How to Safely Trade Bitcoin for Beginner Traders – Many people are interested in making Bitcoin a promising investment instrument in the future because of the fantastic price increase in the last 1 year.
So, it’s no wonder that the quantity of Bitcoin trading volume continues to increase. In Indonesia alone, the total number of Bitcoin users has reached 2 million users, you know.
What are the advantages of Bitcoin so that people are busy chasing it? What is the working step of Bitcoin? Can Bitcoin trading be done by beginners? Find answers to your questions in this article.
How Bitcoins Work
As a new Bitcoin user, you really don’t have to understand in detail how Bitcoin works because it’s too complicated to explain. However, there are more than one important part that you should know as a basic knowledge:
In Bitcoin trading, there is always a Blockchain that records every Bitcoin coin transaction that has ever occurred. If you cannot enter the Blockchain, it means that the transaction has not been completed.
As the name implies, Blockchain is a block flow, where each block contains a new set of transactions and is connected to the previous blocks. Everyone can validate Blockchain by tracing all the records of all transactions from this second to a decade back when Satoshi Nakamoto created Bitcoin.
From the understanding of Blockchain above, you might think hard, who manages this Blockchain? The answer is, nothing is very similar. No organization or individual holds a copy of Blockchain.
In other words, the Blockchain is made so that it automatically works on its own, so that nothing can damage the Blockchain on purpose. The blockchain is held by every pc that mines the Bitcoin currency.
The term miner refers to people who mine Bitcoins. Bitcoin miners are in charge of maintaining old transactions and ensuring new transactions are recorded. In addition, the calculated miner generates or mines new blocks.
These new blocks are useful for storing new transactions that have occurred. As compensation for the task of mining new blocks, miners are given more than one Bitcoin as a bonus. This incentive ensures that there are enough people to mine so that the Bitcoin network process has always been running until now.
The last part of Bitcoin that users need to pay attention to is the wallet. As the name implies, a wallet is a digital wallet owned by Bitcoin investors.
Actually, the meaning of this wallet itself is not quite right because its function is not to store Bitcoins, but to store private keys that allow the owner to increase transactions in the block flow in the public key. Bitcoin deposits will be in the form of transaction records within the Blockchain.
Broadly speaking, Bitcoin trading for beginners can start with mining or shopping for Bitcoin. Are you interested in mining? Buy? Or could it just always be doubtful about the safety of Bitcoin investment? Don’t worry, because the security of Bitcoin transactions is supported by sophisticated cryptographic techniques as protection.
Choose a Bitcoin Trading Style
Bitcoin trading for beginners begins with an understanding of your personality to choose the appropriate Bitcoin trading model.
In terms of time, the trading model is divided into four types, namely day trading, scalping, swing trading and HODL. Each of these trading models has their own level of flying hours and assumption techniques. In more detail, let’s review the discussion below:
Traders with this model can use the time frame from H1 to H4 in determining trends and order concepts. Day trading is very suitable for those of you who are busy with the main job. So when you are always working, you don’t have to pay attention to the chart continuously.
A day trader tends to focus on the direction of the current trend. Usually, they will only connect 1 or 2 positions according to the direction of the trend with entries based on mature technical and fundamental assumptions.
The challenge for day traders is that they must be able to place the right entry point with a measurable risk level and profit objective. Again, this trading model requires both technical and fundamental assumptions.
The scalping trading style has the most frequent frequency in the other 3 trading models. A scalper will look for opportunities in small movements that occur, so that in a day you can make tens to hundreds of entries. That is, the open and close periods of scalping order positions run very fast in minutes, even seconds.
Scalping is very suitable for traders who have 3-4 hours of free time every day for trading and focus on charts with time frames such as M5, M15 and M30.
The scalper must be adept at executing open/close positions so that there are no words to close positions too soon or too late. If you want to become a scalper, you must be armed with risk management and mature emotional control to diligently choose the position quantity and transaction size. Apart from that, the speed of opening/closing positions is also really needed.
Most of the common mistakes traders make with the scalping model are the inability to control their emotions and too many open positions without considering the total risk, which results in overtrading.
The swing trading style focuses on tracking opportunities at the highest and lowest reversal points, both when the movement is bearish or bullish.
This type of model is suitable for traders who are already busy with their main job or don’t like looking at charts for too long. In terms of time and period of open/close entry, swing trading does not have a certain time because the main object is TP (Profit Target).
Therefore, close positions tend to be paid when the price has approached or touched the TP level. In other words, the period of open/close entry is too relative, depending on each individual.
Want to try swing trading? You can use Fibonacci Retracement as a reliable indicator because it can help determine stop loss points and profit targets.
HODL (Hold On for Dear Life) is a favorite mantra of long-term Bitcoin traders. HODL is a kind of slang meaning within the cryptocurrency community that describes a stance to always invest and not give up in the face of a price drop.
HODL recommends traders to hold Bitcoin tightly and not be careless in selling it no matter how high the price of Bitcoin skyrocketed. When the price of Bitcoin falls, HODL traders don’t sell it, but instead compete to buy more.
If you are interested in trying the HODL trading model, pay attention to your financial condition first. The choice of this trading model is very important because it affects the resilience of your funds as an investor.