What Is Bitcoin Trading?

If you’re looking to learn about Bitcoin trading, you’re in the right spot. Our team of crypto specialists has put together an easy-to-follow guide on BTC trading. In this guide, you’ll discover how Bitcoin trading operates and how to trade this well-known cryptocurrency for profit. We’ll also share some helpful trading strategies to assist you in becoming a successful Bitcoin trader.

Without further ado, let’s get started.

Bitcoin Trading Explained

Bitcoin trading is the term that’s used to describe buying and selling BTC. You can trade BTC in two ways — via DEXs, CEXs and CFDs. This means that you can trade Bitcoin without owning it.

The aim of Bitcoin trading is to make money from the changes in BTC’s price, meaning you buy when the price is low and sell when it rises. Keep in mind that the Bitcoin price can change often, which makes trading in crypto quite risky. Therefore, you should only invest what you can afford to lose.

Experienced crypto traders will conduct detailed research to determine whether the market is bearish or bullish. This will help them decide when is the best time to buy and when to sell. They will also use different trading tools and popular Bitcoin robots to help them conduct profitable trades.

What Is Bitcoin Investment?

Investing in Bitcoin is different from trading. It implies buying and holding BTC for a certain period, regardless of its price fluctuations. BTC is the most popular crypto investment for several reasons. First of all, it can generate high returns. Its current price is $59,092, while by the end of 2024, its value could reach an ATH of $90,000. Secondly, it has a fixed supply of 21 million. And finally, BTC is a hedge against inflation.

On the other hand, the goal of Bitcoin trading is to enable investors to make a short-term profit.

How Does Trading Bitcoin Work?

Bitcoin trading starts with creating an account on a crypto exchange and making a deposit. You’ll also need to create a BTC wallet to store your coins. Traders can buy/sell BTC via market or limit orders. The former refers to placing an order to buy/sell Bitcoin immediately, regardless of its price. The latter refers to buying/selling BTC at a specific price. Traders can also use advanced order types, like the stop limit order, which involves the stop and limit prices.

Bitcoin traders can be makers or takers. The term maker refers to the creation of buying/selling orders that are not executed immediately but after certain conditions have been met, such as once BTC reaches $60,000. The term taker refers to traders who execute instant trades.

There is a difference between BTC trading platforms and crypto brokers. The former are platforms that automatically match buyers and sellers, while the latter act as intermediaries between exchanges and traders.

How to Trade Bitcoin and Make a Profit

Now that you know what Bitcoin trading is and how it works, here’s how to use it to make a profit. First of all, you need to create a trading strategy. This will help you mitigate financial risks. Since there are many different trading strategies, you should choose the one that best suits your trading style.

Trading strategies can be active and passive. The former includes scalping, day trading, and swing trading, while the latter includes hodling. Active trading strategies are more suitable for advanced traders since they require more engagement, while passive trading strategies are ideal for beginners.

Next, you need to assess the Bitcoin market. If the market is bullish, you can profit by selling your BTC. If the market is bearish, you could buy BTC at a lower price and sell it once its value goes up.

What Is Bitcoin Trading Strategy?

As mentioned above, there are many trading strategies that you can use. The most popular include scalping, day trading, swing trading, and hodling. Here’s how they work.

Scalping

Crypto scalping is a short-term trading strategy that refers to buying BTC at its bid price and selling it at its asking price. This strategy aims to enable investors to make a small profit from big price changes. The scalping process usually takes 30 minutes, enabling scalpers to make multiple daily trades.

This trading strategy is ideal for daily traders as it includes small margins, short holding times, and high trading volume. Scalpers also use different strategies and tools to help them execute successful trades, such as a useful Bitcoin trading app and top BTC trading bots.

Day Trading

Day trading is the most popular trading strategy. As its name suggests, it involves executing multiple trades per day. Day trading is similar to scalping — both enable investors to profit from small price movements. However, daily traders can make larger profits because they will hold their positions for a longer period (several hours).

This strategy is popular because it includes quick profits while excluding overnight risk. Day traders usually use tools like RSI and MACD, candlestick patterns, and support and resistance.

Swing Trading

Swing trading is a strategy that can be described as a combination of short-term and long-term trading. Its goal is to enable investors to make a profit from both jumps and drops in the price of BTC — swing traders will enter the trade once the price of BTC changes. They will make a profit by holding their coins until the price stabilizes. Swing traders will hold BTC for several days, weeks, or months, depending on market conditions. They’ll also use daily and weekly charts to recognize entry and exit points.

Hodling

Hodling is a passive trading strategy that involves holding crypto assets for a longer period — hodlers won’t buy BTC when its price goes up or sell it when it goes down. This term was created in 2013 when a Bitcointalk forum user misspelled the word hold. The goal of hodling is to enable investors to profit from significant price changes in the long run. Hodling works best with cryptocurrencies that show great growth potential, like BTC and ETH.

Conclusion

We hope that our guide helped you understand what Bitcoin trading is, how it works, and which trading strategies bring the most profit. To become a successful BTC trader, it’s vital to understand how the crypto market works. You should also learn how to use technical analysis tools and manage risks. On that note, you should never invest more than you can afford to lose.