When you decide to buy Bitcoin, the next question comes into play. Will you become an active Bitcoin trader? Or do you save your Bitcoins as a kind of pension pot for later?
In addition to the more traditional investment approach, Bitcoin is also suitable for day trading. The Bitcoin price is volatile. This means that it is mobile. For example, the price can move up more than 10% in one day, but also down. This is because the amount of money currently in Bitcoin worldwide is still relatively low compared to other financial assets. Think of shares, bonds, gold and silver. A Bitcoin trader uses the volatility of Bitcoin. As a day trader, you mainly do this based on technical analysis of the Bitcoin price chart. Price patterns can provide an indication of future price development. Buying and selling moments are mainly determined on the basis of support and resistance levels.
The first step of your career as a trader is to create an account on a reliable exchange. We recommend Bitvavo or Binance for the active trader. Read our Bitvavo review or Binance review. But of course you can also compare all Bitcoin providers there.
There are several ways to be successful as a Bitcoin trader. Roughly speaking, these can be divided into 4 different groups. The best-known “trading” method is HODL. Where you buy Bitcoin and don’t actually trade. But what other methods are there actually? And which one suits you?
Scalping
This is the most active form of trading. Often several trades are made per day with a focus on many small profits. For example, scalping involves someone buying $1,000 worth of Bitcoin and selling it an hour later for $1,040.
Day trading
This involves responding to short-term market movements. These market movements are caused, for example, by interest rate decisions by the FED or government regulations in the field of cryptos. A position taken will be sold again within 24 hours.
Swing Trading
Probably the most popular way of trading Bitcoin. Trends become visible by looking at the market based on technical analysis. These short-term positions that are taken are normally longer than with day trading Bitcoin.
HODL / Passive Bitcoin trading
Bitcoin is bought by a trader and then held. The term HODL stands for Hold-On-for-Dear-Life and is exactly what a passive trader does. Bitcoin is seen by these traders as a long-term investment.
Starting out as an active trader is not something you just do. It is important that you know what you are doing. After all, you don’t want to lose your hard-earned money. Some tips that will help you become a successful trader:
As a trader you can always easily convert your Bitcoins into euros. You can often exchange your Bitcoins for euros at a broker or an exchange. You then have your euros transferred to your bank account. The transaction fee and the speed at which you receive your euros back into your bank account differ per platform. It is therefore wise that you also compare Bitcoin providers on transaction speed.
