How to Make Money with Bitcoin for Beginners (2024)

Bitcoin was established in 2009. It was the world’s first cryptocurrency and is still the most popular and best known.

A cryptocurrency is a digital or virtual currency that is secured and traded using cryptography – a system of complex mathematical algorithms or codes.

Bitcoin was created by an anonymous person (or group of people) known as Satoshi Nakamoto. They aimed to establish an electronic cash system that was completely decentralised, operating on a peer-to-peer system.

Bitcoin is not owned by a central authority or government institution. It can be sent directly from user to user without any need for a middle-man, such as a bank.

Users can remain anonymous through the use of encrypted keys so bitcoin transactions cannot be traced back to them. Bitcoins can also be transferred and withdrawn anywhere around the world.

Bitcoin is notoriously volatile, as has been well-documented in the media in recent years. This high volatility means there is the potential to make good profit margins. But never forget this comes with risks.

With the added incentive of low entry levels, trading bitcoin has become an attractive option for many. However, anyone trading in any market should be aware that there are always risks involved.

In this article, we explore the basics of trading bitcoin, looking at how the cryptocurrency operates, reasons to consider trading bitcoin and what you will need to know before you get started.

Review of the Best Bitcoin Traders for Beginners for October 2024:

1. AvaTrade – Best for Comprehensive Forex and Cryptocurrency Trading
2. ProfitFarmers – Best Semi-Automatic Bitcoin Trader
3. Uphold – Best Bitcoin Trader With No Commission or Account Fees

AvaTrade offers a user-friendly platform that caters well to beginners interested in Bitcoin trading. With its intuitive interface and educational resources, AvaTrade provides an ideal environment for those new to the world of cryptocurrency.

The platform offers access to Bitcoin trading alongside various other cryptocurrencies, allowing beginners to diversify their portfolios.

AvaTrade also provides educational materials such as webinars, tutorials, and market analysis, which are invaluable for novice traders looking to learn the ropes of Bitcoin trading.

Additionally, AvaTrade's customer support is available to assist beginners with any questions or concerns they may have, providing guidance and support as they embark on their trading journey.

Overall, AvaTrade's beginner-friendly approach and comprehensive resources make it an excellent choice for those looking to start trading Bitcoin with confidence.

Best Semi-Automatic Bitcoin Trader

ProfitFarmers – The World's First Free Crypto Trading Co-Pilot

ProfitFarmers is a semi-automatic copy trading platform that produces AI trading signals combined with education and advanced tools to trade better and no trading experience is needed.

It is partnered with Binance.com exchange to buy/sell cryptocurrencies that are paired in BTC, USDT and BUSD.

Sign up now to use their platform for free and upgrade to its $21 trial offer for 21 days to access all their features!

• Copy trading signals
• Advance Features (Trade Guardian, Laddering Mode, Market updates, etc.)
• Trade Doctor/Session with one of their trading expert
• Pro trader 5x blueprint (helps you 5x your account)
• And many more

Best for: Diverse asset support
Type: App & web

Uphold stands out as a top choice for purchasing Bitcoin and other cryptocurrencies in the UK.

With over 10 million users spanning 150 countries, Uphold makes buying, trading, and storing assets, including Bitcoin and 250+ other cryptocurrencies, simple and secure. Uphold prioritizes safety and transparency, operating on a 100% reserve model to hold user funds securely.

Additionally, the platform regularly updates real-time asset and liability data, accessible to the public every 30 seconds, ensuring transparency.

Glossary of Key Terms for Bitcoin Trading

• Cryptocurrency – A digital or virtual currency that uses cryptography for security.
• Bitcoin – The first and most well-known cryptocurrency, created in 2009 by an unknown person or group using the name Satoshi Nakamoto.
• Altcoin – Any cryptocurrency other than bitcoin.
• Exchange – A platform where buyers and sellers can trade cryptocurrencies.
• Wallet – A software or hardware device that allows users to securely store and manage their cryptocurrencies.
• Bitcoin debit card – A payment card linked to a bitcoin or other cryptocurrency wallet that allows its holder to spend bitcoins and traditional fiat currencies at merchants that accept debit or credit cards.
• Cash out – The process of selling bitcoins for fiat currency, such as USD or EUR, in order to withdraw the funds to a bank account or other payment method.
• Market order – An order to buy or sell a cryptocurrency at the best available price.
• Limit order – An order to buy or sell a cryptocurrency at a specific price or better.
• Stop order – An order to buy or sell a cryptocurrency once it reaches a certain price.
• Stop loss – A type of order that automatically sells a cryptocurrency when it reaches a specified price to limit potential losses.
• Margin trading – A trading strategy that involves borrowing funds from an exchange to leverage a larger position in a cryptocurrency.
• Candlestick chart – A type of chart used to visualize price movements over time in a cryptocurrency.
• Bitcoin fork – A change in the protocol of the Bitcoin blockchain that results in a new version of the blockchain and diverges from the original version. This can occur as a result of changes to the consensus rules or a disagreement within the community.

What Does BTC Mean & How Does it Work?

Unlike paper money, bitcoins are not printed. Instead, they are ‘mined’ on computers.

Bitcoin mining requires high-powered computers and a lot of painstaking work, so miners are currently rewarded with 12.5 bitcoins for every new bitcoin they create.

Around 1,800 new bitcoins are mined every day and the most that can ever exist is 21 million – this was decided by Satoshi Nakamoto when they created Bitcoin.

As well as creating new bitcoins, mining serves to verify bitcoin transactions that have been made in the past.

Miners check that blocks of transactions are accurate before adding them to the blockchain – the blockchain is the technology behind bitcoin and is a series of blocks of data providing an immutable record of historical bitcoin transactions.

Crucially, this verification checks that bitcoins are not being duplicated. The blockchain acts as a ledger that anyone can download and check, but no-one can tamper with data that has already been added to the chain.

To earn their bitcoin, miners must verify 1 MB worth of transactions and solve a complex mathematical problem, also known as a ‘proof of work’.

To solve this problem, they must essentially guess a 64 digit-hexadecimal number, known as a hash, that is equal to or less than the target hash (hexadecimal is a system used in maths and computing that represents numbers using 16 different symbols, rather than the usual 10).

The chance of coming up with the correct hash is around 1 in 13 trillion and miners are racing against millions of others to be the first to complete a proof of work, so bitcoin mining is highly specialised and competitive.

Bitcoin Trading vs. Investing in Bitcoin

Bitcoin trading and Bitcoin investing are two different approaches to the cryptocurrency market.

Here are some differences between the two:

• Time Horizon – Bitcoin trading is generally focused on short-term price movements, while bitcoin investing is focused on long-term growth.

• Risk – Bitcoin trading is generally considered more risky than investing due to its volatility and short-term nature. Investing in bitcoin is considered less risky, but still carries some risk due to the unpredictability of the market.

• Strategy – Bitcoin trading requires a more active and hands-on approach, as traders need to constantly monitor price movements and make decisions based on technical analysis or other indicators. Bitcoin investing is a more passive strategy, as investors buy and hold bitcoin for the long term and do not typically make frequent trades.

• Knowledge and Skills – Bitcoin trading requires a higher level of knowledge and skills, as traders need to understand technical analysis, chart patterns and other Bitcoin trading strategies. Investing in Bitcoin requires a basic understanding of the technology and the market, but does not necessarily require advanced trading skills.

• Returns – Bitcoin trading can potentially offer higher returns in the short term due to its volatility, but also carries higher risk. Investing in Bitcoin may offer more stable returns over the long term, but may not offer the same level of potential returns as trading.

Ultimately, whether to trade or invest in bitcoin depends on your personal goals, risk tolerance and knowledge of the market.

Trading Bitcoin may be more suitable for those looking for short-term gains and willing to take on higher risk, while investing in Bitcoin may be more suitable for those looking for long-term growth and willing to take a more passive approach.

How to Buy Bitcoin

Don’t invest in unless you’re prepared to lose all the money you invest.

Buying Bitcoin involves several steps, and it's important to note that cryptocurrency investments are speculative and come with risks.

Before purchasing Bitcoin or any other cryptocurrency, ensure you have thoroughly researched and understand the investment.

Here's a general guide on how to buy Bitcoin:

Get a Bitcoin Wallet

Before you can buy Bitcoin, you'll need a digital wallet to store your cryptocurrency securely.

There are various types of wallets, including software wallets (online, desktop, or mobile), hardware wallets (physical devices) and paper wallets (printed or written records). Choose one that aligns with your security preferences.

Choose a Bitcoin Exchange

To purchase Bitcoin, you'll need to use a cryptocurrency exchange.

Some popular exchanges include Binance, Kraken and Bitstamp.

Research different exchanges and choose one that is accessible in your region and provides the services you require.

Sign Up and Verify Your Account

Create an account on the chosen exchange and complete the necessary identity verification procedures.

This typically involves providing personal information and verifying your identity with documents like a driver's license or passport.

This step is required to comply with Know Your Customer (KYC) regulations.

Deposit Funds

Once your account is verified, you'll need to deposit funds into your exchange account.

Most exchanges accept deposits in various currencies, including fiat currencies like USD, EUR, or GBP.

Place an Order

After your funds are deposited, you can place an order to buy Bitcoin.

There are different types of orders, including market orders (where you buy at the current market price) and limit orders (where you set a specific price at which you want to buy).

Specify the amount of Bitcoin you want to purchase and review your order.

Set Order Parameters

• Choose the amount of Bitcoin you want to buy. You can enter the amount in BTC or your preferred fiat currency (e.g., USD, EUR).
• Set your preferred order type. Common types include:
• Market Order: Executes immediately at the current market price.
• Limit Order: Specifies the price at which you want to buy Bitcoin. It will only execute when the market reaches that price.
• Review the order summary, including fees, before confirming.

Confirm the Order

After setting the order parameters, click "Open Trade" or a similar button to confirm your purchase.

Stay Informed

Stay informed about the cryptocurrency market and security best practices. Be cautious of phishing scams, and regularly update your wallet software for security patches.

Reasons to Buy and Sell Bitcoin in October 2024

While mining bitcoin is not a viable option for most, trading bitcoin is fairly straightforward once you understand the basic principles.

As mentioned previously, bitcoin’s volatility is one of its main attractions to traders. This means we can see rapid price swings both up and down, and if bitcoin traders anticipate the market correctly, they can make from some Bitcoin fast profits. Of course, they can also make significant losses.

Another benefit of Bitcoin for beginners is that you can trade around the clock. Most stock markets are limited to the working hours of the countries where they operate.

However, you can buy and sell Bitcoin on exchanges around the world so it is possible to trade day and night. And as bitcoin is a global currency, it is not affected by the financial stability or situation of any single country. In fact, it can go up while other markets are falling.

Finally, the relative lack of regulation makes it an easy market to get started on, as you do not need to go through a lengthy verification process.

Is Bitcoin Safe to Invest in – How to Trade Bitcoin with Minimum Risk in 2024?

Trading bitcoin can be risky due to its volatility, but there are steps you can take to trade it safely. Here are some tips to help you trade bitcoin safely:

Educate Yourself

The first step to trading bitcoin safely is to educate yourself about it. Learn how bitcoin works, the technology behind it and the factors that affect its price.

This knowledge will help you make informed trading decisions.

Choose a Reliable Bitcoin Exchange

When trading bitcoin, it's important to choose the best Bitcoin exchange that has a good reputation and takes security seriously.

Look for an exchange that has strong security measures, such as two-factor authentication and cold storage for your funds.

Use a Strong Password

When creating an account on a bitcoin exchange, make sure to use a strong, unique password.

Avoid using common passwords or reusing passwords from other accounts.

Enable Two-Factor Authentication

Two-factor authentication adds an extra layer of security to your account.

It requires you to enter a code from an authentication app or text message in addition to your password when logging in.

Keep Your Funds Safe

Don't keep all of your bitcoin on the exchange. Instead, transfer your bitcoin to a hardware wallet, such as a Trezor or Ledger Nano, which stores your private keys offline.

This will protect your funds from hacks and theft.

Start Bitcoin Trading with Small Trades

If you're a beginner Bitcoin trader, start with small trades to minimize your risk.

As you gain experience and confidence, you can gradually increase the size of your trades.

Use Stop-Loss Orders

To limit your losses, use stop-loss orders when trading bitcoin.

A stop-loss order automatically sells your bitcoin if the price falls below a certain level, which helps prevent large losses.

Don't Panic Sell Bitcoin

Bitcoin is known for its volatility, and prices can fluctuate rapidly. Don't panic sell if the price drops suddenly.

Instead, stick to your trading plan and use stop-loss orders to limit your losses. Choosing when to sell Bitcoin should be a calculated decision, unbiased by emotions.

Stay Up-to-Date

Keep up-to-date with the latest news and trends in the bitcoin market.

Follow reputable sources and stay informed about regulatory changes and market developments that could affect the price of bitcoin.

How to Read Bitcoin Price Charts

To read bitcoin price charts, follow these steps:

• Select a chart – Choose a chart that suits your needs, such as a line chart or candlestick chart.
• Choose a time frame – Select a time frame for the chart, such as hourly, daily or weekly.
• Analyze the chart – Look for patterns and trends in the chart, such as support and resistance levels, trend lines and chart patterns.
• Use indicators – Add technical indicators to the chart, such as moving averages, Bollinger Bands and Relative Strength Index (RSI), to help identify trends and potential trading opportunities.
• Monitor news and events – Stay informed about news and events that may affect the bitcoin price, such as regulatory changes or major adoption announcements.

Remember that reading bitcoin price charts requires knowledge and experience, and it is important to practice and develop your skills over time.

Once you have become more advanced, you may want to consider some of the following in your analysis:

Fibonacci Retracement Levels

Fibonacci retracement levels are a popular technical analysis tool used to identify potential levels of support and resistance in a market.

The levels are based on the Fibonacci sequence and are calculated by drawing lines between the high and low points of a trend.

Bitcoin traders use these levels to identify potential areas for buying or selling.

Volume Indicators

Volume indicators, such as On-Balance Volume (OBV) and Volume-Weighted Average Price (VWAP), can help Bitcoin traders understand the level of trading activity in the market.

High volume can indicate strong buying or selling pressure, while low volume can indicate a lack of interest or liquidity.

Moving Averages

Moving averages are a popular technical analysis tool used to smooth out price data and identify trends.

Bitcoin traders use different types of moving averages, such as simple moving averages (SMA) or exponential moving averages (EMA), to identify potential levels of support and resistance in the market.

Oscillators

Oscillators, such as the Relative Strength Index (RSI) and Stochastic Oscillator, are used to identify overbought or oversold conditions in the market.

Bitcoin traders use these indicators to identify potential reversals or changes in the trend.

Chart Patterns

Chart patterns, such as head and shoulders, triangles and flags, can help traders identify potential trend reversals or continuation patterns in the market.

Remember that technical analysis is just one tool for analyzing the bitcoin market, and it is important to consider other factors, such as fundamental analysis and market sentiment, when making trading decisions.

Risks to Consider When Trading Bitcoin in 2024

Bitcoin has become very successful over the past few years and many are rushing to capitalise on the opportunities it presents and get that Bitcoin fast profit.

However, cryptocurrency is still a very new market and remains highly risky. So while there is the potential to make money trading bitcoin, you should have a clear idea of the pitfalls you may encounter before getting started.

A Volatile Market

As mentioned previously, the Bitcoin price is constantly going up and down so it is very hard to predict what will happen in a given period.

While this can lead to healthy profits, it can also mean big losses if you misinterpret what is likely to happen next.

Fraud

As there is little regulation of the bitcoin market, security is a major issue. While many bitcoin exchanges are reputable, others are not and there have been instances of investors being defrauded by fake exchanges.

Cyber Attacks

As discussed in the previous section, bitcoin exchanges are very attractive to hackers and if your bitcoins are stolen by a hacker there is no way to retrieve them.

Reliance on Technology

Bitcoin is a digital currency completely based on technology. This not only leaves it more open to cyber-attacks and fraud but it also means that it is not backed up by any physical collateral, such as gold or property. If the technology fails or is shut down, bitcoin is worth nothing.

Emerging Market

Bitcoin is still in its early stages so there is little data or experience to draw on. There is a lot of uncertainty around how it will evolve in the coming years.

Common Bitcoin Trading Mistakes

Here are some of the most common bitcoin trading mistakes that traders make, along with tips on how to avoid them:

• Failing to do proper research – It's important to do your due diligence and research a cryptocurrency thoroughly before investing. Avoid making hasty decisions based on hype or speculation.

• Emotional trading – Making trades based on emotions, such as fear or greed, can lead to poor decision-making and losses. Stick to a trading plan and avoid making impulsive trades.

• Not using stop-loss orders – Stop-loss orders help protect your investment by automatically selling your bitcoin at a certain price level to minimize losses. Failing to use them can result in greater losses.

• Ignoring risk management – Proper risk management is essential to successful trading. This includes setting stop-loss orders, avoiding trading too much of your portfolio on a single trade, and using appropriate leverage.

• Chasing losses – It's natural to want to recoup losses, but chasing losses by making larger trades can lead to further losses. Stick to your trading plan and avoid making impulsive trades.

• Overtrading – Overtrading can lead to exhaustion, mistakes, and losses. Set realistic trading goals and avoid trading excessively.

• Not staying up to date with market news – Stay informed about the latest news and trends in the cryptocurrency market to make informed trading decisions.

Common Bitcoin Trading Strategies

There are different methods for trading bitcoin and other cryptocurrency and, in this section, we look at some of the most popular approaches.

It is also important to note that there is a difference between investing in bitcoin and trading it. 

Bitcoin investors will buy the currency and then hold on to it for a lengthy period in the belief that its value will ultimately go up.

Bitcoin traders, on the other hand, are looking to make a profit by buying bitcoin and then selling it again after a short period.

They may do this by adopting one or more of the following approaches:

Bitcoin Day Trading

Day traders will make several trades during one day to benefit from short-term price movements.

Day traders may hold their assets for a few minutes or a couple of hours but the idea is always to sell them by the end of the day to make quick, small profits.

Scalping Bitcoin

This is similar to day trading but taken to the extreme. Scalp traders will buy and sell bitcoin very rapidly, holding their assets for a matter of minutes or even seconds before selling up.

They may operate around the clock, making hundreds of trading moves within a 24 hour period. As with day trading, the aim is to make many small, quick profits in a short timeframe.

Swing Trading Bitcoin

This involves holding a position for longer than a day.

Swing traders will look at the bigger picture, studying trends in the market and trying to predict when price movements will begin and end.

Once they have entered the market they may hold their position for days, weeks or even a couple of months as they monitor the market before trying to sell up at the best time to profit from movements in price.

HODLing

HODLing meaning: a long-term investment strategy in which traders buy and hold bitcoin with the expectation of profiting from price increases over time.

Bitcoin Trend Trading

This is a long-term trading strategy in which Bitcoin traders identify trends and hold bitcoin for the duration of the trend to profit from price increases.

Mean Reversion Trading

This is a Bitcoin trading strategy in which traders identify when the price of bitcoin has deviated too far from its average price and then buys or sells accordingly.

Arbitrage trading

This is a Bitcoin trading strategy in which traders take advantage of price differences between different cryptocurrency exchanges by buying bitcoin on one exchange and selling it on another.

It's important to note that no single Bitcoin trading strategy is guaranteed to be successful, and traders may need to use a combination of strategies depending on market conditions.

Additionally, Bitcoin traders should always do their research and understand the risks involved with each strategy before implementing them.

Frequently Asked Questions

Final Thoughts

There has been a lot of media interest and hype around bitcoin in recent years, with reports of people making their millions by trading and investing in the cryptocurrency.

Bitcoin and other virtual currencies have made trading more accessible, with lower entry levels and the opportunity to trade wherever you are in the world as long as you have an internet connection.

As a young and volatile market, bitcoin offers exciting opportunities, but there are also many risks involved. With the potential to make a lot of money there comes the potential to lose a lot too.

If you are considering trading bitcoin, you should make sure you have learned all you can about the market, researched your trading strategy and identified a reputable exchange platform. And, as with all kinds of trading, you should never invest more than you can reasonably afford to lose.

WikiJob does not provide tax, investment or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.