The price of Bitcoin moves, just as the price of any other commodity moves (although the volatility has recently proved to be on another level). It is worth noting that Bitcoin is not supported by a physical asset, which actually makes it very difficult to ascertain its true value. This could, in part, explain why Bitcoin is so volatile but also suggests to us that technical analysis of the charts is the best way to set up a short-term Bitcoin trade.
Given the phenomenal rise of Bitcoin over the past 12 months, which has seen it go from just shy of $1000 to close to $20,000 at its record high in December, buying the dips would have been a sensible approach. As 2018 has kicked off, Bitcoin was in consolidation mode, with the virtual currency settling around the $16,000 level, before it sharply sold off on news that South Korea could look to ban trading the cryptocurrency. This is particularly bad news for Bitcoin given the high percentage of trades that go through the country. Bitcoin dropped over 14% in one day to $12,800. The markets haven’t seen this level of volatility on another asset in recent history.
All top-class brokers are offering their clients the opportunity to trade bitcoin. Always make sure you trade bitcoin through a regulated broker. One such broker is Vantage FX, an award winning Australian forex broker, who are regulated the Australian Securities and Investments Commission (ASIC). Vantage FX are a true ECN broker meaning that they offer their clients some of the tightest spreads in the industry and unparalleled execution. Furthermore, they offer their clients the possibility to trade bitcoin through the world renowned MetaTrader4. Here the process is simple, just download or open MT4, login and open the Bitcoin vs US dollar chart. You are ready to go.
Perhaps the most important point to keep in mind when trading Bitcoin, is its volatility. Volatility is one of Bitcoins key attractions, especially given the lack of volatility in more traditional markets. However, if risk is not managed appropriately it can also be one of the key downfalls to trading this virtual currency. Risk management keeps your trade safe and stops it running away with you. Making sure you understand trade size, exposure and stop losses are all important steps when starting out trading bitcoin. Vantage FX offer clients free educational support regarding risk management on their website, in seminars and webinars.