Bitcoin Basics - Exchanges & Margin Trading
All currencies in the world go up and down over time – and Bitcoin is no different. If you want to invest in Bitcoin, then you should consider learning how to trade and looking at ways of making a profit from falling and rising Bitcoin prices. Here you can learn how to trade Bitcoin and reap the benefits of price arbitrage to the fullest. Bitcoin trading is easy as compared to other financial instruments because of its entirely digital existence and easy to transfer mechanism. This article focuses on the basics of Bitcoin trading and is a must read for anyone who owns Bitcoins and is interested to start trading instantly.
The first and the foremost step is choosing the best Bitcoin exchange. The basic principles of bitcoin trading are same; however, the procedure can vary from one exchange to the other. One should prefer the exchange which has a good history of secure and ethical operation. There are some other important things to consider.
Check if the exchange is offering the best responsive trading interface for a decent volume of trading.
Some exchanges offer only "Options", while others offer "Binary Options" as well. Binary options constitute of bets on future prices and shouldn’t be preferred by dedicated Bitcoin traders, who have better options Choose according to your need.
One should also look for online exchanges that allow Contracts for Difference(CFDs) program for price speculation via fiat currency (In this case losses and gains are paid in cash). Such exchanges also offer a variety of other markets to trade, such as Forex and commodities. Some exchanges let you enter and exit market not more than four times a day, which is not very suitable for day trading, so you have to be very vigilant while selecting an exchange for trading. Some of the one's I use are >>
coinexchange.io>> https://www.coinexchange.io/?r=3621f5f3
cex.io>> https://cex.io/r/0/up104950721/0/
First, you have to make an account on a Bitcoin exchange and confirm that account via email. After confirmation, the exchange verifies your personal information that you provide according to Anti-Money Laundering (AML) rules and Know Your Customers (KYC) policy.
You would find a menu bar with some of the tabs like Funding, Trade, Security, Settings, etc. on the dashboard of the exchange. Remember, tabs can vary from exchange to exchange depending on its features. Generally, under the trade tab you place a ‘‘sell order” and mention the volume and type of the currency you wish to sell e.g., Bitcoin, and the price you want to sell at. When someone places a matching buy order, the exchange will do the transaction and the currency will be then transferred to your account. You can also buy bitcoins by placing a “buy order”. If you are selling Bitcoin for fiat currencies, you will have to withdraw those funds to your bank. Due to occasional liquidity problems, some exchanges take an inordinate amount of time to release your funds.
Margin Trading:
It is the most common mode of trading to make profits in exchanges. Margin trading of the Bitcoin means that seller borrows Bitcoins to make a trade. For example, if you have 1 Bitcoin, and you effectively bet on the price going down, you may be able to use that 1 Bitcoin to borrow 10 Bitcoins at 1:10 leverage. In other words, you either make 10 times the profit or 10 times the loss. This is also known as a short sale of Bitcoin. In a long sale, the seller enters into a regular kind of trade known as spot trading and does the transaction by delivering Bitcoin that he owns utterly. There is a limit on borrowing. In most exchanges, the borrowers are not allowed to borrow more than 70 percent of the bitcoins sold in a short sale. The fiat proceeds of any short sale are considered as collateral for the borrowing of the Bitcoins until those Bitcoins are payed back.