How To Make Money Trading Bitcoin on LocalBitcoins

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You want to make money, and you like the idea of doing it all online. And, you’ve heard about bitcoin. Fantastic, that’s pretty much all you need to get started. A little willpower. Now I’m going to take you through exactly how I got started and what you need to do.

wolf of the wallstreet
Picture yourself as the “wolf”. Minus all the legal problems.

Just to clear one thing up before you even ask it:

Yes, you can buy and sell bitcoins on the same marketplace and still fetch profits.

Okay, so you’re going to be trading Bitcoin, and your going to shave off consistently healthy profits every single trade. But before we go any further, you’re not going to be trading the “price” as if it were an investment.

After optimising the operation:

I learned that you can make strong consistent profits from buying cheap bulk amounts and selling smaller amounts more expensively using only Bank Transfers. Arguably PayPal is more lucrative, but I found much more action by trading using bank transfer only!

One my first day I had over 30 trades, and I made £179~. The workload around all of my other projects was quite a lot–as you’ll probably find out–but if you’ve got the spare-time this is a hugely lucrative business to go into!

Requirements

There are a few requirements that you need to fulfil before you start exchanging Bitcoin for real cash. All of which I’ll take you through momentarily.

After you’ve fulfilled the requirements, we’ll get onto storing your bitcoin, and how you can make a lot of money buying and selling your BTC (Bitcoin).

Starting capital. You need 0.4BTC. You’ve got the money, it’s not expensive, but its going to turn you into a fatcat. You can check the current Bitcoin price on Preev. Just type in 0.4 in the BTC box.

You need a bank account. Both are equally important, as you’ll come to find out later. You will buy Bitcoins low, and sell bitcoins high.

ID to verify who you are. No verification, no sales, no bitcoin, no profits.

Finally, you need a LocalBitcoins account. This is where all the deals will be taking place. This is the trading platform that you’re imagined future-self is going to trading on.

localbitcoins banner
The best bitcoin marketplace for exchanging bitcoin on the net!

Signup to Local Bitcoins Now!

Storing Your Bitcoin

Keeping that trader image in your head, ask yourself, where does this person keep his money? Yes, in his wallet, and mostly in the bank. So that’s what you need.

To store bitcoin you need a bitcoin wallet. The wallet allows you to send and receive your bitcoin. Now, you can either go with your own software wallet or a “cloud-based” wallet.

Use the cloud wallet offered by LocalBitcoins–the place that you’ll be buying and selling your Bitcoins–it makes it easier for you to buy, sell, and keep your bitcoins safe.

LocalBitcoins’ Cloud Wallet

As you can see in the image below, the wallet is incredibly user friendly. You’ve got your “recieve bitcoins” number, which you can give to people if you want to receive–localbitcoins handles this automatically if you trade with them–and you’ve got your send bitcoins, if you want to send you’re bitcoins anywhere.

localbitcoins wallet
Simple send and receive features, with no gobblety-goop

Not sure what a wallet is?

If you’re not completely sure about what a wallet is, then here’s a wonderful picture of the different types of Bitcoin wallet. There’s 3 types of Bitcoin Wallet; internet, mobile and desktop.bitcoin wallets

LocalBitcoins provides an internet wallet. It saves the time and processing power required to keep your wallet “synced” with the bitcoin network. It also saves a tonne of waiting times and learning exactly what the bitcoin process is. Trust me, stick with internet-based wallets hosted by trusted providers such as LocalBitcoins or BlockChain.

Getting your first batch of Bitcoins to sell

There are various methods that you can use to get Bitcoins; you can mine them, buy them, or obtain them illegally. The latter being a joke.

Mining them could be the most financially viable–provided you have a server-farm. But if you’re reading a guide on how make money exchanging bitcoins, you probably don’t own a bitcoin mining farm. Or maybe you do, and your competitors have got more processing power. Who am I to judge?

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Buy Them for The Lowest Cost Possible!

So, you’re going to buy your bitcoins. This way you can secure a bunch of them whenever you feel like it.

Luckily you can buy them from exactly the same place as you’re going to sell them. And yes, there is a gaping hole in the market that needs to be filled.

How Do You Buy Bitcoins on LocalBitcoins?

Navigate to the “Buy Bitcoins” tab over at LocalBitcoins. Once you’ve signed up then you’ll see the screen in the figure below.

buying bitcoins from localbitcoins.com
All the people selling bitcoins, within your specified range.

I wouldn’t advise buying bitcoins anywhere else on the web. Other commercial ventures are more likely to stack on healthy measure of fees for the process.

The more fees you pay, the less profit you’ll be making.

Bitcoin Exchange Fee Comparison
You can see that LocalBitcoins charges $0.00 fees. Other’s charge much more!

Once you’ve signed up to LocalBitcoins and clicked on Buy Bitcoins, you can see the Price/BTC column, followed by the limits column. These are both equally important.

Firstly, because you want to for the lowest price. Secondly, you need to buy within your limit. I mentioned earlier “the more the better”, but don’t go in all guns-a-blazing for your first shot at it. Get a feel for the method first, then expand.

As a general rule of thumb, purchases made via National Bank Transfer are the cheapest. So buy from here. This is especially important as you’ll realize further on in the guide when we’re selling the bitcoins back on the same website.

Choose a seller with good reputation

Ensure you choose a seller with decent feedback, and make sure you read through their reviews profile. This one of the best things about LocalBitcoins because you can veer yourself away from any potentially unscrupulous folk.

localbitcoins feedback for llan

Verify your ID

This is an incredibly important part of the process. Whether you’re buying or selling, on both ends, you need to confirm your identity. This process is for the safety of everyone involved in the trade.

localbitcoins verification of identity

It’s unlikely that people will sell to you without ID, nor will they buy from you. So confirm everything; phone, address, email, ID.

Complete your first trade

So once you’ve verified yourself, picked out a good seller that offers good prices and limits within your reach, and made sure they’ve got good feedback, it’s time to complete the transaction.

Goto the seller’s name, make sure they’re online–you can see by the green or orange light–and click Buy. You’ll see a page with the “terms of the trade” for the buyer (you). Make sure you agree with all the terms as sometimes sellers may wish to wait a day for funds to clear. You want the fastest transaction you can get right?

localbitcoins perfectbitcoins terms of trade

If you’ve happy then fill in the amount you want to invest and hit “Send Trade Request”.

localbitcoins send trade request

Then you’ll be transferred to a screen that has a Chat box and the trade terms once again. Read through the terms, then contact the seller to ensure everything is okay to continue before you pay the invoice. Some sellers may require additional ID!

buying bitcoins to sell from localbitcoins.com

They’ll usually confirm and send you the details in the chat box. Once you’ve sent your money, confirm the trade, contact them again, and await your bitcoin. It will be with you within minutes provided you have contacted your seller and made sure they are online.

Once you’ve recieved your bitcoin then make sure to leave good feedback!

bought bitcoins on localbitcoins.com

Selling your Bitcoins for a Profit

Now you’ve got your bitcoins its time to flip them. For a nice healthy profit. The trick here is to sell your Bitcoins for more than you bought them. After all you want to make money right?

localbitcoins paypal prices

In comparison to the UKBT prices, the Paypal prices are much higher. Yet many people require this service.

Potentially more than there are people seeking out national bank transfers.

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The reasoning behind this is that there is a common misconception that Paypal is less safe than Bank Transfers. And while yes, Paypal does offer the chance to dispute transactions. There are simple ways to provide solid security in your favor should you ever find yourself faced with a malicious customer.

If you’re not to keen on the Paypal method then simply stick to Bank Transfers and you can’t go wrong.

Staying safe when selling your Bitcions

As with any business you need to ensure you stay safe. While it is quite easy to make money with bitcoin, there are malicious people out there looking to steal bitcoins, but you can stay more or less 99.99% safe by follow my 6 rules of lucrative bitcoin exchange.

  • Always request ID and Bank Card verification, even from repeat traders.
  • Always check the Name, Address and ID on the Paypal Account you are receiving from.
  • Always store all information you have on each buyer; never delete any transactions or messages.
  • Never deal with anyone that has no ID.
  • Never accept funds from an account that does not match their ID.
  • Never lend, send first, nor assume money is delayed.

LocalBitcoins provides a brilliant Escrow service. This means that the Bitcoins are always held by LocalBitcoins until the seller confirm that have received their bank transfer.

This ensures that the buyer can also provide proof of payment and receive money’s owed if any issues arise.

Selling your bitcoins

Now there’s two ways to do this. Either you go big and post a trade, or you fulfill other people’s requests. Either way, if you want to make money with bitcoin, you need to sell it for more than you bought for. Here’s how.

Posting a trade

The benefit of this is that you can set your terms, and you control the trade. I suggest this for people that are investing a lot into this method as you’ll have more reach and more people offering to buy your BTC.

posting a trade on localbitcoins.com

Now there is a very important part of posting a trade that you need to understand. When you sell via Paypal, you need Send an Invoice. To do this you request your buyers paypal address, then go to paypal, and send an invoice. This protects you from potential chargebacks as they have agreed to pay, instead of a fraudster deciding to send the money out randomly.

Fulfilling someone’s trade

This way is also lucrative, but it requires you to seek out your trades. In one way it keeps you safe, in another it requires more effort.

selling bitcoins on localbitcoins for paypalIf you’re just starting out I would suggest this approach.

Scaling up your bitcoin money-making business

So now you know everything you need to know. But before you shoot away and start making your money, I want to leave you with a little more motivation. I want to show you your potential earnings from bitcoin exchanging, should you scale up your operations.

Note that the values are figurative, but they closely match the values you’ll be earning.

  • First trade, buy £280 BTC, sell for £300
  • Repeat 5 times, you’ll have £100.

Trust me when I say, 1 bitcoin (priced at 280) can be gone 5 minutes after you buy it and sell it for 300.

The idea here is to keep flipping your investment with a profit every time. Admittedly yes, it may take more than one trade to complete the entire “flip” but the figures make complete sense.

Conclusion

If you’re still at a loss for words as to what the hell I’m talking about I’ll make it nice and concise for you.

  • Signup to LocalBitcoins
  • Verify your account with ID, phone & address
  • Buy some Bitcoins via Bank Transfer
  • Receive Bitcoins
  • Sell Bitcoins with a markup
  • Send Paypal invoice
  • Verify buyer’s identity and store details
  • Receive Paypal money
  • Send Bitcoins
  • Leave feedback
  • Repeat

If you have any questions regarding this method or any of my methods, as usual, leave a comment below.

Until next time,

Josh

 

  • Abishek D

    It is a nice method. But localbitcoins require you to maintain 0.2 btc always in their wallet to post trades? So we have to reserve 0.2 btc always is it?

    • Yes, that’s correct. Though this varies dependant on price. If this is too high, other networks may have better (or no) minimum deposit.

  • Heimir Hallgrímsson

    Hi! I’m a new seller on LocalBitcoins with only 0.4btc to my name, fuelled with inspiration from the Wall Street movies, but lacking in knowledge and understanding of basic trading. Hence, I was wondering if maybe you could help explain some stuff like I’m five?

    1. Aren’t my chances of getting sales pretty slim as buyers usually only buy from the top 6 listed at the front page?
    2. Similar to Shawn Donnelly’s question, why would buyers buy from me when they can buy cheaper from a more established seller?
    3. What if buyers want to buy more than I have in my wallet?
    4. If I announce a sale, there’s a chance nobody’s around to buy right? And that I could end up waiting days, even weeks for a single sale?
    5. Is this just a matter of buying at one price and selling at another, or does it involve price charts, technical analysis trade indicators, historical data and all that, and if so in what way?
    6. I reckon buying cheaper from another exchange is out of the question, due to all the fees, and since I don’t live in the US or China? Most if not all buyers in my country (Norway) use LocalBitcoins exclusively.

    That’s all — cheers and thanks a lot for this article!

  • Shawn Donnelly

    I already have bitcoins so I didn’t buy them at a specific price, I was paid in BTC. So when I go to make my first sale, since advertising with 0 trades is probably out of the question how would I find a buyer that will purchase a small amount (amount you listed) at higher than market price? Current BTC to USD is $776 right now, I believe. So I have to find a buyer offering to buy at $776+…so roughly like $800? Sorry for the noobness of my question, but I’m just a little confused. Thanks so much for the article and taking the time to reply to this, if you do.

    • This is a really good question and I’m pleased youve asked.

      The money in this method lies solely in posting trades.

      When you post a trade you can buy bitcoin at a lower bound and sell them at the upper bound of where the current Buy/Sell rates are.

      You’ll notice that it’s more expensive to buy in LocalBitcoins than it is to sell, when you don’t post a trade.

      When you post a trade, you’re the one that is making the profits.

      If you’ve got any more questions drop a comment.

      • Heimir Hallgrímsson

        You’ll notice that it’s more expensive to buy in LocalBitcoins than it is to sell, when you don’t post a trade.

        You mean we get some sorta discount from other sellers when we ourselves become sellers?

  • Mr nighthunter

    Hello Josh, I’ve been looking for an article like yours for some time now.
    I do have a question.

    How is it possible to transfer bitcoin so fast when dealing with bank transfers.

    Example.
    If someone sends me money to buy it takes almost 3 days to get the payment.
    So fast bitcoin release is out of the question, or do I have to ask my bank when a payment is been done or on the way?

    Feedback is appreciated!

    Regards

    Mr. Nighthunter

  • WinYour Bitcoin

    Your article got me into trying this method, with the exception that my banking is in the usa. So I’ve been buying through coinbase, selling on lbtc for paypal money, then sending their paypal payment back to my bank. I only work with verified and trusted traders but im still paranoid about having a paypal chargeback, especially since most of my trades were filed under goods and services.
    I’m also trying to figure out whether what I’m doing is operating an exchange, and therefore illegal. I’m aware in my home state one needs to pay a fee and register to become a money transmitter. However Im not sure what kind of profit I’d need to see before worrying about that.
    Any feedback or suggestion is appreciated.

    • I’m pleased that my article got you to try the method out!

      What I’d advise is you buy larger amounts via Bank transfer on LBTC then sell in smaller amounts with bank transfer again.

      It’s best you get to grips with it before diving in to paypal too as you need to be able to prevent charge-backs, which comes with experience!

      If your state has laws on this then you may have to go through a legal route, but unfortunately I can’t advise you on this.

  • I write all of my content 🙂

    • Muhammad Fahad Saleem

      How much time it took to write this content?

      • I’ve been running True Miller for almost 2 years now.

      • I’ve been running True Miller for about 2 years.

  • Muhammad Fahad Saleem

    Visited truemiller.com for the first time and really inspired from the knowledge it has.
    I would like to know if the website owner write this content or manage someway to do this. Thanks in advance.

  • Demar

    HEY JOSH. YOU ARE AN INSPIRATION. I JUST VERIFIED MY LOCALBITCOINS.COM ACCOUNT AND AM LOOKING INTO TRADING BITCOIN ON A DAILY BASIS. I LIVE IN CANADA, IS IT STILL BEST TO TAKE THE BANK TRANSFER ROUTE RATHER THAN PAYPAL? AND ALSO, I’M STARTING OFF WITH 0.4 BTC AS YOU SAID. HOW DO I GET IN FOR THIS PRICE? IT SEEMS MOST PEOPLE ARE SELLING AT MARKET PRICE.

    • I would push to buy in bulk with bank transfer then sell in increments with bank transfer too.

      Go into paypal once you get a grip on this!

      And they’re not, you can buy large at market, and sell small at handsome margin over, easily.

  • Dani08

    Hi Josh, just reading the article and seems to be very good this kinda of stuff, i was justing thinking about the end part, after you send the invoice to the buyer and receive the money in paypal, after that i have to transfer the money to bank account or should i buy more bitcoins directly with paypal?

    • Hi Danny,

      The profit from this method comes from you buying with bank transfer, and then selling via Paypal. So to answer your question, yes, you should transfer the money back to your bank account and then buy more.

  • I’m really glad that you’ve asked this question. There’s one simple answer to this. The prices always fluctuate. Sometimes you’ll have more competition, sometimes less. The 50% is a figurative example as I explain in the article. But you might find your self flipping for anywhere between 5% to 50%. In some cases you might flip for more! What you must understand is that despite whether or not you do a flip for 5% or 50%, it’s still profit that you made in a second. Profit you can reflip, and reflip, and reflip. The concept is what I’d called “Accelerated Compounding”. You accrue a percentage every time.

  • Sinding

    Hi Josh 🙂
    Great article. Must say I’m pretty curious about this. Never heard of flipping bitcoins like this before, and for a 50% profit it sounds lucrative.
    How do you know you are gonna get a 50% profit each time? I can see people are selling and buying bitcoins at different rates all the time, so how do I make sure I get the right profit? Do you have a minimum/maximum rate you buy/sell for?
    Thanks again!
    Anders