While there have been sites that allowed people to play stockbroker for over a decade on the Internet, they came with high fees. While cryptocurrencies don't allow you to buy stocks in traditional companies (not yet anyway) they have opened up a financial trading platform for users around the world with minimal fees and transactions measured in the minutes.
Investing in any speculative asset can be risky. I am not an investment banker and this article should not be taken as concrete financial advice. Rather, it is designed to give the reader an idea of what is out there and how to get started trading bitcoin for fiat money and other cryptocurrencies.
Like every currency in the world, Bitcoin and other cryptocurrencies vary in value every day. It is a cliché, but bitcoins are worth exactly what someone is willing to pay for one, and that number changes on a daily and even hourly basis.
Due to the fluctuation in value, astute people can theoretically make money simply buying and selling various currencies as it rises and drops in value compared to other currencies.
Whether you’re looking to trade or simply exchange currencies will influence which exchange you use. There are now hundreds of cryptocurrency exchanges, and many are geared to the needs of specific types of customers.
If you’re new to digital currency, it is most likely that you simply wish to purchase some bitcoins while learning more about what you can do with them once you own them.
If you’re ready to know more, you will want an exchange which provides sufficient support for transacting and clear information.
Regardless of your level, however, it is important to select an exchange which is easy to understand, is secure and has a good service history. For this reason, CoinTelegraph recently conducted a thorough review of 10 of the most popular exchanges, the results of which can be viewed here.
As we discuss further in the reviews series, the all-round recommended exchange for entry-level users we found to be Kraken. Despite being a relatively new exchange, it offers peace of mind in its security credentials, excellent functionality and full accountability, meaning even if you yourself make a mistake, you can be assured that you are in full control of your coins at all times.
A similarly good option for beginners is Bitstamp, a name which has been often mentioned in the community as it has gathered considerable popularity. This exchange is used by both organizations and individuals and is considered like Kraken to be very stable.
For technical features, which are more important if you’re interested in learning about trading, Hitbtc is hard to beat, however. Not only is its technology state-of-the-art, the site offers a novel demo mode, meaning you can ‘learn by doing’ in order to avoid any unwanted results from your first trades.
“Buy Low, Sell High”
Once you are trading, making money depends almost entirely on your ability to stick with the old adage: “buy low, sell high.” Just like in stocks, everyone knows the saying, but few are actually able to stick with it. It is simply too tempting not to jump onto a rising tide or abandon a sinking ship. Not following the crowd is a surprisingly hard thing for many people to do, especially when it comes to financial investments.
What would be useful would be a system that helps you predict what the currency is going to do next. Predicting the bitcoin market is like predicting the stock market, which, in turn, is like predicting the next still un-computed digit in Pi. But looking at past performance can be a relatively reliable way to predict what is going to happen next.
Candlestick graphs are the most popular bitcoin price chart among traders and that is because it lays out a lot of related information in an easy to read format that fits into a small space.
Each graph can be broken down by a predetermined measurement of time. Within each point, a candlestick graph will show a cryptocurrency's high price, low price, opening price and closing price. This can provide some idea on how far a coin is likely to rise and fall within the next time period and can help you make investment decisions based on that.
Another tool to predict the rise and fall of a currency is to be extremely knowledgeable about it. In the cryptocurrency world, negative news generally means a drop in price while positive news means an increase in price. Theoretically, this means you should invest after hearing bad news and then sell after good news drives the price back up.
Investing is risky business. Bitcoin and cryptocurrencies like it are no different. Essentially creating wealth through speculative bubbles have burned at least as many people as it has helped over the years. But, investment previously had to go through gatekeepers and other third parties that skimmed heavily off of the investment amount. Now, with regular users investing and trading in a fluid cryptocurrency marketplace, an interesting experiment has begun.
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