Bitcoin Whiteboard Tuesday's episode covers the essentials of Bitcoin trading, distinguishing it from long-term investing. It explains trading terminology, types of orders, and reading price graphs. The episode emphasizes the importance of a clear action plan, risk management, and learning from each trade. Common mistakes like over-investment and emotional decisions are highlighted, with advice to avoid them for successful trading. The session concludes by stressing that trading requires significant time and effort to acquire necessary skills.
1. Bitcoin trading is different from investing in Bitcoin.
2. Investing in Bitcoin usually means buying Bitcoin for the long term.
3. Bitcoin investors tend to HODL (hold) the currency long-term.
4. HODL is a term that originated from a typo of the word "hold" in an old 2013 post in the BitcoinTalk forum.
5. Bitcoin traders buy and sell Bitcoin in the short term, whenever they think a profit can be made.
6. Traders view Bitcoin as an instrument for making profits.
7. Bitcoin is very volatile, which means its price can make large movements.
8. Bitcoin trading is open 24/7.
9. Bitcoin's unregulated landscape makes it relatively easy to start trading.
10. There are different types of trading methods, including day trading, scalping, and swing trading.
11. Day trading involves conducting multiple trades throughout the day, trying to profit from short-term price movements.
12. Scalping is a day-trading strategy that attempts to make substantial profits on small price changes.
13. Swing trading tries to take advantage of the natural "swing" of the price cycles.
14. Fundamental analysis looks at the big picture, evaluating Bitcoin's industry, news, technical developments, and regulations.
15. Technical analysis tries to predict the price by studying market statistics, such as past price movements and trading volumes.
16. Technical analysis assumes that price movements speak for themselves and tell a story that helps predict what will happen next.
17. A healthy mix of both fundamental and technical analysis will probably yield the best results.
18. Bitcoin exchanges are online sites where buyers and sellers are automatically matched.
19. An exchange is different from a Bitcoin company that sells you Bitcoin directly.
20. The complete list of buy orders and sell orders are listed in the market's order book, which can be viewed on the exchange.
21. The buy orders are called bids, and the sell orders are called asks.
22. Whenever people refer to Bitcoin's "price," they are actually referring to the price of the last trade conducted on a specific exchange.
23. There is no single, global Bitcoin price that everyone follows.
24. Bitcoin's price can be different in other countries, since the major exchange in these countries includes different trades.
25. The terms "high" and "low" refer to the highest and lowest prices in the last 24 hours.
26. The term "volume" stands for the number of overall Bitcoins that have been traded in the given timeframe.
27. Significant trends are usually accompanied by large trading volumes, while weak trends are accompanied by low volumes.
28. A healthy upward trend is accompanied by high volumes when the price rises and low volumes when the price declines.
29. There are three types of orders: market (or instant) order, limit order, and stop-loss order.
30. A market order is an order that will be instantly fulfilled at any possible price.
31. A limit order is an order that will only buy or sell Bitcoin at a specific price that you decide on.
32. A stop-loss order lets you set a specific price that you want to sell at in the future, in case the price dramatically drops.
33. Maker fees and taker fees are fees charged by exchanges for certain types of orders.
34. Exchanges want to encourage people to trade, so they offer lower fees for market makers and higher fees for market takers.
35. Japanese candlesticks are a type of chart used in technical analysis, based on an ancient Japanese method of technical analysis used in trading rice in the 1600s.
36. Each candle shows the opening, lowest, highest, and closing prices of the given time period.
37. Bull and bear markets are named after these animals because of the ways they attack their opponents.
38. A bull market is a market where the trend is up, and a bear market is a market where the trend is down.
39. Support and resistance levels are important features to be familiar with while analyzing graphs.
40. Resistance levels are prices that Bitcoin's price seems to hit a virtual ceiling and can't break through for a long time.
41. Support levels act as floors by preventing the price of an asset from being pushed downward.
42. The high demand of a buyer at the support level cushions the downtrend.
43. Historically, the more frequently the price has been unable to move beyond the support or resistance levels, the stronger these levels are considered.
44. Support and resistance levels are usually set at a round number, since most inexperienced traders tend to buy or sell when the price is at a whole number.
45. Psychology also creates support and resistance levels.
46. The biggest mistake you can make when starting to trade is to risk more money than you can afford to lose.
47. Another mistake people make when starting out with trading is not having an action plan that's clear enough.
48. Clear profit goals and stop-losses should be decided before starting the trade.
49. Never leave money on an exchange that you're not currently trading with.
50. Two basic emotions tend to control the actions of many traders: fear and greed.
51. The majority of people who start trading Bitcoin stop after a short while because they don't successfully make any money.
52. If you want to be successful at trading, you'll have to put in a significant amount of time and money to acquire the relevant skills, just like any other venture.