Bitcoin trading can be extremely profitable for professionals or beginners. The market is new and highly fragmented, with huge spreads. Arbitrage and margin trading are widely available. Therefore, many people can make money trading bitcoins.
Bitcoin’s history of bubbles and volatility has perhaps done more to bring in new users and investors than any other aspect of the cryptocurrency.
Each bitcoin bubble creates hype that puts Bitcoin’s name in the news. The media attention causes more interest, and the price rises until the hype fades.
Each time Bitcoin’s price rises, new investors and speculators want their share of the profits. Because Bitcoin is global and easy to send anywhere, trading bitcoin is simple.
Bitcoin trading has very little barrier to entry compared to other financial instruments. If you already own bitcoins, you can start trading almost instantly. In many cases, verification isn’t even required to trade.
If you are interested in trading Bitcoin, many online trading companies offer this product, usually as a contract for difference or CFD.
How To Exchange Bitcoin For Other Cryptocurrencies
With CFDs posing such a risk, some may just decide it’s better to own their own bitcoins. And those looking to trade it like stocks still have plenty of options.
Bitcoin is nearly a decade old now, and in its wake are hundreds, if not thousands, of other cryptocurrencies that have sprung up in an attempt to compete with it.
Some competitors have become mainstays in cryptocurrency news, but none have yet matched Bitcoin’s value.
If you think cryptocurrencies are the future or are just fascinated by one or two particular ones, there are ways to trade some of your bitcoins for them.
You’ll need to ensure you have the right Bitcoin wallets and use the right Bitcoin exchanges, depending on which cryptocurrencies you choose; they’re not all as universal across exchanges as Bitcoin.
In previous Bitcoin articles, we’ve discussed other popular cryptocurrencies that one might look to invest in, such as Ethereum, Ripple, and Litecoin.
Other highly valued cryptos out there, like Bitcoin Cash and Dash (each of which boasts a much faster transaction time than Bitcoin), can be considered.
Bitcoin owners who use Coinbase as their wallet use Coinbase’s own exchange, GDAX, to buy and sell their cryptocurrencies.
If you have bitcoins in your Coinbase wallet, GDAX exchanges Bitcoin Cash, Ethereum, and Litecoin. Go to GDAX and login with your information.
At the top of the page, click “Select Product” and pick which crypto you want to buy with Bitcoin by choosing BCH/BTC, ETH/BTC, or LTC/BTC. On the left side of the page are the options for Market, Limit, and Stop.
Entering the amount of BTC, you want to spend for Market and pressing Buy allows immediate purchase at current market prices. Limit tries to order at the specified price or better. A Stop order becomes active after a specified price is reached, and you have the option for it to be a market order or limit order.
Popular exchange Bitfinex has similar instructions and lets you trade BTC for Ethereum, Litecoin, and Bitcoin Cash.
It actually offers far more cryptocurrencies to trade for – dozens of them, in fact. Bitfinex also offers several more options for your orders, such as OCO, aka One, Cancels Other – placing a pair of orders with the understanding that if one order is completed, the other is immediately cancelled.
Gemini and Poloniex are other fairly prominent Bitcoin exchanges that let you trade for Ethereum, while Kraken also offers Dash and Ripple. Trade fees vary from exchange to exchange.
Find an Exchange
As mentioned earlier, there is no official Bitcoin exchange. Users have many choices and should consider the following factors when deciding on an exchange:
Regulation & Trust
Is the exchange trustworthy? Could the exchange run away with customer funds?
If you must deposit fiat currency, an exchange that accepts payments from your country is required.
What percent of each trade is charged?
Large traders will need a Bitcoin exchange with high liquidity and good market depth.
Based on the factors above, the following exchanges dominate the Bitcoin exchange market:
Bitfinex is the world’s #1 Bitcoin exchange in terms of USD trading volume, with about 25,000 BTC traded daily. Customers can trade without verification if cryptocurrency is used as the deposit method.
Bitstamp was founded in 2011, making it one of Bitcoin’s oldest exchanges. It’s currently the world’s second-largest exchange based on USD volume, with a little under 10,000 BTC traded daily.
Bitcoin exchange is based in China but trades in USD.
Coinbase Exchange was the first regulated Bitcoin exchange in the United States. With about 8,000 BTC traded daily, it’s the world’s 4th largest exchange based on USD volume.
Kraken is the #1 exchange in terms of EUR trading volume at ~6,000 BTC per day. It’s currently a top-15 exchange in terms of USD volume.
Bitcoin Trading in China
Global Bitcoin trading data shows that a large percentage of the global price trading volume comes from China. It’s important to understand that the Chinese exchanges lead the market, while the exchanges above simply follow China’s lead.
The main reason China dominates Bitcoin trading is that financial regulations in China are less strict than in other countries. Therefore, Chinese exchanges can offer leverage, lending, and futures options that exchanges in other countries can’t.
Additionally, Chinese exchanges charge no fees, so bots are free to trade back and forth to create volume.
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How To Transfer Bitcoins From Wallet To Wallet
Depending on which wallet you have and which currency you want to trade, you may need to move your bitcoins to a different wallet first.
It’s a little annoying but not as inconvenient as you might assume. Coinbase allows for transfers both on a desktop and via your phone.
After you’ve set up a new wallet elsewhere, pick the Coinbase wallet you want to send from, click the Send button (found by clicking the paper airplane on the iOS app or the “+” on Android), enter the number of bitcoins to send and the email or wallet address to send to, and then confirm your details before sending.
You can also use your other wallet’s QR code on mobile to send bitcoins.
How To Sell Bitcoins
Maybe when you mean you want to trade bitcoins, you just want to trade them away. You think it has peaked, and you’ll never get a better investment, or you may as well pull out now before the losses get worse.
Or maybe it’s just stressful to watch Bitcoin shoot up and crash down constantly and just want to use money again.
Whatever the reason may be, selling bitcoins isn’t difficult. Many ways you buy Bitcoin double as a place where you can sell it.
All the exchanges mentioned above will let you sell Bitcoin as well. Some minor details may vary, but a general list of instructions on these exchanges for selling BTC for USD is:
- Click “Sell” on the exchange.
- Specify the wallet you want to sell bitcoins from and the amount you wish to put up for sale.
- Select where you want your money deposited; often, this is a bank account you already linked to the wallet when you first signed up.
- Confirm your information before placing the sell order.
The time it takes for the funds to find their way to your bank account will depend on how long it takes for a sale to go through and how busy the exchange is when processing.
Direct trading websites like LocalBitcoins and Paxful connect buyers and sellers without additional third parties.
The buyer deposits money into the seller’s bank account, and upon showing proof, the seller can send the bitcoins from their wallet to the buyer’s.
Some direct trading sites offer other methods of paying or accepting money, including gift cards and gift card codes, PayPal, and Venmo.
The idea of not needing a third-party exchange can be tempting, especially if you’re worried about how secure they are.
But direct trades come with plenty of risks, too. By contacting the buyer directly, they leave the trading method up to you, including potential in-person exchanges, which are incredibly risky to do with a stranger.
These methods can also be annoying, frustrating, and more time-consuming than preferred. If a buyer is unreliable, it can take even longer if you end up successfully selling them.
Depending on your preferences on different factors when it comes to selling, you’ll likely find a way that suits what you want. Just check how Bitcoin is doing before you make the sale. You never quite know where it’ll be on any given day. Or hour. Or minute.
Bitcoin may be a superb investment vehicle if you’re seeking a short-term profit due to its high liquidity.
Due to their great market demand, digital currencies may also be a long-term investment.
We hope this article was helpful to you and you will use each easy step whenever you’re trading Bitcoin.