There are few possible explanations of why you’re reading this article. 

You want to try investing and make quick profits. You’re already familiar with the basics of trading, say, on Forex, and hope to extend your portfolio. Or, you have held Bitcoin for quite some time, and now, when the price is good, you want to trade it.

To those of you who want to make a lot of money quickly, please reassess your approach and learn a little bit about strategies and indicators. Nowadays, when the hype is gone, it’s challenging to achieve small gains for even professional traders. 

To the second group of readers, Bitcoin trading is a good option for day trading with its high levels of volatility, and you can put your experience to action.

And if you’ve always held Bitcoin and now want to try it, keep on reading, too. 

This short overview will cover pitfalls to come across while trading Bitcoin as well as benefits of buying and selling the digital gold. We’ll also enlist a few trading platforms, apps and software for you to start the process.

But first things first. 

PROs and CONs of trading Bitcoin

While talking about BTC trading, it makes sense to compare the process to several markets: Forex, traditional stock exchanges and altcoin assets, such as EOS or Ethereum. 

However, the altcoin market is worth the whole separate series, and we’ll not talk about it much in detail here.

Benefits:

 

  • Volatility

 

In contrast to Forex trading or trading stocks, Bitcoin might be a more volatile currency than any traditional one, which creates ideal conditions for substantial daily spikes. And that, in turn, opens a road to manifold day-trading and scalping opportunities. 

Take a look at these fluctuations levels in the price of Bitcoin over three months from July to November 2019. The BTC price dropped from a maximum peak of 14 000 USD to almost 8000 USD, which is slightly below 50%. 

Bitcoin trading: Price chart – TradeSanta

 

 

  • No brokers needed

 

As we explain in our piece on how to trade Ethereum, while trading crypto, you have an opportunity to use a broker, such as eToro or RoboForex, once you want to. 

But the good thing about cryptocurrencies is that you don’t have to use the brokers as you would do with Forex or traditional stocks.

That eliminates commissions and transaction costs dramatically. If you access the market directly via a crypto exchange, such as Kraken, Bitfinex or HitBTC, you are not obliged to have a minimum amount, to start trading. 

All you need is the Internet, some savings and several papers to verify your identity. 

But there is an even better solution than aforementioned platforms where you will still have to pay withdrawal/deposit fees together with trading fees. And this is p2p exchanges where you can purchase Bitcoin directly with a very small fee for the conformation of the transaction.

We’re not done yet. The best way to go is to buy Bitcoin from your friend, where it will cost you a minimum fee and will be absolutely safe.

Drawbacks:

 

  • Hacking

 

Before we even go further, you should keep in mind that there are several ways to store your Bitcoin. 

You can use a hardware wallet, such as Ledger Nano or Trezor. This kind of storage is known as a cold storage since it doesn’t touch the Internet. 

There are also physical wallets in place, for example, paper wallets.

Bitcoin paper wallet – Bitcoin trading review

But it’s not all. There are hot wallets out there which cover everything online-ish. These include desktop wallets, mobile apps and cryptocurrency exchanges. 

Most likely, you will store your Bitcoin with an exchange simply because it’s easy and convenient for those who trade! 

But be aware that they are all under the watchful eye of hackers. Although the largest trading venues take action to enhance their security all the time, some of them saw thieves nab millions. 

Just to give you one example, in 2019, hackers stole more than $30 million from a South Korean platform Bithumb. The hack has affected hot wallets, or simply, users’ online accounts with the exchange. 

Keep in mind that cold storages, such as hard drives or paper wallets where you keep your Bitcoins far away from the Internet, are more secure.  

Once hacked, no-one will ever guarantee you that you will see your money again. Basically, you’re unprotected in this matter, and can only rely on the exchange that might want to pay damages.

 

  • No solid regulation

 

Bitcoin is not easy to tax in several countries where regulation is still ambiguous about the nature of the blockchains and cryptocurrencies. 

For example, in China, cryptocurrency exchanges are banned, meaning you cannot tax the income from your trading activity.

But in Israel, for example, crypto is taxed as an asset. So the night is young, and for every country, there are specifics you should research.

Bitcoin trading platforms

It’s really hard to give you advice about the best Bitcoin trading platforms and apps on the Internet without knowing why you want to sign up with an exchange.

You might have several objectives. 

You just want to try that new thing everybody is talking about, Bitcoin, and you don’t have time to delve into this too much. 

Or, you might be serious about investment opportunities because you have some experience with traditional trading. Then, you will need exchanges well-suited for day trading.

If you’re just a beginner and want to buy Bitcoin with fiat, or, in other words, with a credit card or a bank account, you can go for CEX.IO or Coinbase. The latter is especially popular in the United States. 

However, the group of readers who are serious about trading should learn all about advanced options that such exchanges as UPbit, Kraken or HitBTC provide you with. These options include stop-losses, limit orders, trading indicators, trading strategies, margin trading and many other tools.

Be aware that the aforementioned list is just a rough list that can be extended with Poloniex, Binance, Bitfinex and other venues. Coinmarketcap, a famous statistics website in the niche, enlists top 100 exchanges in the world by liquidity. And this is just the top list.

Top Exchanges by Liquidity 300x143 - How to trade Bitcoin (BTC)

Binance gives you a chance to trade their native token for other cryptos, which reveals a certain decrease in trading fees. 

One of the first venues to provide users with such a feature as margin funding was Bitfinex. Although now, with the influx of DeFi solutions, this option is becoming more popular. 

As for Poloniex that has been recently bought by Circle, it is a crypto-to-crypto exchange, meaning that you can buy and sell no fiat on top of it. 

That is to say, depending on the exchange’s interfaces and functionality you might want to choose this or that venue.

Bitcoin trading apps

If you live in the U.S. you can try a famous mobile app Robinhood to not only trade traditional stocks but also Bitcoin. The distinctive feature of the app is commission-free trading. Well, almost commission-free. 

They will charge you a small fee for stock sell orders on behalf of the SEC, but will not make you pay for opening your account, maintaining it, or transferring funds to it.

If you don’t live in the States and, yet, want to utilize a crypto trading app on your phone, you can try eToro or ZuluTrade.

Bitcoin trading software

Once you gain some trading experience you can advance to the next level, which is automated trading.

This option is the best fit for those investors who already know what they are doing. With such trading software as TradeSanta, you can execute smart orders; you set your take-profit targets and earn either on selling or buying your assets. 

Crypto bots can do this all for you, but you see that it takes a little experience and the ability to calculate losses and gains in a way that your gains are higher than losses – something they call a risk/reward ratio. 

No software can guarantee you profits, it just simplifies your trading processes and saves your time.

To sum up…

Now, you hopefully have at least a rough idea of what it takes to trade Bitcoin. It’s not as hard technically as you thought but it takes a lot of time and effort not to fall into the trap of manifold details.

For example, you might be inspired by no brokers involved or volatility levels that give you a chance to day trade. 

But don’t let pitfalls fool you and mind the laws of your country as well as the hackers who are tempted to take away the money that is so easy to take away once kept in hot wallets.

If after consideration of all the pros and cons, you’ve decided to go for it and try Bitcoin trading, you have several options at your disposal. 

Crypto exchanges where you can trade crypto for fiat is a good starting point. 

With the new cryptocurrencies obtained, you can enter a more advanced venue, to trade Bitcoin to other cryptocurrencies.

And finally, once gained some experience, just set up a few bots to help you automate your Bitcoin trading.