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Bitcoin trading can be extremely profitable for professionals or beginners. The market is new, 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 crpytocurrency.
Each bitcoin bubble creates hype that puts Bitcoin’s name in the news. The media attention causes more to become interested, and the price rises until the hype fades
Each time Bitcoin’s price rises, new investors and speculators want their share of profits. Because Bitcoin is global and easy to send anywhere, trading bitcoin is simple.
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Compared to other financial instruments, Bitcoin trading has very little barrier to entry. If you already own bitcoins, you can start trading almost instantly. In many cases, verification isn’t even required in order to trade.
If you are interested in trading Bitcoin then there are many online trading companies offering 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 your 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 even just fascinated by one or two particular ones, there are ways to trade in some of your bitcoins for them. You’ll need to make sure you have the right bitcoin wallets and use the right bitcoin exchanges, depending on which cryptocurrencies you’re choosing; 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 as well, such as Ethereum, Ripple and Litecoin. There are other highly valued cryptos out there, like Bitcoin Cash and Dash (each of which boast a much faster transaction time than bitcoin), that can be considered.
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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 also 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 either 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 for an 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 canceled. Gemini and Poloniex are two 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?
Location – If you must deposit fiat currency, and exchange that accepts payments from your country is required.
Fees – What percent of each trade is charged?
Liquidity – 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 – Bitfinex is the world’s #1 Bitcoin exchange in terms of USD trading volume, with about 25,000 BTC traded per day. Customers can trade with no verification if cryptocurrency is used as the deposit method.
Bitstamp – 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 per day.
OKCoin – Bitcoin exchange based in China but trades in USD.
Coinbase – </p>
Coinbase – 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 – 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 very large percent 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 because financial regulations in China are less strict than in other countries. Therefor, 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.
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 first move your bitcoins to a different wallet. It’s a little annoying, but not as inconvenient as you might assume. Coinbase allows for transfers both on 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 amount of bitcoins to send and the email or wallet address to send to, and then confirm your details before sending. On mobile, you can also use your other wallet’s QR code to send bitcoins.
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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’re never going to get a better investment, or you think 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 of the ways you bought 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 are:
- 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 to; 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 will take 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 buyer and seller directly without any 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 admittedly be a tempting one, especially if you’re worried about how secure they are. But direct trades come with plenty of risks, too. By putting you directly in contact with the buyer, they leave the method of trading up to you, including potential in-person exchanges, which are incredibly risky to do with a stranger. Some of these methods can also be annoying, frustrating and more time-consuming than preferred, and if a buyer is unreliable, it can take even longer should you end up successfully selling them at all.
Depending on your preferences on different factors when it comes to selling, you’ll likely find a way that suits what you want. Just make sure to check how bitcoin is doing before you make the sale. You never quite know where it’ll be any given day. Or hour. Or minute.