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Bitcoin trading basics

Last update: January 01, 2017

What you should know

AML/KYC

One of the most annoying things for novices, definitely. This stunning abbreviation stands for anti-money laundering and know your customer policies. Most Bitcoin exchanges have them, the hassle differs from exchange to exchange.

Before you will be able to send in fiat money be prepared to have a high-res photo of your passport, driver's license or ID. Mostly you will also need a proof of residence and that not older than 3 months. Keep in mind that they don't like to count the days. If you got a utility bill on 15th of March, it will probably be rejected as too-late-mate on 10th of June even though technically it is still less than 3 months.

These two papers will do it at some exchanges. Not everywhere though. From the famous ones, Bitfinex wants also a bank statement. On Kraken it depends on how much money you want to deposit and from which country you are. You might be asked to provide a photo of yourself with your ID. Be careful to have all of your face visible. It’s really important and needs an exceptional selfie-skill.

This is why LocalBitcoins might be the easiest option to get coins if all you want to do is to get them and spend them. People on LocalBitcoin might sell with a thick margin but unless you really have nothing else to do, the absence of compulsory AML/KYC there will save you a lot of pain. Be aware of scammers though. Opt for wire transfer and demand at least real name and phone number verification.

Also if you are interested in trading cryptocurrency pairs like BTC and LTC, you don't have to worry about identity check so much. There are plenty exchanges that allow Bitcoin deposit and withdrawal on accounts without identity. If this speaks to you, get a verified account somewhere where it is relatively painless, do your fiat/BTC exchange there and for the trading only transfer the coins.

Fees: Flat Fee

Most Bitcoin exchanges will take about 0.2% of trade amount from you. When a place is starting out you might be lucky to get 0 % for a limited time. There are also places with lower fees for those who came from a referral link.

Another set of fees comes into play with deposits and withdrawals. Cryptocurrency deposits are usually free of charge.

Fees: Maker-Taker Fees

This is kind of an individual fee model based on how and how much you trade: See full explanation on itBit

Traditionally, makers are the traders who make the market liquid. Makers place order that sit for a while in te order book before another user places complementary order. To keep makers in the exchange gives them rewards mostly in terms of lower fees. There are also exchanges that will give you rebate - you earn a small percentage when you trade instead of paying the fee. See HitBtc.

Nowadays it goes per order. Orders executed at market price are taker orders and get taker fees. Orders that stay on the market a while before executing are maker orders with maker fees.

The link from itBit sounds like it’s not about traded volume but more about hodling and strategy. Usually, you also get further fee discount for large monthly volumes though. Maker-Taker system simply has two separate fee schedules, one for makers and other for takers.

Deposit

You can expect a deposit via bank transfer to be ready in some 3 days. That means making that deposit when you notice interesting pattern in the chart that needs immediate action – you got it, that's too late. For trading fiat vs Bitcoin, your fiat money must be sitting on an exchange ready to be invested.

Trade Charts

You can follow technical analysis reports but it is not a good idea to just take someone's word for it. Technical analysis is also wrong, and quite often at that. It is not quite a get-rich-quick scheme but the best way really is to keep staring into tradeview charts, trying to make conclusions and then honestly assessing if you were right. This way you will get the grips of it without textbook knowledge.

Bitstamp has a good tradeview available for anyone. You need no user account to see it.

Some exchanges do not really provide a good tradeview. They only offer API access for third party services to use to draw the charts. There are platforms that will give you access to all your exchange accounts at once:

Coinigy – Paid web client
Qt Bitcoin Trader – Free desktop client for Windows, Linux and Mac.

You can also use BitcoinWisdom, a website that plots charts of all major bitcoin exchanges.

Mobile Trading

If you are often on the go: There is an Android app called TabTrader. There are about 15 Bitcoin exchanges supported. To trade real-money you will need to get an account and paste in your API key and secret (In “Accounts”).

This way you will be able to stare into trade charts in your spare time and keep updated about the movements, though on a desktop it is indeed better.

TabTrader is probably the best of the Bitcoin trading apps. It has good charts (after clicking a tab you’ll get a chart) with the most common technical analysis indicators. Once you select an indicator the app remembers your choice. Also, looking at the tabs next to each other will give you a good overall idea about the markets.

An alternative option is zTrader. Here it is with Bitfinex API keys - it looks like Bitfinex for all exchanges. Without the API keys only the order book is visible.

Many apps now support alarm on price change but there are a few dedicated apps that will do that (perhaps) better:

 </a> **2017 - New in: Boilr** New and very good app tracking BTC spot, BTC futures and all of the traded shitcoins. **Free and no annoying ads.** Supports 2 alarm types: * Price Hit - Triggered when price crosses the alarm's upper or lower limit. One limit may be left empty to create an alarm with a single trigger. * Price Change - Triggered when price changes more than X amount (in currency or percentage) in a specified time frame (e.g. 15 min). It uses a rolling time frame: price is fetched with a given update interval (e.g. 30 s) and compared with the price fetched one time frame ago (e.g. 15 min ago). Snoozes on retrace. Get it, seriously.
[Link to Google Play](https://play.google.com/store/apps/details?id=mobi.boilr.boilr&hl=en)and to [homepage](http://boilr.mobi/#features). ## Margin Margin trading means trading with _leverage_. The most famous platform to trade with leverage is Bitfinex but Poloniex is just as good. When you trade with leverage you always borrow funds to do the trade you want to do. * For long positions you borrow fiat (to buy more and sell dearer later) * For short positions you borrow bitcoin (to sell more and buy them back cheaper later) With leverage you get more buying power than you should have with your balance, you can also lose faster though. Try [this Youtube video](https://www.youtube.com/watch?v=Gs2PVoa9L6A) by Theo Goodman. It explains margin trading on Finex for noobs and also how to limit your potential losses. One more thing to calculate with is the interest - the fee that you pay to the person whose money you are trading.
#### Moving Bitcoin from Exchange to Exchange You should never move coins (any) from an account on an exchange directly to an account on another exchange. The reason is sometimes you might be asked to prove the coins are yours by signing a message using your wallet. The functionality of signing a message with your wallet's keys is possible with Blockchain.info, Electrum or GreenAddress from the most popular wallets, so do use them. If you send money from an exchange there is indeed no way you can sign a message since you don't have access to the exchage's wallet software.
####Best practice Bitcoin community is full of tender-hearted geeks excited at the idea of governance 2.0 and freedom. For better or worse, with freedom also comes responsibility and the sad reality shows that it is better to be prepared for the worst. Try and keep in mind the following points: * Never leave untraded money on an exchange account. Some exchanges have policy that will allow them to collect untraded coins if you don't log in over certain time period. Other than that, obviously, those coins are easier to steal. * Never recycle passwords. Use paper notebook with hints that will make you recall the full password. Remeber, there are things that should never be stored in computer, no matter what. * If you trade on an exchange that doesn't need verification for what you do, don't trade significant amount on a single account. * During registration, no matter what names and numbers you type in, make a note about it on a piece of paper. * Enable 2-factor authentification. * Never trade all of your coins at a single exchange. * Never chuck in more than you will survive to lose. * All markets are manipulated. * Forum accounts can be fake. * Genuine accounts of all kinds can be bought. * Technical analysis is often wrong. * People on forums are often wrong. * People on forums are often dicks. * Everybody lies.

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