Bitcoin trading is a trending topic these days, and traders are quite inquisitive to know how trading works and are the best ways to speculate the price movement. Initially, traders used to get the Terra Markets using the exchange with anticipation that the price will shoot up somewhere in the future.
Below highlighted are some important Bitcoin trading notions concepts that you should keep in mind as a Bitcointrader. Read on to know more in detail.
Understanding the price of bitcoin
The very first thing that requires your attention is understanding the bitcoin’s price if you want to play safe trading. So, take a look at the factors that make it drive
Supply of the bitcoin
Presently the market has 21 million of the supply and the number is definite. Therefore, definite number means the price of the bitcoin will hike if only the demand for the same rises in the next few years.
Unexpected media coverage
Suppose all of a sudden you came to know about any highlighting news about the bitcoin that concerns its security measures, longevity, or value. Then in that case it hurts the bitcoin’s market presence and price.
If bitcoin is perfectly integrated with the banking system, then there is a high chance that the price will rise.
Some important events such as the macroeconomic announcement in the bitcoin, regulatory changes, and breaches in security can impact the price.
Bitcoin day trading
Day trading in bitcoin is quite well known here you need to close and open any position in a day only. That means you won’t get overnight exposure. This concept is useful especially when you want to earn from the bitcoin movement in the price for the short term.
Bitcoin hedging concept
Hedging of the Bitcoin here stands for leveraging your position so that you can stay away from the trading risk. Now, this hedging concept is super beneficial only when you see that the market is going against your position. For example, suppose you have some bitcoins but you are concerned about their short-term price drop then you can open a short time position. Now by chance if the bitcoin falls then also you can make a profit on your short opening because that will offset the losses.
Whether to go for short or long
Trading with bitcoin derivatives means that you need to think about whether you want to go for short or long distances. Traveling long means that you need to expect that the price will rise and short means that the price will fall. Below are a few features that you can get from bitcoin trading derivatives
Derivative of Bitcoins
Trading with bitcoin derivatives also means that instead of having any complete authority over the bitcoin, you can speculate on the price. Precisely if the price falls you can take a short position and take a long position if the price rises.
Margin and facility
As a trader, you will get the full leverage of the market which means you need to invest a deposit amount called the margin to experience the complete exposure of the market.
Put a limit and decide your stops
Bitcoin traders also have to know about the two vital risk management concepts known as the limits and stops. And you will have options to select when you are trading with professional traders. Remember the stops are of three types as discussed here
Regular stops let you close your market position at the present level. However, there is a chance that you can slip off with a sudden change in the market price.
Trailing stops generally follow the desirable market pattern so that you can make a profit. But the best part is that it shields the risk.
Master the stop loss
Setting the guaranteed stop is free and you can close your position at the present level irrespective of any slippage.
Finally, when you seem to be planning for Bitcoin investment, it is advised you choose Bitcoin Era to do the same as the platform is highly reliable and offers utmost security to the crypto investors.