Please check your photos, only two were uploaded.

The floor plan sketch needs some additional labels. Centimeters? Inches?

Is this an indoor balcony overlooking a living room or an outdoor balcony exposed to sun and wind?

What country are you in? Local building codes will affect what you can do.

Not going to happen in NA so you need to check with your building code where you live. for all the US people the room is 72x 64 and the answer to the bed question is no it will not fit a even a double bed . Sorry IMO a no go

@apple_pie_order ^ your first task is a visit with the local zoning dept.

you may not be able to do this, for a bedroom, there are requirements in the US.

egress, closet, height and space requirements. Take your acurate measurements and plans to see what is possible, and not.

There are only two pictures.

It's in Europe.

Balcony is in between two rooms.

Measurements are in centimeters.

Sounds like an absolute pain to even attempt.
You may have to be satisfied with stringing a hammock or two.
Best of luck,and do show us your eventual solution.

For those interested here are the approx. dimension in inches. Also the door is now in more perspective.

You will need to remove the door as its swing will be in the way. You will be able to fit in a twin bed along the length of the room opposite the door or a custom size bed bench at the end. You will need to heat and insulated the room and the window wall will need insulating glass windows and insulated wall. Everything would be very costly compared to moving to somewhere larger.

I decided to do that, because I have my living room and bedroom in one room. Maybe I should focus on how to divide those two. I’m looking for a way to separate the bedroom from the living room, mainly for privacy and to reduce noise - especially when someone is sick. At the same time, I’d still like the daylight from the living room window to reach the bedroom when no one is in there, particularly at night.

So, how can I nicely arrange my balcony, if it will not serve as bedroom?

And how to divide bedroom and living room? Should I open a new discussion for that?

I would post a new posting about dividing the living room and bedroom, include a floorplan and say something like "my other posting for the balcony had me thinking I should consider this instead....." I feel you will get more responses if the posting is new.

I've just opened new discussion.

I still need advice for the balcony For what purpose should I use it now and how to design/arrange it? First step is glazing of course.

Heat and insulation are highly dependent on climate. The UK tends to have a climate that never gets too cold or too hot, so the work to adequately insulate is far less than if you live in, say Northern New England. Next, where you are. In an area with lots of other buildings and/or trees where it's rarely all that windy, you have less work than if you have Maine's stiff ocean winds. Then, of course, there are building codes.

So, you really need local advice. If your balcony is in the US, you may find good advice here. If it's in the UK, you should go to Houzz.UK. If it's somewhere else without a dedicated website, you should try to figure out what area in the US is most similar to your climate.

I note that @Lorraine Leroux drawings show that it will be quite hard to fit in a bed for two. Perhaps more doable if both people are no more than 5'8" or 175cm. And, if you are, you're looking at a custom bed, which means finding a mattress and sheets will be a pain.

It's 6 ft. x 7 ft. There's no other reasonable use except as a balcony. Unless you live in a frigid climate, or you're surrounded by brick walls of neighboring buildings, take advantage of having an accessible outdoor space!

OK, how to furnish it in a sensible and useful way?

Two chairs and a small table.