I mentioned recently that I have finally started trading Bitcoin. There are two great aspects about this new endeavour:
- Trading is free.
- Bitcoin’s price rise compensates for my losses.
Thus, for me Bitcoin trading is essentially a safer playground compared to my stock trading account; a bit like a soft play park for toddlers.
I know, the words ‘Bitcoin’ and ‘safe’ are usually not used in the same breath. Allow me to me explain what I mean. My main intention is to use Bitcoin for trading practice to develop my chart reading skills and trading discipline whilst risking very little to no money. How?
- To start with, I trade with small fractions of a Bitcoin. Thus, instead of risking €100 on a stock trade, I only risk €1 in a Bitcoin trade.
- In addition, Bitcoin’s price is rising. I originally bought at an average price of about €5000 per coin. On 8/11/17 it topped at €6800. After a recent breakdown it is currently sitting at about €5650 and is touted to have a €8500 ($10,000) intermediate target. Thus, the increasing value of Bitcoin basically wipes out my trading losses and might even leave me with some pocket money. Sure, I won’t fully benefit from the price rise in terms of monetary ROI, but I’ll be getting something much more valuable – experience.
- Even if the price broke down massively, and I got out at a net loss, I would have risked less money than in my stock trading account due to the smaller total investment I have made in Bitcoin.
This was one of the best trading ideas I have had of late! Even though the trading figures are tiny, it is real money and that makes it a much better practice tool for me than paper trading. Trading Bitcoin for real keeps my impatience in check and saves me from taking out unworthy stock trades.
No trading fees
I didn’t shop around for exchanges, tbh. I purchased my first Bitcoin fractions with GBP on Coinbase for a hefty fee. Later I discovered that I can get more coins for a comparably minuscule fee through Coinbase’s exchange GDAX using my Euro bank account. Even better, GDAX doesn’t charge any trading fees as long as you use limit orders. Yass! Here’s a good video explaining how to use GDAX. Not paying trading fees is an absolute bliss because especially with a small account fees can kill you.