Online Bitcoin trading is a well-known term in the digital age, an era where everyone is trying to generate secondary income thanks to the power of the mobile devices and platforms available to us.
In particular, Bitcoin has caught the attention of not only investors but also the best modern companies that have understood the potential of blockchain. The best way to benefit from these assets, even if you don’t fully understand the technical aspects, is certainly to buy them through CFDs.
Bitcoin: What is it?
Before trading cryptocurrencies like Bitcoin online, it is essential to at least understand how these tools work. In a nutshell, Bitcoin is a digital currency that works thanks to blockchain, a cutting-edge technology that guarantees security and transparency.
Basically, the blockchain is a chain of blocks within which transactions take place, which are approved in a fully decentralized way. Because of this, Bitcoin’s main goal is to be a stand-alone tool that lets you exchange money quickly while minimizing fees and cutting out middlemen.
Of course, this is just the tip of the iceberg of Bitcoin online trading, as there are many technical aspects related to blockchain that we will not cover in this section. What you are interested in knowing, in this case, is how to invest in Bitcoin without commissions, as this can often attract smaller investors.
The Meaning of Crypto Trader: Bitcoin Traders
The meaning of Crypto Trader applied to Bitcoins, as is easy to guess, is those who are able to develop short-term or long-term trading strategies by analyzing chart trends. They can also make very accurate predictions about the market by looking at a lot of data.
Among the various information available on the blockchain, in fact, you can monitor volumes, demand, supply, indices such as the Fear & Greed Index, and many other elements that can help you understand whether the market will go up or down.
But if you want to learn how to trade Bitcoin without having to become an expert in statistics, you can use one of the many platforms that offer clear, easy-to-read data without having to move from place to place.
Among the many, nextmarkets is without a doubt the best. As we will see later, in fact, it allows you to invest in Bitcoin without paying commissions simply and quickly, using the aforementioned CFDs.
Bitcoin CFDs: What Are They?
Before we understand what Bitcoin CFDs are, we should start with the pure definition of CFDs. A CFD stands for a contract for difference, literally a contract for difference. Basically, it is an agreement made between the buyer and the seller in which it is stipulated that the buyer will pay the seller the difference in the price of Bitcoin from the moment of the contract until its expiration.
Thus, the focus is on the entry price and the exit price of the market. The difference lies in the fact that Bitcoins are not held in all respects, as what is held will be the Bitcoin CFD contract. In this sense, online Bitcoin trading has become much easier for several reasons.
First of all, one should not use complicated platforms to try to buy Bitcoin. Second, you can opt for different shapes based on your predictions and your sentiment towards a particular asset, as we will see later.
In a nutshell, investing with Bitcoin becomes viable even for those who are not true Bitcoin traders, as they will not have to analyze certain parameters, especially in the short term.
Investing in Bitcoin: Long or Short?
Anyone who has traded online at least once using assets such as cryptocurrencies knows very well that the volatility of this market is so extreme that it can develop a very large number of strategies. Most of them, unlike the stock market, can also be short-term.
Investing in the short term means trying to get as much profit as possible in a short period of time, which can be a day (intraday trading) or a week, but also a few hours. That’s why platforms like nextmarkets offer the ability to trade Bitcoin using both long and short positions.
The long position allows you to bet in favor of Bitcoin. Therefore, if the price of Bitcoin increases compared to the time of the CFD, the investor makes a profit. If the price drops, the investor will take a loss.
On the contrary, with the short position, you are aiming against Bitcoin. So if the asset price drops compared to when you bought the CFD, you make a profit. On the other hand, if the price goes up, you will lose. Therefore, it is good to try to monitor the price, especially during false breakouts or so-called bearish or bullish periods.
Also Read: How to Trade Forex with 100 Euros
Online Bitcoin Trading: What is Leverage?
On online trading platforms such as nextmarkets, you will find many additional functions, including so-called leverage. Professional Bitcoin traders who want to take advantage of every chance to make money often trade with leverage.
Trading with leverage is essentially equivalent to increasing your position in an asset, even if you don’t physically own the funds. In short, the broker lends funds so that the investor can bet on the desired asset.
When you take a 10% profit but position yourself with a leverage of x2, your profit automatically increases to 20% because the position is equivalent to twice the funds you physically hold.
All this, however, is also true in reverse, as when you trade on leverage you can be liquidated as long as you put funds on margin to cover your position.
What are stop-loss and take-profit?
When trading cryptocurrencies, stop loss and take profit can also be set on Bitcoin CFDs as well as Buy Limits. But let’s start from the basics: stop losses are used to cover very large losses, while profits are used to take profits during a rise.
If, for example, you buy Bitcoin CFDs when BTC is priced at $30,000, with predictions of $35,000, you might decide to set a profit of $32,500 with half equity. This allows you to already make a profit even if you haven’t fully reached your goal yet, minimizing the risk.
The stop loss is very similar, but on the contrary: you set a price that, if exceeded, automatically triggers a sell, so you don’t lose too much money. If you buy at $30,000, for example, you can set an SL at $27,500 so that if BTC drops below that price, you don’t continue to lose profits.
Clarifications about the purchase limit
After setting a stop loss or a take profit, you can take advantage of the Buy Limit function. This is a function that lets you buy an asset automatically when its price reaches the price you set.
If, for example, you set an SL at $27,500 and that value moves to $22,000, you can use the liquidity returned thanks to the stop loss to buy lower. This way, you can strongly average the price without having to constantly monitor the charts.
True Bitcoin traders take all of these tools into consideration, so they can focus on any market news and updates to use to their advantage. This is the only way to make real profits with both short and long-term strategies, regardless of the average investment time.
The important thing, in these cases, is not to be overwhelmed by the commissions. Fortunately, commissions will only be a distant memory with nextmarkets.
Invest in Bitcoin without commissions.
Many think that it is not possible to invest in Bitcoin without spending a single cent on commissions or fees. In fact, the best online brokers, like nextmarkets allow you to trade Bitcoin CFDs without the hassle of having to pay every time you make a trade.
This allows you to fully understand how to trade Bitcoin without the anxiety of having to enter and exit a position just once. It turns out, in fact, that it is not possible to carry out certain investment strategies due to the high costs of some platforms.
In fact, transaction fees, or transaction costs, are one of the governing elements of the Bitcoin blockchain. When you decide to understand how to trade in Bitcoins, in fact, you often end up spending a lot on transactions without completing anything.
It is worth transferring them to the wallet, exchanging them, and buying and selling them. At nextmarkets, however, this is not the case thanks to CFD trading.
Long-term or short-term trading strategies: how to predict trends?
Before deciding whether to trade Bitcoin online or not, it is always good to understand how much time you want to dedicate to your investments. There are those who want to commit their money for just one month, and those who want to create a real income in 10 or 15 years.
In short, every Bitcoin trader has their own investment method and their own way of managing their money. The “trick”, if it can be defined that way, is always to invest only what you are willing to lose, based on both your income and your expenses.
To predict the trends of Bitcoin or any other asset, the on-chain data, the cost of blockchain fees, the global hash rate, and a lot of other complicated information for the inexperienced must be analyzed. Those who invest in Bitcoin CFDs, in fact, tend to focus on the main news in the sector.
Even a simple tweet from an influential person can make the price go up or down within hours.
Alternatives and diversification
Diversification in the world of cryptocurrency investing is key to minimizing risk. Ethereum and Stellar Lumens are well-known alternatives to Bitcoin that can be bought on the best online exchanges. You can also buy them on nextmarkets.
Bitcoin CFDs are undoubtedly the best way to invest in cryptocurrencies, limiting the risks of an extremely volatile market. Trading with stop loss, take profit, and leverage, in fact, allows you to maximize the potential for economic returns by always having the situation under control. That’s why they are the most popular solution for anyone looking to trade Bitcoin online.
As we have seen by looking at the experiences of many individuals, Bitcoin is worth investing in. The important thing is to use the best online brokers like nextmarkets.