Trading bitcoins for profit is not easy. Many people are excited to trade bitcoins due to the surge in its value. Although there are many people who are interested in trading bitcoins, only a handful become successful. Unfortunately, there are many people who give up even before they earn their first payout.
What Is Bitcoin Trading?
Bitcoin trading is similar with forex or stock trading. It is defined as the buying and selling of bitcoins. The first thing that you need to do is to make sure that you know the market that you are going to enter. Trading stocks, forex or even bitcoin for that matter is considered gambling. If you do not learn how to calculate your risks, you will end up losing everything. For these reasons, make sure that you learn what bitcoin is all about before you start trading.
Look For A Bitcoin Exchange Platform
As soon as you have gained ample knowledge about the bitcoin market and economy, the next thing that you need to do is to look for a bitcoin exchange platform that allows you to buy and sell bitcoin. There are different bitcoin exchanges in the market – here are just a few:
- Mt. Gox – is the most popular bitcoin exchange platform in the market. Users can trade and convert bitcoins into local or international currencies.
- BitBox – is a bitcoin exchange program that is limited to BTC and USD exchange. Unfortunately, it does not support other currencies.
- Bitstamp – is an exchange wherein people can purchase bitcoins using their credit cards. Moreover, they can also withdraw bitcoins using a variety of currencies.
You can read about some other exchanges at How to Buy Bitcoins.
Once you have opened your account on a bitcoin exchange, the next thing that you need to do is to start trading. The main principle in earning money through bitcoin trading is that you have to buy low and sell high. This means that you have to time the bitcoin market and find out when the prices of bitcoins go up or down. As a bitcoin trader, you will have to speculate on what the market is going to do.
To give you a good example, bitcoin investors who have invested early this year have bought bitcoins at a price less than $20 in January. Due to the great reception of bitcoins, many other investors started to invest in the market and by April, the price of a single bitcoin was around $260. If a particular bitcoin investor started selling his bitcoin in April, he would have made a 1,400% profit. On the other hand, if he bought at the top and sold at the bottom, he would have lost over 60% of his money.
It’s important to understand that like any investment, this is risky business – but if you’re able to do it well, it could be quite profitable.