashes. It has been likened to emerging markets in the early 20th century where investors saw their stock rise into the sky and crash down hard before settling out to make them millionaires. This is the feeling people have on Bitcoin that the inevitable price dip is coming down the track.
This time, however, with Wall Street big names mining the currency and JP Morgan Chase launching their own cryptocurrency circumstances are different to previous years.
If you want to know more about Bitcoin take a look at the Bitcoin Foundation and tap into its resources.
Trading is a risk and trading Bitcoin is arguably riskier still. Nobody knows what the next play will be which makes it all the more exciting.