Bitcoin Day Trading – Part 1
You might be wondering what i’m talking about, In this series of articles I will be discussing Bitcoin day trading strategies using BTC as your trading currency. I’m assuming that my readers have some sense of using Bitcoins and already know how to use the BTC addresses, fund their wallets, and get the USD back out when they want. If you don’t know how to do these things I will cover it in a tutorial and link it from here when it’s complete. A simple google search should be able to land you some answers regarding those issues also.
Bitcoin Day Trading is the art of buying and selling bitcoins in small amounts at exchanges for fun and profit. Bitcoins are very volatile, they go up and down a pretty decent amount everyday. Your job as a bitcoin trader is to buy when the prices are low, and sell when the prices are high! It’s pretty straight forward, I enjoy selling and buying in small amounts like 1BTC. Here’s an example of how you can make profit doing this:
You start with 5 BTC transfered into your prefered market account, You got this BTC for $11.28.
In the market you check the current prices, say at the moment you can sell the BTC for $11.98 so you do that. You now have a .70cent profit on every bitcoin you sell. If you sell all 5 you have made $3.50, not bad for just some simple button clicks! And this is the essence of bitcoin day trading. It’s a fun past time, and can be a great source of additional income for just playing around! I dunno about you, but this type of stuff is just plain fun to me. So doing it a few hours of the day isn’t hard at all!
Okay so, you want to take a stab at it? There’s many places to trade BTC, one of my favorite is BitFloor.com, A great simple interface for your trading. They also have an API available for advanced traders who want to automate the process. There are a few other top marketplaces but i’d suggest BitFloor as a good starting place. They ran into some trouble in September 2012 but have since upgraded their security and really upped the overall services quality.
Ups And Downs
The key to succesful trading is realizing the market is going to keep going up and down, so don’t put all your eggs in one basket. A good rule of thumb is to just trade 50% of your inventory throughout the day. For example if I have $500 in my account, I will have $250 worth of USD in BitCoins and 50% in USD so I can trade up or down at any time. This ensures you can work the market regardless of it’s current state. You can hold onto BTC if the price is down, and buy more BTC. Then when it goes up you can sell your excess BTC for a profit and vice versa. So always keep in mind that the market is constantly fluctuating, volatile, and very active. This is great news for you, now get trading!