You’d like to become a Bitcoin trader and want to trade Bitcoin and other cryptocurrencies? In this article, you’ll learn everything you need to know about becoming a trader!
Difference between Bitcoin trader and investor
Contrary to an investor that buys Bitcoins to hold them for a long time, a Bitcoin trader often acts more with a higher trading frequency. In other words, a Bitcoin trader buys and sells Bitcoins and other cryptocurrencies in narrow time frames to take advantage of the small/mid-price gains.
First of all, a Bitcoin trader needs an exchange account, which can be charged up with FIAT money. FIAT money is the common currency, for example, EUR, USD or GBP. There are dozens of exchanges that allow the deposit of FIAT, but the most simple method is to directly buy Bitcoin on Coinbase with a credit card.
But it needs to be said that you pay high trading fees when buying Bitcoin with a credit card. So, when you want to become a real Bitcoin trader, in the best case you create an account on Kraken.com, that will be your key point for depositing and withdrawing fiat. On Kraken.com you’ll pay fewer fees and when you also have a FIDOR bank account, you can transfer money between your Kraken and bank account within seconds.
The safest exchanges
As a Bitcoin trader, of course, you care a lot about the security of your funds. Professional Bitcoin traders tend to only have the money on the exchanges that is needed right now for trading activities. A good exchange characterizes itself by having a transparent headquarter office address, caring about the safety of the customer’s funds and replacing all the losses when it comes to security breaches or hacks. Furthermore, the height of the fees, the trading volume, and the limitations of withdrawing and depositing coins/tokens are very important. It also plays a role how fast the customer service is at completing the user’s verification process and helping him with problems and questions. All that is very important for choosing the right crypto exchange.
Besides Binance, the Kraken exchange can be recommended for Bitcoin traders with a European bank account. It only takes a few days to open up an account, verify it and connect it with the bank account. The steps are very easy and when you’ve completed them, you can instantly buy Bitcoin. After the buying process, it would be a good idea to store the coins in a hardware wallet (Ledger, Trezor, etc.) to make sure your funds are safe. Because when using a hardware wallet, you are the only human having control over the private keys.
Safe storage of Bitcoin
You can create a digital wallet for every cryptocurrency, that can only be accessed by using the private key. Once set up in the right way, it is almost impossible that your coins get stolen because no one owns the private keys except you. On the other side, when you lose your private keys, there is no one that can help you to get access to your wallet back, what ends in your coins being lost. In practice, this means that you should always handle your private keys with care. The best way is to write your private keys clearly visible down on a piece of paper, which then gets stored in a secure place like a safe deposit box.
Most of the professional Bitcoin traders use a very comfortable, but quite expensive method, they buy themselves a Trezor or Ledger hardware wallet. These devices allow access to your crypto wallet, with only you owning the private keys. Once installed correctly, the private key isn’t needed the whole time for signing transactions, because it is saved in the device and you just have to follow the instructions given in the Ledger’s or Trezor’s users manual.
The best exchange for Bitcoin traders
For the time being, the safety precautions are done and we can finally start with the instructions on how to buy and trade Bitcoin. The best exchange for Bitcoin trading is Binance. Binance offers various trading pairs and is well known as a reliable and safe exchange, for example, because of its SAFU fund, which holds assets from Binance to make sure the customers get their losses compensated when it comes to hacks or other security breaches.
After you’ve registered on Binance, you can immediately start depositing the Bitcoins that you bought on Coinbase or Kraken.
Of course, you can also use other crypto exchanges like KuCoin, Bibox, Huobi, OKEx, BitMex, HitBTC, Bitfinex, etc. but they’re not as trusted as Binance.
Trading with leverage
An advanced Bitcoin trader may also like to trade with leverage (opening short or long positions with borrowed money). For purposes like this, BitMex and Bitfinex are the first choices. Both have their advantages and disadvantages. On the one hand, Bitfinex shows the profit and loss in realtime, which is really helpful, especially for Bitcoin daytraders. But on the other hand, Bitmex isn’t getting accused of facing financial issues. If the rumors about the financial problems of Bitfinex should be true, there deposited funds could be in danger. Because Bitfinex is the issuer of Tether (USDT), some people say that they manipulate the crypto market and print money out of thin air.
It is recommended to not trade on one of those exchanges when you don’t exactly know what you’re doing. Please also note that trading with leverages can end up in a total loss.
>>Sign up on Bitmex and start trading with leverage <<
>>Sign up on Bitfinex and start trading with leverage <<
If you’d like to get informed about the latest price changes on the whole cryptocurrency market, then you need to bookmark Coinmarketcap or download their app for iOS and Android. On the platform, you can search for every cryptocurrency and find out its market capitalization, volume, and check on which exchanges it gets traded. Coinmarketcap also keeps a list of nearly every coin/token existing and ranks them after the market cap. You can also use the platform for finding the right URLs of exchanges or projects. Because using wrong exchange URLs can lead to losing your funds.
Another very helpful tool is the CoinMarketCal, which collects and lists all upcoming events in the world of cryptocurrencies and blockchains. In a bull market, this can be very useful because then there are a lot of people that “buy the rumors” and “sell the news”.
Helpful crypto magazines
As a Bitcoin trader, you, of course, take the happenings in the crypto world seriously. In the best case, you’re daily checking the most important crypto news outlets like CryptoTicker, CoinDesk, CoinTelegraph or Cryptonews for the latest news and events about Bitcoin and other cryptocurrencies. Because negative and positive news are affecting the price changes of the crypto market, this can help you to make trading decisions.
Telegram and Facebook groups
Telegram, a messenger service like WhatsApp, became popular because of cryptocurrencies. In Facebook and Telegram, you can find lots of helpful groups, for example, the CryptoTicker Telegram trading group. Most of the time the cryptocurrency communities use both platforms to connect with each other and to debate about projects and prices. Furthermore, you can find a separate telegram group or channel to every cryptocurrency, which you can use to always stay updated or to contact the project developers.
How to trade Bitcoin
This clearly depends on your trading style. But one thing is for sure: day trading with Bitcoin isn’t substantially different from trading with other assets or securities. Most of the Bitcoin traders rely on EMAs, Fibonacci, RSI and MACD, support- and resistance levels as well as candlestick-analysis and -volume. We highly recommend the use of Fibonacci-tools and 200 and 50 EMA.
You should also become familiar with bullish and bearish divergences in the RSI and MACD. Although all of this are very helpful and useful indicators, you should always keep an eye on the price and volume. For many experienced traders, the formations of the single candle and the volume are by far the most important thing, to anticipate an up- or downtrend.
So it is an advantage when you learn how the candlestick analysis and the advanced order book works.
>>We’ve also created a selection of the most recommended books.<<
When you want to become a professional Bitcoin trader, you should consider using Tradingview. It gives you the ability to do technical analyses for every kind of asset price with all kinds of indicators. Even though it costs a monthly fee, it’s definitely worth the money when you want to start serious trading with Bitcoin.
One more thing
Trading with Bitcoin can be very profitable, but for that, one thing needs to be kept in mind. You should always make sure to use the correct URLs to sites that effect your exchange accounts or wallets, otherwise, it may end up in a total loss even before you started to trade.
You have questions about this article or you want to discuss with us about the latest events in the crypto world? Then join our free telegram group. We would be very happy to welcome you there.
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Disclaimer: The authors of this website may have invested in crypto currencies themselves. They are not financial advisors and only express their opinions. Anyone considering investing in crypto currencies should be well informed about these high-risk assets.
Trading with financial products, especially with CFDs involves a high level of risk and is therefore not suitable for security-conscious investors. CFDs are complex instruments and carry a high risk of losing money quickly through leverage. Be aware that most private Investors lose money, if they decide to trade CFDs. Any type of trading and speculation in financial products that can produce an unusually high return is also associated with increased risk to lose money. Note that past gains are no guarantee of positive results in the future.
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