This is called a crypto-cross pair (sometimes referred to as a "crypto-cross"). For example, if you trade Bitcoin for Ripple, it will show as BTC / XRP.
Below you can see an example with BTC / XRP:
- Cross Pair BTC / XRP costs 93.587.
- As such, for every 1 bitcoin the market gives you Ripple worth 93.587
It's as simple as that. The question is - will the exchange rate of the pair in question rise or fall? There are several ways to help yourself when it comes to making the right decisions. Therefore, the most important thing is to thoroughly research the bitcoin market you have chosen.
How to trade bitcoin: short-term or long-term?
After talking about the basics, we should briefly explain how Bitcoin is traded ... long-term.
Bitcoin CFDs
CFDs are undoubtedly the most common way to trade assets in the short term these days. Bitcoin CFDs track the real price of the digital currency - saving you from having to own it.
With Bitcoin CFDs, you can speculate as a trader and take short positions if you think Bitcoin is overvalued and about to fall in price. To do this, you create a sell order through your online broker.
Take a look at an example of a bitcoin CFD below:
- You trade Bitcoin against Stellar
- BTC / XLM costs 114.322
- Sure enough, your bitcoin CFD is also priced at 114.322
- If you think the pair will rise in value - create a buy order on your chosen trading platform
- On the other hand, if you think the pair will fall in value - create a sell order on the trading platform
- If the pair rises or falls according to your hypothesis, you will make profits on this trade
Here is good advice from trade-exness: "Bitcoin CFDs มักจะเปิดไว้เป็นเวลาหลายนาทีวันหรือในบางกรณีสัปดาห์. CFDs ที่น้อยกว่าใน Exness ค่า swap จะเปิดต่อไปดีกว่า. เนื่องจากทุกวันมีการเปิดการค้า CFD จะมีการคิดค่าธรรมเนียมการระดมทุนข้ามคืน. ผู้ให้บริการบางรายอ้างถึงสิ่งนี้ว่าเป็น "ค่าธรรมเนียมการแลกเปลี่ยน" และค่าธรรมเนียมมักจะสูงขึ้นเล็กน้อยในช่วงสุดสัปดาห์."
"Bitcoin CFDs are often kept open for minutes, days or in some cases weeks. The less time CFDs are kept open, the better. This is because every day a CFD trade stays open, an overnight funding fee is applied. Some providers refer to this as a "swap fee," and the fee is usually slightly higher on a weekend."
With brokers, you can see the overnight fees payable when you enter your stake and leverage. This way you can see exactly what you are paying in overnight fees for your leveraged CFD trading. However, if you feel that you have a long-term strategy and want to avoid these fees, see below.
Buy and hold bitcoin
Long-term traders tend to buy bitcoin and hold on to it - hence the name of the strategy known as "buy and hold". In cryptocurrencies in particular, this is often referred to as "HODLing". Ergo, if you bought Bitcoin and held on to it - you are a "Hodler"!
Hodlers typically hold on to Bitcoin for years before cashing out their investment. At the premier Bitcoin provider, you can do this Buy Bitcoin directly - and pay absolutely no commission fees. This is done through the integrated trading suite and you will receive a Bitcoin wallet when you sign up.
When you trade bitcoin for the long term, you no longer have to worry about short-term volatility in the market. The buy-and-hold strategy also eliminates the need to perform daily technical analysis.