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Trading Bitcoin is simply the act of buying or selling the cryptocurrency with the goal of making a profit. Unlike more traditional investment channels, Bitcoin trading can be done through cryptocurrency exchanges or via financial derivatives like contracts for difference (CFDs).
Because of the decentralised nature of Bitcoin, it’s not controlled by any government or financial institution. This creates something of a unique trading experience – especially if you’re new to crypto.
Traders can capitalise on Bitcoin’s price movements, influenced by factors ranging from market demand to global economic conditions. Given Bitcoin's inherent volatility, there are numerous opportunities for traders to profit, or incur losses, from short-term price fluctuations.
How does Bitcoin trading work?
GoingLong and GoingShort when trading Bitcoin
Bitcoin trading involves speculating on the cryptocurrency's price movements. This can be done by taking a long position (buy) if an increase in price is anticipated, or a short position (sell) if a decrease is expected.
Bitcoin trading can occur through cryptocurrency exchanges, where actual Bitcoins are bought and sold, or through brokers offering Contracts for Difference (CFDs). CFDs allow traders to speculate on future market movements of the price of Bitcoin without owning the actual asset, which can help in reducing overall risk.
Traders may use tools like leverage and margin, which have the potential to boost profits but also increase risks. A solid understanding of market analysis, including both technical and fundamental analysis, is essential for successful trading.
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