Need help understanding how to profit from bitcoin trading (like forex?)

Question

I want to understand something very basic. How does trading work between BTC & USD.

Let's say I have 1 BTC at US 100. The naive idea is "buy low" and "sell high". But I don't grasp how that work, ie, how is possible to profit in both directions.

If the value of BTC change this way (value in USD):

110 85 102 40 70 90 115 130 100 200

What I need to do to turn a profit? And if my plan is that I don't lose more than I invest at the start?

Answer 1

Pretty simple. You just make money on the differences when you buy/sell (taking in to account fees).

In your example, you start with 1 BTC purchased at $100 USD. Assuming no fees, you would:

• Sell at $110 (Profit: $10)
• Buy at $85
• Sell at $102 (Profit: $17, total: $27)
• ... and so forth

Now, you could get even more creative, since you can purchase fractions of BTC. In this case, you could:

• Sell at $110 (Profit $10)
• Buy 1.294 BTC at $85 each for $109.99
• Sell at $102 for $131.98 (Total Profit: $31.98)
• ...

Answer 2

The key benefit of trading Bitcoin against the US Dollar, using the leverage like with other currency pairs is that it allows traders to increase the size of the position with only a limited amount of investment. Check http://forex-metal.com, they offer bitcoin trading