A Trader's Guide To Trading Bitcoin Cryptocurrency Trading | Bitcoin at CAPEX

The recent exponential surge in Bitcoin’s growth has attracted countless new investors. With numerous trading options, strategies, technologies, etc., available, it’s vital that you amass more knowledge on how to trade Bitcoin.

Bitcoin is the most famous cryptocurrency. With the rising in online trading options, you must evaluate and choose the best platform available for trading Bitcoin. We at CAPEX are a global fintech brand launched in 2016, aiming to make online trading of CFDs easier and rewarding for people.

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Author:

Thomas Walker

Last Updated on:

14/03/2023

Topic:

Trading

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What Is Bitcoin Trading?

While trading in Bitcoin, the intention is to buy Bitcoin when its price falls and sell it when the prices rise to make a profit. Making those wise moves while trading depends on how well you can contemplate market movements in the cryptocurrency’s price. Mostly, people buy Bitcoins from a cryptocurrency exchange and expect its price to rise shortly to sell and make a profit.

But, nowadays, traders are capitalising on Bitcoin’s price changes by using derivatives like contracts for difference (CFDs) more and more to conjecture on the rise and fall of prices. Trading accounts on trusted platforms like ours at CAPEX lets you make the most of financial derivatives like CFDs.

Trading through a CFD account with us at CAPEX allows you to speculate on the rise and falls in the price of Bitcoin on the market without actually taking ownership of it. It’s a very convenient and efficient way to trade Bitcoin. . This article on how to trade Bitcoin will help you in making more informed decisions while trading Bitcoin.

How To Trade Bitcoin?

The arrival of Bitcoin, the first digitally coded currency in the world, marked the birth of a new asset class itself. A decade following its inception, cryptocurrencies like Bitcoin have secured a place of their own among good investment options.

The first thing you need to have for making your first investment is a cryptocurrency exchange account. Additionally, personal identification documents, a secure internet connection, a convenient mode of payment, and a personal wallet is also required. Apart from cryptocurrency exchanges, Bitcoin ATMs and peer-to-peer (P2P) exchanges are commonly used to buy Bitcoin. Read the following sections to gather an overall idea on how to invest in Bitcoin.

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Choosing A Cryptocurrency Exchange

Setting up an account at a cryptocurrency exchange serves as a platform for exchanging your fiat currency for cryptocurrency. Furthermore, they provide buying, selling, and holding facilities for cryptocurrencies. It is also recommended to use an exchange that allows withdrawing your crypto to a personal wallet for better safe-keeping. The process here is pretty simple: every time you withdraw funds or execute orders, the exchanges charge a transaction fee.

It would help if you always chose an exchange that has a license to operate within your local area of jurisdiction. Furthermore, it is vital to evaluate exchange features like maximum deposit amount, transaction fees, daily withdrawal limits, etc., before choosing one.

When you buy Bitcoins through an exchange, you take up the responsibility of permanent ownership of Bitcoins. However, if you are not interested in ownerships, you can resort to trading Bitcoin derivatives on online trading platforms. At CAPEX, we provide a platform that facilitates trading CFD derivatives by speculating its price deviations without actually owning them.

Connecting A Payment Source

Once you have decided on an exchange of your choice, you need to connect the exchange to a payment source. Depending on the exchange, you may have to provide personal documents like identity cards, license, etc. Moreover, the kind of documents you have to provide depends on the rules and regulations of the region you live in. The transaction fees and fund release times vary from exchange to exchange, depending upon your payment option. It is also essential to research and compare the fee amounts associated with different banks and exchanges before selecting one.

The exchange ensures your identity after verifying the details you provided. After that, you provide a suitable payment option by connecting your bank account directly or providing debit cards. Even though you may also use credit cards, it is wise to avoid them on account of cryptocurrency price changes. Some banks do not encourage the idea of crypto-related deposits or exchanges. Subsequently, it is necessary to ensure that you encounter no such problems with your bank while withdrawing or depositing. However, trading CFDs with us at CAPEX absolves you from all of the above hassles.

Choosing A Safe And Secure Storage Option

Cryptocurrency wallets serve as a more safe and secure option for storing your digital assets. Furthermore, holding Bitcoin in your wallet away from your exchange prevents losing Bitcoins if the exchange were to get hacked. Let us first understand the two main types of wallets – hot wallets (online wallets) and cold wallets (offline wallets):

Hot Wallets

Hot wallets or online wallets run on devices connected to the internet like smartphones, laptops, computers, etc.

Even though hot wallets enable accessing your assets and transactions faster and easier, they are highly susceptible to hacking. Hence, it is necessary to take precautions like strong passwords, two-factor authentication, secured internet connections, etc. These wallets are mainly used for actively trading small amounts of cryptocurrency.

Cold Wallets

Cold wallets (offline wallets) have a far lesser risk of being hacked as they have no connections to the internet. A paper wallet that you can generate from certain websites is the most secure form of a cold wallet. A hardware wallet is another common type of cold wallet that stores user’s assets in a USB drive device. Cold wallets are meant for people with long term investments because you cannot easily sell or trade the Bitcoin stored.

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Buying And Taking Care Of Your Investment

Now that you have chosen an exchange, connected a payment source and selected a wallet, you can buy Bitcoins and store them. After purchase, you can use your Bitcoin for:

Making purchases and transactions online.

You can perform day trade or can trade using derivatives like Bitcoin CFDs (contract for differences) at CAPEX.

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What To Do After Buying Bitcoin?

After learning how to buy Bitcoin and once you have become part of the Bitcoin network comes the question: how should you use it?. Well, there are numerous things to do with Bitcoins; below, we will be discussing three things you could do:

Payment Method

You can use Bitcoin to make purchases or to pay for services online. A large number of big establishments and small-scale merchants are now providing Bitcoin as a payment option. Compared to the past few years, Bitcoin has become more mainstream. Now, you can use Bitcoin to book a holiday on Expedia or buy movies and apps on the Microsoft store. Apart from this, you can use Bitcoin to buy clothes, food, electronic items, pay bills, or make donations.

HODL Bitcoin

You can HODL (hold on for dear life) Bitcoin if you have no intentions to sell or trade it shortly. HODL is an investment philosophy that suggests holding on to Bitcoin for a long period of time as an investment strategy.

Investors fond of this strategy firmly believe in Bitcoin’s prospects despite being well aware of the asset’s price change. However, this strategy requires investors to ride out the many uncertainties regarding Bitcoin price fluctuations without selling them, and waiting for the price to reach a certain target.

Trading Bitcoin

Those who are not fond of the HODL strategy can resort to trading that relies mostly on the asset’s prince change in the short term. Capitalising on the rapid variations in market price, you need to sell at high points and buy at low points. While investment is a slow and calculated approach to making money, trading is a fast-paced way.

Nowadays, rather than trading Bitcoins, trading their derivatives like CAPEX Bitcoin CFDs are becoming increasingly popular. Trading Bitcoin derivatives doesn’t require buying or selling Bitcoins. Instead, you are taking a position on Bitcoin’s price rise by either going long or by going short. The major benefit of trading derivatives is that it allows you to mitigate the risks associated with constantly varying market prices.

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Trading Bitcoin CFDs: Why Choose CAPEX?

Trading Bitcoin CFDs allows you to speculate on the price of Bitcoin without actually owning the digital currency. Moreover, you get to leverage your position as you only have to put up a fraction of the cost beforehand. Financial products like CFDs facilitate predicting whether prices will go up or down on underlying assets like Bitcoin. Furthermore, they enable you to trade based on how you think prices will move without procuring ownership of the assets. Since trading Bitcoin CFDs take place on dedicated platforms online, you must thoroughly go through them before choosing one. Trading at trusted online performs like CAPEX comes with its many benefits like:

Our award-winning educational content and trading tools, advanced charts, and updated market analysis are always there to support you while trading CFDs on Bitcoin and other markets.

Trading Bitcoin CFDs with us doesn’t require an exchange account or wallet, so don’t worry about security or transaction fees.

Moreover, we at CAPEX operate under Key Way Investments Limited, an entity licensed and regulated by the Cyprus Securities and Exchange Commission (CySEC).
At CAPEX, we also offer a CFD demo trading account to hone your trading skills.

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Pros And Cons Of Trading Bitcoin And Its Derivatives

Like any investment, Bitcoin also comes with its own set of pros and cons. We will be discussing a few of them below

Pros Of Trading Bitcoin And Its Derivatives

Price Changes Of Bitcoin: The rhythm of the price changes in the Bitcoin market is what makes trading so exciting, but also what makes it so risky. The constant rise and fall of prices serve as opportunities to make the most out of trading. Moreover, carefully studying and analysing price movements lets traders go long or go short, depending on whether they think price would go up or down. However, take in mind that, as with any investment, risk is always present.
Risk Management: Like any market, the severe price fluctuations of Bitcoin and other cryptocurrencies in the digital market gives rise to risks. However, trading in Bitcoin derivatives like CFDs with us at CAPEX allows you to better manage the risks associated with the changing nature of the Bitcoin prices, by using, for example, stop-loss and take-profit orders, when such orders align with your strategy. Nevertheless, it’s important to know that trading risks can’t be completely mitigated.
Available Market Hours: Another advantage of trading is the availability of a market that is open 24/7 all year long. The absence of a centralised body to govern and regulate the market hours makes trading further convenient.
Liquidity Improvements: Liquidity is the measure of how quickly the conversion of cryptocurrency into cash takes place without making an impact on the market. Additionally, cryptocurrency falls under the illiquid category as even comparatively small trades make a considerable impact on the market. However, when you trade Bitcoin derivatives on platforms such as CAPEX, it potentially improves liquidity as the prices are sourced from different venues on your behalf.
Leveraged Exposure: Trading Bitcoin derivatives such as CFDs are considered a leveraged product. It enables you to open a position with a deposit amount worth just a fraction of the total trade value. Subsequently, you gain huge exposure to a cryptocurrency market while using a comparatively lesser amount from the capital. Take in mind that trading with leverage is risky, as you could potentially multiply your losses as well.

Cons Of Trading Bitcoin And Its Derivatives

High Inherent Risk: Bitcoin trading comes with a high inherent risk as the immanent complex design of trading processes makes valuation highly difficult.
Over-The-Counter (OTC) Transactions
Numerous instances state that OTC Transactions don’t necessarily follow compliance procedures all the time. Subsequently, this leads to the development of new risks and difficulties for the traders to overcome.
Short-Term Fluctuations: Even though trading with derivatives helps mitigate the long-term risks involved, short-term fluctuations can still cause considerable losses.
Higher Exposure To Potential Loss Of Capital: CFD trading is risky by nature due to leverage. In that sense, trading crypto CFDs requires experience and is not appropriate for beginners. As previously stated, having a greater exposure to a market means a higher exposure to potential loss of capital.

Conclusion – Trade Crypto CFDs at CAPEX

Bitcoin is a highly volatile asset prone to rapid fluctuations in price, making trading an opportunity for large returns and, at the same time, a tremendous risk. Before making any decisions, you must learn and gather more insights to trade responsibly.

We at CAPEX offer a dedicated platform that deals with trading Bitcoin derivatives like CFD Trading. Our advanced features will help mitigate some of the risks associated with trading. Furthermore, our professional seven days a week support and trading academy makes CAPEX your choice of a lifetime for Bitcoin CFDs trading. Sign up now at CAPEX to experience this exciting world of online trading.

How to Trade Bitcoin – FAQ

✔️ How safe is an investment in Bitcoin?

🔐 How can we store Bitcoin

💱 Do we need an exchange account for trading in Bitcoin CFD

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Key Way Group Ltd is the holding company of Key Way Investments Ltd, JME Financial Services (Pty) Ltd and Key Way Markets Ltd. Key Way Investments Ltd operates CAPEX.com and is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) (license no. 292/16) with branches in Romania and Spain, and registered with the Romanian Financial Supervisory Authority (ASF) (registration no. PJM01SFIM/400013), and with the Spanish National Securities Market Commission (CNMV) (registration no. 129), respectively. JME Financial Services (Pty) Ltd operates za.capex.com and is authorized and regulated by the South African Financial Sector Conduct Authority (FSCA) (license no.37166). Key Way Markets Ltd operates ae.capex.com and is authorized and regulated by the Abu Dhabi Global Market (ADGM) Financial Services Regulatory Authority (license no. 190005). KW Investments Ltd operates sc.capex.com and is authorized and regulated by the Seychelles Financial Services Authority (FSA) (SD020).