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Bitcoin Gold Trading Guide For Beginners

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Bitcoin Gold (BTG) has become a popular cryptocurrency since it was hard forked from its parent Bitcoin just a few years ago. Bitcoin Gold intends to provide several technical advantages over the market-leading Bitcoin currency, but in common with its cousin is both open source and decentralised.

Bitcoin Gold aims to make improvements over the Proof-of-Work algorithm associated with Bitcoin, so that ASICs (Application-Specific Integrated Circuits) cannot be used to mine the token. This is intended to make it a more democratised platform than it is asserted the original Bitcoin is today.

Bitcoin Gold is also a valuable trading mechanism, so in this article, we will assess many of the issues related to trading Bitcoin Gold.

3 Reasons to Trade Bitcoin Gold Now!

1

Bull Market

Cryptocurrencies have undoubtedly been in a bull market for at least a year, having performed sensationally well during 2020. The ongoing pandemic and related lockdown have certainly impacted this growth in value, but these issues have also helped to escalate this process. As the coronavirus still continues to circulate, the bull market in cryptocurrencies may continue for quite some time. This would certainly seem to be positive for Bitcoin Gold.

2

Bitcoin Adoption

Considering the close relationship between Bitcoin Gold and the market-leading Bitcoin, any positives for the latter are promising for Bitcoin Gold. Therefore, the increasing global adoption of Bitcoin is obviously advantageous for Bitcoin Gold. Data indicates that the number of users of cryptocurrency will increase massively during 2021, at the same time that the value of cryptocurrency tokens is escalating rapidly. Statistics also indicate that investors and consumers are increasingly utilising tokens such as Bitcoin as substitutions for digital payment methods such as PayPal. This points to a rosy future for cryptocurrencies in general, and Bitcoin Gold is only likely to benefit from this, due to its ties with Bitcoin Gold.

3

Wall Street

Another major positive for cryptocurrencies has been the pouring of Wall Street and institutional money into the niche. Considering the extent to which cryptocurrencies escalated in value in 2020, it is not surprising that professional investors are beginning to sit up and take notice. This will obviously be bullish for the currency going forward, and can only be a positive for Bitcoin Gold as well. Many people believe that institutional investors will invest yet more money into cryptocurrencies in 2021, and in the foreseeable future as well.

Bitcoin Gold Trading Vs. Investing

Cryptocurrencies have been a huge revolution, yet the ways of making money with these alternative currencies are not always common knowledge. Thus, in this section of the article, we’re going to examine trading and investing in Bitcoin Gold, and the differences between the two.

Bitcoin Gold is a digital currency, and this means that it can be held over a period of time, as investors seek price discovery. Storing the token is, of course, different to traditional currency, but the principle is exactly the same. This can be considered an investment strategy in Bitcoin Gold, and is usually engaged in over a significant period of time.

Conversely, trading can happen over just a 24-hour period, as investors attempt to benefit from relatively minor fluctuations in the market. Trading is considerably more flexible than investing, and allows much greater agility for investors as well. 

Essentially, investing in Bitcoin Gold is seen as a backing for the long-term fundamentals of the token, while trading is much more driven by technical analysis (which we will discuss later in the article), and short-term economic factors.

It should also be noted that when trading Bitcoin Gold, investors don't receive any actual BTG coins. The usual way to trade this cryptocurrency is to utilise crypto derivatives, such as CFDs, futures, and options. 

Investors utilising CFD contracts receive a cash return based on the difference between the opening and closing trade prices of the commodity. Meanwhile, futures require investors to transact Bitcoin Gold at a predetermined future date and price. Meanwhile options provide investors with the right to buy or sell a particular asset, and are based on the value of the underlying securities.

When trading Bitcoin Gold, there are a variety of strategies available, and smart investors will balance these in order to make an informed decision. The type of investment, market behaviour at the time, the risk profile involved, macroeconomic factors, and other issues can also be taken into consideration. This means that investing in Bitcoin Gold is a highly organic process, and not one that can be stereotyped.

Bitcoin Gold Analysis: The Key to Success!

There are several options for investing and buying Bitcoin Gold, and it is therefore important to understand this variety of investment mechanisms. Central to this is the various forms of analysis that can be used in an attempt to predict the price direction of Bitcoin Gold, and these should definitely be investigated thoroughly.

Today, the most popular ways of attempting to understand the Bitcoin Gold market are technical analysis and fundamental analysis. Technical analysis is based on the analysis of price charts and other data, with investors pouring over historical records in an attempt to predict the future direction of the market.

Fundamental analysis can be seen as a counterpoint to technical analysis, instead being based on what would be deemed the true value of an asset. Fundamental analysis focuses on market fundamentals, such as breaking news, regulation, technical development, investor behaviour, and other relevant issues and information.

When investing in Bitcoin Gold for the first time, it is also important to take other factors into consideration. The overall economic situation, the state of the stock market, whether cryptocurrency is experiencing a bull or bear market, and the political climate can all impact the general market sentiment. Understanding and assessing all of these factors can be extremely challenging, but this is ultimately the skill of investing.

Trade Bitcoin Gold Today!

Choose a Trading Strategy

Trading strategies with Bitcoin Gold are many in number, so in this section of the article we will assess some of your options.

  • Swing trading

Swing trading is undoubtedly one of the most popular ways of investing in the stock market, and it could also be applied to cryptocurrency. Anyone swing trading Bitcoin Gold is attempting to capture short-term gains in the token, which tend to last for a few days.

However, there is some technical analysis involved with swing trading, as its advocates tend to assess data and charts in order to identify trading opportunities. Swing traders will hold a position for more than one trading session, but will rarely continue with this investment for more than a few weeks.

Ultimately, swing trading is intended to capture a significant tranche of a more generalised price movement in a particular asset, rather than bearing down on specific moves as some other techniques advocate.

  • Day trading

Day trading is probably the most infamous form of trading, and the one most readily depicted in the media. Day traders tend to be highly ambitious and dynamic people, and are willing to monitor the market on an almost continual basis.

When day trading, investors aim to close all of their positions within a 24-hour period. The intention behind this is to avoid unmanageable risks and negative price gaps, and also to make profit over a short timeframe.

Day trading can be extremely exciting, and can lead to immediate profits. However, it is more speculative than other trading techniques, and does not really take market fundamentals into consideration. Day traders may also require more technical information that is the case with other approaches to trading Bitcoin Gold, with specialised software even being required in some cases.

  • Technical Analysis

Technical analysis has already been mentioned in this article, but it is definitely one of the key investment techniques that investors need to understand. When engaging in technical analysis, investors seek to assess price charts and market statistics, looking at historical data in order to examine and predict price movements. Those that believe in technical analysis assert that traders can identify market patterns by looking at previous price trajectories.

  • Scalping

Finally, scalping is often used by highly knowledgeable investors, and is an interesting way of seeking profit in the market. Scalping involves placing a vast amount of trades in a relatively short timeframe, with the intention of capitalising on tiny movements in the market. 

Scalping does require some significant technical knowledge, but it can also be deemed less risky than some of the other trading strategies available. Spreading capital over many small trades definitively diversifies any capital risk, and this can be an excellent hedging strategy in and of itself.

Sign Up on an Online Broker or Derivatives Exchange

Another decision for Bitcoin Gold investors is whether to use an online broker or derivatives exchange. These are two fundamentally different approaches to trading, and it is important to understand how they contrast.

Online brokers offer indirect exposure to assets like Bitcoin Gold through contracts, whereas exchanges also allow for direct exposure to the asset itself. 

More leverage tends to be available with brokers, but exchanges offer features that would be unavailable with the other option. However, more knowledge is required in order to trade via exchanges, with brokers helping beginners with a less technical approach overall.

Depositing funds for a cryptocurrency exchange can be considered a simple process. The first step involved is to register with the site, during which process you will be required to confirm your identity, via personal documentation.

Once the registration process has been completed, payment methods can be added. Debit cards, credit cards, PayPal, Skrill, Neteller, and other commonly used payment methods will all tend to be available.

That is pretty much all that is required, but it should also be noted that a hardware wallet is certainly advisable for storage.

Open Your First Bitcoin Gold Trade

Opening your first trade with Bitcoin Gold is an exciting moment, but it’s vital that you understand everything involved before embarking on this process.

When trading Bitcoin Gold, you should definitely acquire a cryptocurrency wallet for cold storage before beginning. This will help prevent theft and fraud. Although the crypto space is increasingly safe and regulated, you cannot afford to take chances, in common with any investment or wealth decisions.

You also need to decide upon a trading strategy before beginning your Bitcoin Gold journey. Define your entry and exit strategies, and what you ultimately hope to achieve. Make sure that you carry out diligent research of the market, and do keep in touch with important news regarding crypto trends and macroeconomic issues.

Continue to monitor the market throughout your Bitcoin Gold journey, and your chances of success will increase significantly.

Short / Long Position

Investors in Bitcoin Gold can also choose to take a short or long position in the token. Taking a long position essentially means that you believe Bitcoin Gold will increase in value over a period of time, whereas shorting Bitcoin Gold means that you believe it will decline in value.

Both of these positions tend to be taken over a long time period, and are based on market fundamentals. Often those who are bearish regarding cryptocurrencies engage in aggressive short selling. But there are also plenty of investors who have long-term long positions in cryptos such as Bitcoin Gold. Shorting is a complex process, but is often made very simple by broker platforms.

CFD Contracts

CFD contracts are another excellent way to invest in the Bitcoin Gold market. These are derivative products, which enable investors to engage in a significant amount of leverage. They can therefore be extremely profitable for cryptocurrency trading, but also expose traders to significant risks.

Nonetheless, CFD contracts are often used as a hedging mechanism, enabling investors to offset losses. This is unquestionably valuable in a cryptocurrency marketplace that can often be somewhat volatile.

CFD contracts mean that investors do not need to hold physical tokens, so they can be considered a convenient form of investment. Nonetheless, they also attract rigid margin requirements, and expose investors to a significant amount of risk.

Order Book

Another important concept related to Bitcoin Gold and other cryptocurrencies is the order book. This refers to an electronic list of buy and sell orders for any security or financial instrument, which also applies to cryptocurrencies such as Bitcoin Gold.

Order books list the number of shares that are currently being bid on, and which are offered at every conceivable price point, along with all participants in the market. Virtually every crypto exchange will utilise order books, and they are also common in other markets, and with other assets, equities, and commodities.

Order Types

There are numerous order types available with cryptocurrencies as well, including limit and stop orders. These communicate to your broker that you are not favourable towards the existing market price, and wish for trades to be limited until such time as the market has shifted in one direction or the other.

Leverage

Leveraging has been mentioned several times in this article, and this technique is usually popular with professional and institutional investors. Leveraging essentially enables traders to borrow money, meaning that profits can potentially be increased. Be careful, though: losses will be amplified too.

Risk Management

Risk management is another important concept for Bitcoin Gold traders, as it helps investors protect themselves against losses. All serious investors engage in risk management, but it can often be overlooked by amateur investors.

Due diligence and the restriction of emotion from entering into the trading process should be considered particularly important, as this can help minimise poor investing decisions. Risk management encompasses several different techniques, all of which are intended to lower the odds that an investor will lose a significant amount of money.

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Expert Insights: Common Bitcoin Gold Mistakes and How to Avoid Them

When trading Bitcoin Gold, there are a variety of strategies available, and this can be somewhat daunting for the beginner. But one of the best approaches is to stick to basic market fundamentals and avoid some of the textbook errors that can be all too common in this field. Most important of all is ensuring that you never invest more than you can afford to lose. It should be an underlying foundation of all investing, whether in cryptocurrencies, Bitcoin Gold in particular, or any other equity, commodity, or asset class. Secondly, you should definitely avoid unregulated platforms, as these put your initial investment at risk. In the case of theft, if the platform is regulated you'll have no recourse whatsoever. So definitely bear this in mind. Leveraging can be an exciting way of trading currencies, but it is highly ill-advised for those just beginning in the niche. Leveraging potentially exposes you to greater losses and liabilities, and thus should only be attempted once you build up a significant level of experience. Investors should also monitor market fundamentals at all times, and limit the influence of emotion on trading. Basing your decisions on data is always advisable, and can ultimately lead to Bitcoin Gold success.
- Chris Morris
About Chris Morris
Christopher Morris is a highly experienced writer and editor, whose work has featured in many notable publications, including The Sunday Telegraph, Financial Times, Yahoo, Newsweek, The Times Educational Supplement, Seeking Alpha, ValueWalk, Investor Place and the Digital Tourism Think Tank.…
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