As the world’s first cryptocurrency, many investors see Bitcoin as the most likely candidate for a serious challenge to traditional currencies. In view of the observed price development, the volatility seems rather difficult to assess.
The different ways to trade Bitcoin
There are two ways to trade Bitcoin: you buy the actual cryptocurrency, hoping to sell it profitably, or you are speculating on performance without ever having the token. The latter can be accomplished by CFDs.
In a CFD, you trade a contract based on the prices of the underlying market. This leverage product makes it possible to move much higher market positions with less capital outlay. This can multiply both your profits and losses.
When you trade Bitcoin, you never interact directly with a stock exchange but trade our buying or selling prices, which we obtain from several stock exchanges on your behalf. All you need to open a Bitcoin position is an IG trading account.
Bitcoin exchanges work just like traditional exchanges and allow investors to buy and sell each other’s crypto currency. There are, however, some advantages to simply omitting them:
When you trade Bitcoin, you get far better liquidity for your desired touch price. However, if you are buying or selling directly on the stock exchange, you will normally have to accept multiple prices to complete your order.
4 steps to bitcoin trading
Open a trading account
To trade CFDs, you first need an IG trading account. The opening takes only a few minutes and you can open your first position as soon as you have deposited money.
Unlike traditional buying and selling, you do not need an account with a Bitcoin exchange. This is because you are trading prices that we derive on your behalf from multiple exchanges.
Create a trading plan
You have chosen a trading strategy, but as the markets are still new territory for you, you should also consider a trading plan. This can help you to make objective decisions, even when the mission is high. So do not hold the positions too long – or close them too soon.
Make sure that you are always up to date with the Bitcoin in order to gain a good understanding of the development of the cryptocurrency.
Charts may turn out to be an invaluable tool in interpreting the behavior of Bitcoin. StsRoyal data can help you understand how the market is moving, whereas comparing multiple timeframes could provide deeper insights into emerging trends and patterns.