This is how Bitcoin trading works

How does it work?

Trading in crypto currencies takes place via a Bitcoin broker. It is not necessary to buy Bitcoins, as there is only speculation on rising or falling prices of the digital currency. Since the BTC price is not subject to the usual stock market fluctuations, this offers both advantages and of course risks. In principle, however, trading transactions are always associated with a risk of loss, which can be reduced by selecting a reputable and trustworthy online broker for trading, who will take various measures to for risk minimization and support. To find the best exchange take a look at Bestbitcoinexchange.net.

But how exactly can we invest in Bitcoins now?

Since a Bitcoin is currently expensive, a Bitcoin broker such as eToro can be used to invest in only a fraction of a Bitcoin. This works using a CFD (Contract of Difference). Note that the Bitcoin price is very volatile, so you need to use a trading strategy. With eToro, it is alternatively possible to copy an experienced trader using the broker’s discovery tool.

As with any other underlying on a trading platform, a buy position can be opened for the underlying Bitcoin if it is assumed that the price will rise, or a sell position if it is assumed that the price will fall. Of course, the market should be closely monitored beforehand. For example, a price low to buy and a high to sell are favorable. Register for your FREE Trial Version

Traders should keep in mind that the digital currency Bitcoin is new and that it has only been around for a few years, so the data on the price trend is still small. It is therefore very difficult to identify long-term patterns with the help of technical analysis. However, since the overall Bitcoin trend is positive, it can also be assumed that the price will probably continue to rise.

Selection of the Bitcoin Broker

Until now, the selection of online brokers who offer trading with Bitcoins has been very clear. In general, the selection of brokers should meet various requirements, as this is the only way to ensure secure trading. Therefore the following factors should be considered:

  • Security: The security or seriousness of a broker should always be in the foreground, because the highest yield is of no use if the broker practices dubious business practices. Government regulation and/or the subordination of a financial supervisory authority already provide indications of the seriousness of a broker. In addition, it should always be checked how the broker deals with customer money. It is important, for example, that customer funds are kept separate from the business account so that they are not lost in the event of the broker’s insolvency. A serious broker will always give his customers open and honest information about such procedures, which is why traders should not be afraid to ask questions about security.
  • Yield level: Of course, traders want the yield to be as high as possible. In principle, however, online brokers should not only be compared in terms of yield. Some brokers, for example, offer sensible measures to minimise risk and pay out a slightly lower return in return. Such a broker is particularly recommended for beginners in Bitcoin trading.
  • Demo account: Not every online broker offers a demo account, which can be accepted by professional traders. For beginners, however, it is important that they can first try out Bitcoin trading with play money and gain their first experience without immediately losing capital.
  • Customer support: A customer service that is easy to reach is worth a lot. It is advantageous if the support of the broker can be reached quickly by telephone or via live chat, so that questions can be answered quickly and problems clarified.

In addition, care should be taken to ensure that personal data is protected and that financial transactions are secure. Serious online brokers also publish the relevant information on their website.

Conclusion

Digital currencies are trendy, so that Bitcoin trading can offer attractive returns. It is important that a reputable and trustworthy broker is selected. Only with a reliable partner at your side and the necessary risk and money management will the chances of high returns increase.