It might not come as a surprise that cryptocurrency has become hot property today.
The cryptocurrency market stood at $4.25 billion in 2021 and this is expected to grow at a compound annual growth rate of 12.2% from 2022 to 2023.
This only means one thing- cryptocurrency is here to stay and it will dominate in the future.
Trading crypto has gained high popularity and several brokerages have made the process quick and convenient for traders.
One of the most popular and talked about cryptocurrencies is bitcoin. In 2009, it was valued at a fraction of a dollar but in just 8 years, it exceeded $10,000 in valuation.
It has become a household name over the past few years and became an integral part of an investor’s portfolio.
After the pandemic, cryptocurrencies have become mainstream financial assets and any pullback is considered to be temporary.
When all the financial assets dipped in value during the pandemic, bitcoin sprung to life. It rose to $23,000 in December 2020 and hit $55,000 in February 2021.
Bitcoin crushed all levels of highs and become one of the most sought-after cryptocurrencies.
This led to a massive surge in the number of people willing to trade bitcoin in the hope to take home big money.
If you are keen to trade too, we will explain how to buy bitcoin and make the most of your trade.
How To Trade Bitcoin In The UK
Trading bitcoin in the UK has become very easy and convenient today. You must have a source for the coins and a personal wallet to withdraw money from.
The U.K. has several cryptocurrency exchanges that help with cryptocurrency trading. Here are a few steps to follow:
1.) Choose If You Want To Go Short-term Or Long Term
There are always two ways to invest- short-term or long-term. In short-term trading, you will make the most of the temporary price swings in bitcoin and create and execute a strategy.
It is riskier than long-term trading but also offers higher returns if you do it right.
The second option is long-term trading where you buy and hold bitcoin for weeks or even months. You sell it at a later date and make a profit.
Those who believe that the value of bitcoin will rise in the long run and do not want to engage in day trading should take a long-term position.
2. Choose A Trading Method
There are different ways to trade bitcoin. Let’s look at them.
A.) Trade Against Each Other
The first method is to trade a pair of cryptos against each other or a fiat currency. Here, you aim to buy low and sell high.
This method will require timing the market well and it needs a lot of research, but it is an ideal choice if you want to avoid high risks.
B.) Trade Derivatives
Just like stock derivatives, you can trade cryptocurrency derivatives.
This means you can bet on the market and while there are various types of derivatives like options, futures, and swaps, but they all come with unique pros and cons.
You can use leverage for derivatives trading which can help magnify the losses and gains. Derivatives are ideal for leverage but not suitable for beginners.
C.) Bitcoin CFDs:
Contract for difference is a type of derivative where you place bets on the price movement of an asset and use leverage without owning the asset.
You do not buy and sell but only place a bet on the platform you are using. It is ideal for those who have an experience in forex trading but not suitable for beginners.
3.) Choose An Exchange
Now that you are ready to place a trade, choose the right cryptocurrency platform and see what kind of orders it allows.
Does it offer leverage and derivatives? It should be easy to use and have low commission.
Do your research and pick the right platform since it can make a lot of difference to trade execution and the amount of money you pay in commissions.
4.) Place Your Trade
You are now ready to place a trade. Decide the amount you want to invest in bitcoin and open your account with the brokerage.
You can either place a market order where you buy or sell at the current market price and the trade is immediately executed.
Or you could choose a stop limit trade where you set the stop price and the limit price so when the asset reaches the stop price, it will at least sell for the limit price when possible.
Conclusion
Bitcoin trading is here to stay and will become mainstream in the coming years. If you have always wanted to trade bitcoin, now is the time to make the move.
The value of bitcoin has significantly declined this year which makes it an attractive entry point.
