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Just like any other digital currency, Bitcoin also received instant attention. It wasn’t long before Bitcoin became one of the most popular digital currencies in the world. It can be spent, saved, stolen and even invested. Bitcoin is already being considered the most widely spread and circulated cryptocurrency.

The rise of this currency began in 2009. It was released by a person using the alias Satoshi Nakamoto. Earlier this year, it came to prominence when its value suddenly jumped from just $2 to $266. Bitcoin also realized a peak market evaluation of over $2 billion.

Trading Bitcoins

Due to the increasing popularity of this crypto currency, a lot of people from around the world started considering it as a perfect investment opportunity. In this post, we will explain some of the most popular ways in which you can make a profit while trading Bitcoins.

According to most traders, there are two basic ways to accomplish this task. In the first method, you can be working for the real world economy, while mining new Bitcoins and converting them into a traditional currency like Euro or dollar.

The second method is to take a risk, and try to trade Bitcoins yourself, while keeping a close eye at various exchange rates. The second method can help you make more profits, and bring more cash. In this post, we will prominently discuss the second method.

It is extremely important to understand that the behaviour of the Bitcoin exchange market can be very hard to predict. Bitcoin exchanges are affected by many different factors influencing exchange rates and influx of new traders. In order to make accurate predictions, you will need to gather a lot of information. Some of the information discussed below can help you make the right choices.

What Exchange Should You Use?

There are a lot of Bitcoin exchanges around the world. In these exchanges, you can easily trade Bitcoins with currencies like EUR, USD and more. You can even trade Bitcoins with other crypto currencies like Litecoin or LTC. While choosing a Bitcoin exchange for trading Bitcoins, you need to consider the price, currencies and volume being traded.

For instance, if you live in Europe, it would be a much better decision to trade on a German exchange like Bitcoin.de rather than a far off Chinese exchange. It is also worth mentioning that some Bitcoin exchanges provide international deposits and withdrawals, like Bitstamp. It will be easier for you to trade on a Bitcoin exchange with high volume rather than one with low volume. Thus, you should consider this while choosing an exchange.

Long Bitcoin Positions

With this particular trading strategy, an investor will be able to buy Bitcoins with the expectation that their value will rise in the future.

When prices rise, the trader will sell his Bitcoins to earn more profits. This is a standard method used by most traders. It is quite easy to implement and understand.

Shorting Bitcoins

Short selling or shorting is another popular method used by most traders. In this method, the trader sells a commodity and hopes to buy it back at a much lower price. Short selling can be a good way to make profits when you think the value will decline in the near future. A trader looking to short sell can borrow some amount from a brokerage house and sell it to another buyer. In the future, the trader will have to cover or buy back the shares, and keep the profit made from short selling.

Bitcoin Arbitrage

When you compare Bitcoin prices on various Bitcoin exchanges, you will notice that every exchange offers a different price. As a trader, it can be easy to use this to your advantage. You can perform arbitrage. A good example would be selling 1 Bitcoin for $120 on A Exchange, and buying 1 Bitcoin from B Exchange for $100. If you want to find some good arbitrage opportunities, you need to look for a good way to quickly move funds between different exchanges.

Automatic Trading

These days, you can choose from many different automatic Bitcoin trading platforms on the Internet. Automatic Bitcoin trading software allows you to make trades 24 hours at a rapid pace. It is important to understand that the software will not be able to predict the market like humans. However, it still gives better returns. Automatic trading can also be quite risky. But it is not as risky as conventional trading. While trading Bitcoins, you can use the information given in this post to take the right decisions and make profits.