Bitcoin price is currently trading at around $58,350, with a market cap of $1.1 trillion as at the time of this writing. While there are different ways to trade Bitcoin online, CFD trading with a platform like Skilling is a popular option. This method allows you to speculate on Bitcoin’s price movements without actually owning the cryptocurrency, meaning there's no need to worry about setting up or managing crypto wallets, which can sometimes be complicated and risky.
In this article, we’ll walk you through why trade Bitcoin, the steps to trade it online, how to use technical analysis for better trading decisions, and tips for managing your risk when trading.
Why trade Bitcoin (BTC)?
Trading Bitcoin could be an attractive option for several reasons:
- High volatility: Bitcoin’s price can change rapidly, creating opportunities to gain from these price movements. However, while this volatility could bring gains, there are also risks involved including potential to lose funds.
- Global popularity: Bitcoin is the most well-known cryptocurrency, with millions of people trading it worldwide. This high level of interest often leads to significant market activity, providing more opportunities to trade.
- 24/7 market: Unlike traditional stock markets, Bitcoin can be traded 24/7. This means you can trade at any time, whether it’s day or night.
- Decentralized nature: Bitcoin operates independently of governments or central banks, which could appeal to those looking for an alternative to traditional currencies.
- Potential for growth: Many believe that as more people and institutions adopt Bitcoin, its value could continue to grow, offering long-term trading opportunities. Check: Bitcoin price prediction (2024-2050).
Steps to trade Bitcoin CFDs online with Skilling
1. Create a Skilling account
If you’re new to Skilling, you’ll need to sign up for an account. Go to the Skilling website and click on "Sign Up." Provide the required personal information and complete the verification process. This usually involves uploading some identification documents.
2. Deposit funds
Once your account is set up, deposit funds into your trading account. Skilling offers various payment methods like credit/debit cards, bank transfers, and e-wallets. Choose the one that’s most convenient for you.
3. Search for Bitcoin (BTC)
Log in to your Skilling account and use the search bar to find Bitcoin. It’s usually listed as BTC/USD (Bitcoin against the US Dollar). Click on it to view the current market price and other details.
4. Analyze the market
Before placing a trade, take a moment to review the charts and any technical indicators that Skilling provides. This will help you decide if it’s the right time to buy or sell Bitcoin.
5. Choose to buy or sell
Decide whether you think Bitcoin’s price will go up or down:
- Buy (Go long): If you believe the price will rise, click the "Buy" option.
- Sell (Go short): If you think the price will fall, click the "Sell" option.
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6. Set your trade details
Enter the amount you want to trade. You can also set additional parameters:
- Stop-loss order: This automatically closes your trade if the price moves against you by a certain amount, helping to limit your losses.
- Take-profit order: This closes your trade once your target profit level is reached, locking in your gains.
7. Execute the trade
After setting your trade details, review everything to make sure it’s correct. Then, click "Execute" to place your trade. Your position will now be open, and you can monitor its progress in real-time.
8. Monitor and close your trade
Keep an eye on how Bitcoin’s price is moving. When you’re ready to close your position, or if your stop-loss or take-profit levels are hit, you can close the trade to realize your profit or loss.
9. Risk management
- Regular review: Continuously evaluate the effectiveness of your trading strategy. This includes reviewing both successful and unsuccessful trades to understand what worked and what didn’t.
- Adjust strategy: Based on your review, make necessary adjustments to your trading plan. This might involve changing your risk parameters, like adjusting the size of your stop-loss or take-profit, or modifying the indicators you use for making trading decisions.
- Diversification: Don't put all your funds into a single trade. Spread your investment across different assets or trading instruments to mitigate risk.
- Risk capital: Only trade with money you can afford to lose. It’s vital to ensure that potential losses from trading do not affect your essential financial obligations.
10. Withdraw your funds
If you’ve made a profit and want to withdraw, you can do so by selecting the withdrawal option in your Skilling account. Choose your preferred withdrawal method, and your funds will be transferred to you.
Key technical indicators and chart patterns when trading Bitcoin online
When trading Bitcoin online, using technical indicators and chart patterns could help you make smarter decisions. Here are some key ones to know:
1. Moving Averages (MA)
This graph is used for illustrative purposes only
Moving averages smooth out price data to help you identify trends. For Bitcoin, you might use the 50-day and 200-day moving averages. Assuming Bitcoin is currently trading at $60,000. The blue line represents Bitcoin's actual price over 100 days. To help understand trends, we use moving averages. The orange line shows the 20-day moving average, which smooths out daily price fluctuations and gives a clearer view of short-term trends. The red line is the 50-day moving average, which does the same over a longer period.
Moving averages are like a "trend filter," helping traders see the bigger picture and make better decisions. When the short-term average (orange) crosses above the long-term average (red), it could signal a potential upward trend.
2. Relative Strength Index (RSI)
These graphs are used for illustrative purposes only
Here’s the chart showing Bitcoin’s Relative Strength Index (RSI), assuming Bitcoin is currently trading at $60,000.
The RSI is a momentum indicator that measures the speed and change of price movements. The upper chart shows Bitcoin's price over 100 days, while the lower chart displays the RSI. The RSI values range between 0 and 100. The dashed red line at 70 marks the overbought threshold, and the green line at 30 marks the oversold threshold.
If the RSI is above 70, it might indicate that Bitcoin is overbought and could be due for a pullback. If it's below 30, it might suggest that Bitcoin is oversold and could be due for a price bounce.
3. Bollinger Bands
This graph is used for illustrative purposes only
Here’s the chart showing Bitcoin’s Bollinger Bands, assuming Bitcoin is currently trading at $60,000.
Bollinger Bands are a tool used in trading to understand the volatility of a price. The blue line represents Bitcoin’s price over 100 days. The orange line is the 20-day moving average, which shows the average price over 20 days. The green and red lines represent the upper and lower Bollinger Bands, respectively.
These bands widen when Bitcoin's price is more volatile and narrow when it's more stable. The space between the bands helps traders see potential overbought or oversold conditions.
4. MACD (Moving Average Convergence Divergence)
These graphs are used for illustrative purposes only
Here’s a simple explanation of the chart showing Bitcoin’s MACD (Moving Average Convergence Divergence), assuming Bitcoin is currently trading at $60,000:
The MACD helps traders understand whether the price of Bitcoin might be about to go up or down. The first chart shows Bitcoin’s price over 100 days. The second chart shows two lines: the MACD line (in purple) and the Signal line (in orange).
When the purple line crosses above the orange line, it could be a sign that Bitcoin’s price might go up (a good time to buy). When the purple line crosses below the orange line, it might mean the price could go down (a good time to sell). The black dashed line helps see where these crossovers happen.
5. Candlestick patterns
This graph is used for illustrative purposes only
Here’s a simple explanation of the Bitcoin candlestick chart, assuming Bitcoin is currently trading at $60,000:
A candlestick chart shows how the price of Bitcoin moves within a specific period. Each "candlestick" represents one day. If the candlestick is green, it means the price went up that day, closing higher than it opened. If it's red, the price went down, closing lower than it opened. The thin lines above and below each candlestick show the highest and lowest prices of the day.
This type of chart helps traders see patterns and make decisions based on price trends.
Tips on managing risk when trading Bitcoin
- Set stop-loss orders: Automatically close your position if Bitcoin’s price drops to a certain level, limiting potential losses.
- Use take-profit orders: Secure profits by setting a price at which your position will automatically close when gains are reached.
- Avoid over-leveraging: Leverage can magnify both gains and losses, so use it cautiously.
- Diversify investments: Don’t put all your money into Bitcoin; spread it across different assets to minimize risk.
- Stay informed: Keep up with market news and trends to make informed decisions and adjust your strategy as needed.
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Conclusion
Bitcoin has been making headlines of late. There's so much optimism that could propel the price higher, including the coming 2024 US elections and the Bitcoin ETFs like Blackrock's IBIT that continue to buy Bitcoin on a daily basis. However, when trading Bitcoin, it's important to be careful. The market is highly volatile, and without proper risk management, you could face significant losses. Always use tools like stop-loss and take-profit orders, avoid over-leveraging, and stay informed about market trends. Source: ig.com
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