Bitcoins are a new digital currency that is gaining popularity all over the world. It’s cool because it’s decentralized, therefor can’t be controlled by one authority. Bitcoins are created, and transacted by a process called mining.
As with any market, the current price per Bitcoin is determined by the current demand for Bitcoins. If more people are buying Bitcoins then the price will be in an uptrend and if more people are selling Bitcoins the price will go down and therefor be in a downtrend. If you buy Bitcoins with your USD when the price is low, and sell when it is high, you have earned a profit and the adverse is also true.
Buying and selling Bitcoins
The actual buying and selling of Bitcoins happens on an exchange. The top exchanges include BTC-E and Bitstamp, if you’re in the United States most people opt for Coinbase because it allows you to buy using your bank account or credit card instead of the foreign alternatives.
When to buy, and when to sell
This is where it gets tricky, obviously. There’s several methods for and paths for building your personal trading strategy.
Also dubbed “FA” is doing your research on the Bitcoin communities current affairs. For example if a large company is planning to add Bitcoin payments to their website, you may expect a rise in price with positive news, Adversely you may expect a drop in price if there is negative news.
As with anything, make sure to do your due diligence before investing your money frivolously. I think Bitcoins are one of the easiest ways to start learning to play the markets and invest your money in a Forex like fashion. You can be setup without the need for a specialized broker in less than an hour.