Thanks to Bitcoins recent surge in popularity, many people around the world have started to consider Bitcoin as an investment opportunity.

In this article, you will learn some of the most popular ways to make profit trading Bitcoins.

What exchange should I use?

There are many Bitcoin exchanges, where Bitcoin can be traded with currencies such as USD, EUR, as well as other cryptocurrencies such as Litecoin (LTC). When choosing an exchange to trade Bitcoins, you should consider the volume, price, and currencies traded.  For example, if you are living in Germany, it would be a better decision for you trade on a German exchange such as Bitcoin.de, rather than a Chinese exchange. Some exchanges provide international withdrawals and deposits, such as Bitstamp, and Mt Gox. It is much easier to trade on an exchange with high volume than one with low volume, so keep this in mind when choosing a site to trade on.

Long Positions

With this trading strategy, an investor would buy Bitcoins with the expectation that they will rise in value. When the price rises, the investor would sell his Bitcoins and earn profit. This is a method used by most investors, since it is easy to understand, and easy to implement.

Shorting bitcoins

Shorting, or short-selling, is when an investor sells a commodity (in this case, Bitcoin) in the hope to buy it back at a lower price. Shorting is a great way to make profit if you believe the price will decline in the future. A person looking to short can borrow from a brokerage house such as Plus500   and sell to another buyer. Later on, the shorter would have to cover (buy the shares back), and keep any profit made from shorting.

Arbitrage

If you have been comparing the Bitcoin price on different exchanges, you will have noticed that each exchange has a different price. As a trader, you can use this to your advantage, by performing arbitrage. An example would be selling 1 BTC for $120 on Exchange A, and buying 1 BTC for $100 on Exchange B. In order to find good arbitrage opportunities, you must be sure that you have a good way to move funds between exchanges quickly.

Automatic Trading

Several Bitcoin automatic trading platforms are currently available for sale. Automatic trading software allows the user to make trades 24/7 at a very fast pace. You should remember that software cannot predict the market as well as humans in some cases. Automatic trading is as risky as regular trading, since there is no surefire way to make consistent profit through trading.

What methods do you use to trade Bitcoins for profit? What is your favorite Bitcoin exchange? Let us know by posting a comment below!