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Bitcoin Trading Explained - How it Works

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Do you want to trade Bitcoin, but you’re unsure how it works? If yes, here is an explanation of Bitcoin trading to help you.


The trading world seems hectic and fast-paced. However, trading doesn’t generate instant wealth, contrary to how people portray it in popular culture. Instead of pushing sporadic buttons, traders make informed decisions while implementing effective strategies.

Initially, people thought about financial markets like stock markets, exchange-traded funds, and foreign exchange when trading. CFDs or contracts for difference and options were also some of the most talked-about choices. However, things are different with the entry of cryptocurrencies like Bitcoin.

How people trade and those involved are some of the aspects of trading that have changed over time. Today, people are using platforms like to purchase and sell Bitcoin for profits. Such platforms do the hard work for traders. That’s because they use robots to analyze trades and provide the information a trader needs to make informed trading decisions.

Traditionally, trading in the financial markets required considerable funds to invest in the activity. However, the changing tides in the financial markets have altered this as Bitcoin and other digital currencies present more opportunities. The clientele and modus operandi have evolved in the financial markets.

The blockchain and internet eras have made trading accessible to more people across the globe. What’s more, traders have lower entry levels as the capital requirements reduce. Nevertheless, the trading spirit is still the same. Traders have many possibilities. Additionally, whether a trader achieves their desired outcome remains risky.


How Trading Differs from Investing

Investment and trading are different activities. The timeframe is the primary differentiating factor for investing and trading. When a person invests in an asset, they make a long-term commitment to it. A person makes a short-to-medium commitment when purchasing and selling an asset for a profit. And that’s what trading entails. An investor aims to build profit gradually by buying and holding on to an asset for a long time. A trader looks for any opportunity to profit from the purchase and sale of an investment.


Bitcoin Trading Explained

Bitcoin trading involves the purchase and sale of this cryptocurrency. The volatility and dynamic force of this cryptocurrency add a new dimension to this digital currency. That’s because Bitcoin trading enables it to settle into a global market. The price volatility that characterizes its trading creates the opportunity for benefiting from the activity.

When trading Bitcoin, a person aims to capitalize on the chance to purchase it at a low cost and then sell it at a higher cost. And purchasing Bitcoin when the price is relatively low means you will pay a relatively low amount of your fiat money to acquire this cryptocurrency. And when you sell Bitcoin when the price is high, you get a high fiat cash amount for selling a low Bitcoin amount.


What is Bitcoin Price?

Bitcoin doesn’t have a specific price. Crypto exchanges determine the price of this cryptocurrency. Essentially, the amount a person pays for Bitcoin depends on the crypto exchange where they purchase it. And Bitcoin exchanges show their bid price when purchasing this digital currency.

Therefore, before you purchase Bitcoin, check its price on different platforms. That way, you can know the lowest and highest Bitcoin price. Also, familiarize yourself with how the crypto market works and factors that may influence the price. How people engage with Bitcoin and the price they are willing to spend on it are some of the factors that affect its cost.


Final Thoughts

Bitcoin is a virtual currency with no central authority controlling it. Its issuance and price depend on factors like the amount people are willing to spend on it. What’s more, the global adoption of this cryptocurrency is growing globally. But before trading Bitcoin, take your time to learn how it works and why it’s attracting more traders and investors.


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This area of the site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

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