Simple steps in trading bitcoin




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Simple steps in trading bitcoin

  • Guide for Noobs

    Simple and Not A Lot of Money

setup an account on coinbase.com, buy your coins, walk away until next year or later, fees are ~1.5% which is $1.5 USD for a $100 USD of coinnote coinbase does have an option to buy via credit card instead of a bank account, fees are ~4% when you do that, your credit card company may charge more if it considers it a cash transfer

Guide for Not Noobs

Less Simple

-setup an account on coinbase.com, move dollars into your account, setup an account on gdax.com (same company, same login), move your cash from coinbase to gdax, buy your coins on GDAX at Market, fees are cheaper 0.25% versus 1.5%

-consider buying alternative coins supported by coinbase

No Fees

-all of the above but use GDAX’s Limit/Buy, zero fees, but you have to wait for the market to dip below your buy price

More Money Available

-setup several Limit/Buy orders at different price points to capture dips when you are away

More Control but More Complex

-it’s possible coinbase could go out of business, move some or most of your coins to a personal hardware wallet like a Trezor or Ledger Nano S, made in Czech Republic and France respectively



-consider using other exchanges with different fees and coin support

-consider buying other alternative coins supported by other exchanges

You Are Very Responsible

-create a paper wallet, put it in a safe, be warned it’s like a visual bearer instrument, if you lose it or someone takes a picture of it…it’s gone, but you have complete control over your money/asset

DO NOT EVER

-buy more than you can lose, it’s early wild west days, the market could easily come crashing down

-panic sell, the market fluctuates regularly by 20%, thus far it has ALWAYS recovered, people that try to sell during a fall/dip and buy at the bottom usually miss time it and lose

-store your keys on your computer or phone unless its small amount, these are the two most vulnerable routes to hacking and simple hardware failure resulting in loss

-attempt to daytrade and time the best prices unless your real life job is day trading

-get addicted to watching the market, pay attention watch for dips, but don’t let it crowd out your work or free time

-keep a LOT of cash or coin in an exchange, it is very easy to mistype and buy or sell far more than you meant to, exchanges can disappear with your coins

-buy a hardware wallet from anyone other than the company who makes it, i.e. do not buy one on Amazon, it is possible some third person hacked it and could steal your coin

PROBABLY DON’T

-limit sells until the far future when market volatility is down, flash crashes have happened and recovered, if you had all your coin in limit sells it would be gone

-margin trade unless your real life job is day trading

-stop buys or stop sells unless your real life job is day trading

DO

-hold your coins, your coin may be worth x10 or more in value in the future, e.g. if bitcoin replaced gold, bitcoin would be worth ~x70 the current value

-buy small amounts over time DCA, this might not seem intuitive but it spreads your risk out, reduces risk of buying at all time highs (ATH) and more likely to catch lows (dips), a fluctuation of $100 in price is small if the eventual value is worth x10 or more in the future

-keep a small amount of cash on an exchange always, when there is a lot of traffic/trading which happens during dips, you are much more likely to be able to make trades on an exchange rather than with your own wallet

REMEMBER

-if you don’t have your coin in your own wallet, it’s not your coin. this is not a problem until you have a lot of value and you want to keep it safe from a bankruptcy, unscrupulous people/exchanges, or unforeseen acts. if it’s a small amount compared to your income it’s an acceptable risk, if not then move it to a wallet

-in the days of fake news not everything you read is true, in fact there are armies of people shilling for ‘pick a random coin’; some are malicious, some uninformed, and some willfully uninformed

-if your value starts to become large, dig deep into how your asset/currencies work just like you would for any other purchase, understanding how it works helps you understand if it will be a success, e.g. understand the difference between PoW vs PoS or what a hard fork is

-some coins especially newer ones are scams, a good indication of if it is not a scam is how long the coin has been around

-most bitcoin hard forks so far have not been successful with some exceptions

-btc is the accepted short-name for bitcoin on most (but not all) exchanges, xbt is also common in EUR-land

Other Risks

-holding your own coin requires personal responsibility, it is easy to lose and not be able to recover it if you are not careful

-again, do not buy more coin than you can lose

-transaction speeds which are slow are a serious problem in bitcoin scaling

-there is less innovation and more argument going on in bitcoin than some other coins, bitcoin is large enough that consensus is difficult, future change is less likely than with some other coins, there are other side solutions to bitcoins problems that may not require bitcoin to change much

-bitcoin.org IS the generally accepted bitcoin website, NOT bitcoin.com

-important other risks compiled by /u/themetalfriend

-coinbase has insurance up to $250k USD for you USD Wallet which DOES NOT cover your bitcoins or other crypto currencies, they claim to have separate insurance for your crypto currency but it is unclear how much

Community

there are a lot of memes

-hodl, GameKyuubi mistyped hold and it spread

-to the moon, where everyone hopes the price will go

-coin on a rollercoaster, it is highly volitile market you will see this during fluctuations

-this is gentlemen, via /u/Liquid_child , here

-lambo/roadster, a car people want to buy when they get rich

-the cost of pizza, early days someone bought a pizza for 10,000btc which is worth over ~80million USD today

-tesla/vehicle with a bitcoin chart, /u/cytranic posted a picture that spread



-intersting guide by /u/stos313 , here. I do not agree with everything but it has a lot of useful information.

CORRECTIONS

Edit: Adding in user comments.

Edit: Crosslinking to a more Beginner Version.

Edit: Note in an earlier edit of this guide I said.

note that most of the development on bitcoin is by employees of one company, it is open source but their priorities may not align with the community

This is not true. Blockstream appears to have a high representation but not an overwhelming amount. You can compare blockstream’s employee page and bitcoin’s commits in the last year. Thank you to /u/lclc_ , /u/trilli0nn , and /u/Holographiks for pointing this out.

Edit: Clarification that FDIC insurance does NOT cover crypto currency/assets.

Edit: Clarity on who owns bitcoin.org

Good Luck and Hodl.

Please comment if your experience is different. Or call out things I missed.