Bitcoin is a digital currency that works via mining. Mining is a process that releases bitcoins in circulation. It comprises of a computationally hard puzzle to solve and add it to the blockchain to receive rewards in bitcoin. The mining process hardship increases as more and more BTC gets created. In the start, an average desktop was sufficient for the BTC mining process, but today to handle the difficulty levels there is a need for an advanced processing unit and fast hardware.
How does a BTC exchange operate?
Just like the physical currency exchange, BTC trade functions. You buy one currency with another in the FX market. Similarly, you speculate BTC price actions against fiat currency. It means, you are not buying BTC directly, but are vulnerable to its volatile spikes. BitCoin trading is possible on price increase and fall, just like CFDs.
How to trade Bitcoin CFDs?
The contract for difference is beneficial. You can trade BTC without using bitcoin. CFDs are a contractual agreement between trader and broker. The contract declares the difference between the investor’s entry and exit prices. It simulates an environment that the actual BTC is held by the trader. Among the highly recommended CFD brokerages in the market today that offer crypto CFD trading are eToro, Plus500 and ADSS. These brands are licensed by financial regulators so you know that your funds are safe.
Easy steps to trade BTC on ADSS platform
- Open a BTC trading account on ADSS
- Add funds to your account
- Go long [buy] or go short [sell]
ADSS is a leading brokerage platform offering competitive trading conditions like low crypto spreads.
BTC trading strategies
Buy & hold
In the BTC community, traders who buy & hold transactions for a long time are called “holders”. They consider the BTC’s monthly or weekly prices and expect it to turn more valuable in the future. This perception has some justification…..BTCs limited supply an inbuilt advantage over fiat currencies.
The holders prioritize fundamental analysis instead of technical analysis. They act on BTCs economic potential instead of chart pattern signals. They don’t take action on daily price fluctuations, even if they are extreme. They view price falls as a chance to get more coins at discounted rates. Even if the price reaches an unsustainable peak, they take some profits, but don’t liquidate their full position.
Swing traders trade, when there are significant price moves between the two extremes. They maintain the position for a couple of weeks to several months. When the trend is not bearish or bullish, swing traders consistently enter the market, which consequently reverses the price direction. When BTC price reaches reversal level, they bet on price reversal but if the price continues moving, it is a signal to close the position with a small loss.
Trend trader enters as early as they can and exit before a trend reversal. The clear sign of emerging trend is consistent price movement like going higher high and lower low breaking some past significant level. When market participants enter the trend, it gains momentum. A strong trend gets easily identified and draws more herd in the trend.
It is a style, where day traders maintain a position for 12 – 16 hours. Traders follow hourly charts and it aligns well with trading CFDs, except when the price movement is flat.
You can apply the above strategies by opening a BitCoin Demo Account on the ADSS brokerage platform. You will get live charts with comprehensive analysis tools.