Bitcoin is the most popular cryptocurrency in the world today. Cryptocurrencies are digital currency. Their main advantage is that there's no central authority controlling them. Bitcoin is also very scarce making it quite valuable. At its peak, 1 BTC was worth well over $19000. But today, this value has dropped to around $10000.
This makes Bitcoin one of the best assets to invest in. IQ Option offers traders the opportunity to invest in Bitcoin among several other cryptocurrencies. This guide will teach you how to trade BTC. However, the principles explained can still be applied to other cryptocurrencies offered on the platform.
Cryptocurrencies offered on IQ Option
Currently, IQ Option offers a total of 20 cryptocurrencies and tokens. Among these are leveraged cryptocurrencies. For example BTCx100 simply means Bitcoin with a 100 times leverage applied. Leveraged cryptocurrencies provide the opportunity to multiply your profits. However, they also increase the risk of incurring huge losses on losing trades.
Getting started with Bitcoin on IQ Option
To set up a Bitcoin trading chart, click on the select asset tab at the top of your trading interface. Then select crypto. Finally select Bitcoin.
Terms you need to understand when trading cryptocurrencies on IQ Option
Spread : This is simply the difference between the Ask price and Bid price on IQ Option. This is similar to spreads applied to forex.
Multiplier: This is leverage applied on a specific cryptocurrency. For example BTCx100 has a leverage of 100 times. This means that your trade investment is able to control Bitcoins of 100 times it's value. That is, if you invest $100 in a BTCx100 trade, it's the same as investing $10000 on the regular BTC.
Change: This is simply an indicator of whether the cryptocurrency's value has been rising or decreasing over the past day. It should give you an idea of whether to enter a buy or sell position.
Is Bitcoin a safe asset to invest in?
For short term traders – no. In its early years, Bitcoin and other cryptocurrencies experienced high volatility. The Bitcoin value would double or even triple in a matter of days. Today, its value has stabilized although there are periods of high volatility.
For long term traders wishing to hold position for several hours or even days , Bitcoin makes a good asset to invest in.
If you take a look at the 1 hour interval chart below, Bitcoin doesn't experience major price movements. However, once a trend is adopted, there's an opportunity to make hundreds of dollars in profit over a short period of time.
When trading Bitcoin or any other cryptocurrency on IQ Option, it's therefore important to focus on long term trading.
It's worth noting that IQ Option will charge an overnight funding fee. This is a small fee charged to your account if your trading position remains open overnight.
Trading Bitcoin on IQ Option
One easy way to trade Bitcoin is by using support and resistance. As mentioned before, BTC prices usually remain within a range before a trend finally develops. It can remain within this range for hours or even days. This makes it easy to identify strong support and resistance zones in your chart.
The good thing about Bitcoin is that once the support or resistance level is broken, the developing trend is usually strong.
When drawing your support/resistance levels, it's advisable to use the 1 hour interval candles chart like the one below.
Next, switch to a 15 minute candles chart. This will make it easier to identify prices when they're about to break the support or resistance.
Using the chart below, you'll notice that the price starts to break out of the resistance indicating an impending uptrend. You should wait until the candles close above the resistance. Then enter position lasting 1 to 3 hours.
Still using the chart below, you'll notice that the price of Bitcoin increases from about 3350 to 3500 over a 3 hour period. That's about $150 in profit.
Trading Bitcoin and other cryptocurrencies on IQ Option can be lucrative even for beginner traders. Unlike options trading Bitcoin actually means that you have control over the asset. The only disadvantage to trading Bitcoin is that it takes sometime before an apparent trend develops. In addition, it's best suited for traders who want to hold position for a long time.
Now that you've learned the basics of trading Bitcoin on IQ Option, head over to your practice account and try this crypto out. Share your results in the comments section below.
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