How to Start Trading Bitcoin for Beginners?

• Blockchain Council
• October 03, 2024

Bitcoin trading involves purchasing and selling Bitcoin to earn from its changing prices. Bitcoin, unlike traditional currencies, isn’t managed by central banks. Instead, it runs on a decentralized system called the Blockchain. This system ensures openness, safety, and keeps a public record of every transaction, setting Bitcoin trading apart from standard financial setups. 

Bitcoin trading can occur on various platforms that help connect buyers and sellers. These platforms can be split into three types: trading platforms, brokers, and marketplaces. Each one offers unique features and has different fees, so understanding these differences is key before you decide where to trade. 

To learn how to trade like a pro, enroll into the Certified Cryptocurrency Trader™ (CCT) certification. 

Getting Started with Bitcoin Trading

Step 1: Select a Trustworthy Trading Platform

To begin trading Bitcoin, the first step is to pick a platform that matches your preferences. There are several choices: 

• Trading Platforms: These are websites that automatically match buyers and sellers. These platforms usually charge less but need users to have a bit of knowledge.
• Brokers: These services let you purchase Bitcoin directly from the provider, usually at a higher fee, but with greater ease.
• Marketplaces: Here, buyers and sellers can talk directly to make trades, similar to services like LocalCoinSwap or Paxful.

When deciding on a platform, consider security, how easy it is to use, the fee structure, and how good their customer service is. 

Step 2: Learn Key Trading Terms

To trade effectively, it’s important to know the terms often used in Bitcoin trading: 

• Order Book: A list showing all buy and sell orders on a platform. The buy orders are “bids,” while sell orders are called “asks.”
• Market Order: A request to buy or sell Bitcoin at the best available price. These are fulfilled right away.
• Limit Order: A request to buy or sell Bitcoin at a set price, only completing if the market reaches that price.
• Volume: Indicates the quantity of Bitcoin traded within a period. High volume often shows strong market trends, while low volume may indicate weak activity.

Understanding these terms can help in making better trading decisions. 

Step 3: Protect Your Bitcoin

After purchasing Bitcoin, it’s vital to store it securely. There are two main types of wallets: 

• Hot Wallets: These are online and provide quick access, making them suitable for regular trading, but they are more prone to cyber attacks.
• Cold Wallets: These are wallets kept offline, such as hardware wallets, offering better security by lowering hacking risks. They are perfect for storing Bitcoin for a long time or keeping large amounts.

Choose a wallet type that suits your trading habits and risk preference. Knowing the nuts and bolts of BTC is important to be successful in BTC trading. Consider a renowned certification like the Certified Bitcoin Expert™ to get the hold of it.

Starting Out with Bitcoin Trading

To trade Bitcoin, follow these steps: 

Select a Reputable Exchange

Start by choosing a trustworthy cryptocurrency exchange. Well-known choices for beginners are Binance, Coinbase, and Kraken. These platforms enable you to buy, sell, and securely store your Bitcoin. When choosing an exchange, consider aspects like how user-friendly it is, security options, fees, and trading pairs available. 

Complete Verification Steps

Many exchanges require users to complete Know Your Customer (KYC) and Anti-Money Laundering (AML) verification steps. This typically means uploading ID documents and providing personal details. Completing these steps helps keep your account safe and ensures it meets legal rules. However, anonymous crypto exchanges don’t need these details but they are not as secure.

Deposit Funds to Your Account  

Once your account is set up and verified, the next step is to deposit funds. You can deposit fiat money (like USD or EUR) through bank transfers, debit cards, or other payment methods. Some exchanges also accept PayPal or credit card deposits. Pick the funding option that works best for you, considering any associated fees. 

Developing a Bitcoin Trading Plan

After you’re all set and understand the basics, the next step is choosing a trading strategy. Here are a few popular strategies in Bitcoin trading: 

HODLing

This method involves buying Bitcoin and keeping it for a long time, ignoring short-term price changes. It’s based on the idea that Bitcoin’s price will rise over time. This approach is for those who believe in Bitcoin’s long-term growth. 

Day Trading

Day trading involves purchasing and selling Bitcoin in the same day. The objective is to benefit from minor price shifts. This approach demands a strong grasp of market trends and rapid decision-making abilities.

Swing Trading

Swing trading focuses on taking advantage of price fluctuations over multiple days or weeks. Unlike day trading, it does not require continuous market observation. This method is for those who want to trade more frequently than long-term holders but less intensively than day traders. 

Scalping

Scalping is a brief strategy where traders execute numerous trades daily to gain from small price changes. This method is more appropriate for seasoned traders who can swiftly assess market trends. Picking a strategy that aligns with your risk level and the time you can commit is crucial for successful trading. 

Tips for Safe Bitcoin Trading

Bitcoin trading comes with risks, so following best practices for safety is crucial: 

• Use Strong, Unique Passwords: Ensure your accounts are protected with strong passwords and update them regularly.
• Activate Two-Factor Authentication (2FA): Enhance security by setting up 2FA for your accounts.
• Avoid Public Wi-Fi for Trading: Use secure internet connections for transactions to prevent hacking attempts.
• Keep Your Private Keys Safe: For wallets that require private keys, keep them secure and don’t share them.
• Stay Updated on Market Trends: Monitor market shifts and risks to make better trading decisions.

Conclusion

Bitcoin trading can be a profitable activity for beginners if approached carefully with proper knowledge. Start by grasping the core concepts, creating a secure trading setup, and picking a strategy that matches your objectives. By sticking to safe practices and staying updated, you can trade Bitcoin more effectively. Further, get a renowned cryptocurrency certification to get the most of your investment.