Bitcoin Trading Crash Course: How to Trade Bitcoin for Fun and Profit

David CoxFebruary 6, 2020Last Updated: May 6, 2022

What Is Bitcoin Trading?

Bitcoin investors typically buy and hold Bitcoin until the time is right to sell. When the right time comes, no one can say for sure. Bitcoin has been around since 2008, and the price has gone up and down like a rollercoaster.

Bitcoin traders, however, have to study the market to buy and sell regularly based on their market predictions. They come from all walks of life and include former stock traders and cryptocurrency enthusiasts.

If you’ve traded anything before, then you’ll already have a good understanding of how different market works. That’ll give you an advantage over complete beginners. That said, there are still some marked differences between trading Bitcoin and anything else.

Most Bitcoin trading takes place on cryptocurrency exchanges. But there are also many other platforms to trade on, and you’re about to become familiar with them below.

How to Understand Bitcoin Trading Terminology

Welcome to a whole new world of lingo. Although some of the terms used in Bitcoin trading are pretty straightforward, others require a bit of explanation.

Here are eight terms to get under your skin, so you know what’s going on in the Bitcoin trading community.

1. Exchanges and Brokers

Exchanges are either trading platforms like NordikCoin or peer-to-peer marketplaces like LocalBitcoins. Brokers places where you can buy Bitcoin directly but often at a higher price.

2. Order Book

An order book is where all the orders for buying and selling on a given platform are listed. Buying orders are often called “bids,” whereas selling orders are referred to as, “asks.”

3. Bitcoin Price

As opposed to fiat money, there is no universal price point for Bitcoin. Instead, the term Bitcoin price refers to the value of the last trade conducted on any given platform you use.

4. Volume

Volume refers to how many Bitcoins are traded over a specific period of time. When the Bitcoin price goes up, the volume will also increase as traders try to buy as much as possible.

5. Market Order

A market order is when you request to buy or sell a specific number of Bitcoins, and the trading platform then matches you with one or more buyers until you’ve reached the desired amount.

6. Limit Order

A limit order is similar to a market order, with the difference that you set a specific limit on the buying or selling price. If your price isn’t met, then your order won’t be fulfilled.

7. Stop Order

A stop order is an automated order that will sell your Bitcoin if the price drops below a certain amount. It’s a great way to minimize your losses since the price of Bitcoin fluctuates.

8. Market Maker (or Taker)

If you create a limit order that cannot be fulfilled, then you’re a “market maker.” If you’ve created a limit order that is easily fulfilled, then you’re a “market taker.”

How to Understand the Different Bitcoin Trading Methods

As with any other kind of trading, there are many ways to trade Bitcoin and many different strategies to employ. Here are some of the most common methods you’ll encounter or try out.

1. Day Trading

Day trading, also known as margin trading, is when you buy or sell Bitcoin based on price

fluctuations over the course of one day. You typically buy in the morning and sell in the evening.

2. Scalping

Scalping is similar to day trading, except you buy and sell many times during the course of the day. The philosophy is to limit risk and make as many small-scale profits as possible.

3. Swing Trading

Swing trading refers to the method of watching the swing of the price curve. You buy or sell when you notice a trend, then you sell or buy once you think the trend is coming to an end.

4. Passive Trading

Passive trading is the most straightforward method. You simply set the price you’d like to buy and sell at, and then you let the automation handle the rest. It’s still recommended that you keep an eye on the market from time to time.

How to Understand Bitcoin Trade Analysis Methods

Bitcoin, and cryptocurrency in general, are infamously volatile. Many people have tried to predict the price fluctuations, but only a few have succeeded. Here are some of the methods they use.

1. Fundamental Analysis

This method looks at news stories, technical developments, government regulations, and the Bitcoin industry as a whole to predict how the price will fluctuate in the near and distant future.

2. Technical Analysis

Rather than looking at the big picture, this method uses past price fluctuations and volumes to predict patterns that will emerge in the future. It looks at the raw numbers and nothing more.

How to Read Bitcoin Price Charts

Finally, you may want to look at Bitcoin price charts to gain some insights. You’ll eventually come across one or all of the charts we’ve listed below, so it’s a good idea to know what they are and what they show.

1. Japanese Candlestick Charts

The candlestick chart shows the opening and closing prices, as well as the highest and lowest price points within a specific time period. This price chart has been used for over 400 years.

2. Bull and Bear Market Charts

Bull and bear graphs show whether there is an upwards (bull) or downwards (bear) trend. The chart is named because bulls attack upwards and bears attack downwards.

3. Resistance and Support Level Charts

This price chart shows the price points Bitcoin has historically been unable to rise above (resistance level) and drop below (support level.)

Ready to Trade?

Phew! That was a lot of knowledge pressed into one article. But know you should have a basic understanding of how Bitcoin trading works, and how you can get started.

Ready to trade some Bitcoin? Let’s go! Apart from this, to know more about the Bitcoin future value predictions visit our forecast section.

NordikCoin is one of the safest and most secure Bitcoin exchanges in the world. You can create an account in a matter of minutes and make your first Bitcoin trade right away.

You don’t need to worry about finding a Bitcoin wallet, either. NordikCoin automatically sets you up with a wallet, and your funds are kept safe with our multi-signature cold storage solution.