Cryptocurrency trading can be highly profitable if you play your cards well. In this article, I will discuss all facts associated with Cryptocurrency trading and all the resources or tools required to trade Cryptocurrency for profit.
Bitcoin volatility is a traders dream. If market movement pattern analyzed correctly, then huge profit can be made in short span of time. But make no mistake volatility doesn’t mean profit is guaranteed, where there is high volatility, there’s high risk.
The human mind, which excels at pattern recognition, struggles with random outcomes. Hence even expert traders find it difficult to recognize the Cryptocurrency market pattern.
Benefits of Cryptocurrency trading
Cryptocurrency trading is far simpler than Forex, stocks and commodities trading because of these reasons.
1.Bitcoin (Global currency) –
Bitcoin is a global currency. Any central government does not control it. So it doesn’t depend on any given country economy or policies. Bitcoin is not a fiat currency. Cryptocurrencies can be sent from one user to another without any involvement of the third party like banks. Cryptocurrencies can’t be printed, unlike regular money.
When central bank print lots of money, inflation goes up which makes the currency value going down. Since there is a finite number of Bitcoins ( 21 millions of them) and the same hold true for other Cryptocurrencies. So supply side can’t be increased which makes Bitcoin less prone to inflation.
- Can trade 24/7 –
Bitcoin can be traded non-stop 24 hours 7 days a week. Unlike forex, stock, and commodities which only operate during business hours and closed on weekends. Trade in Cryptocurrencies remains active round the clock.
- Cryptocurrency is volatile –
Bitcoin volatility can results in high profits in short span of time. Hence, traders can make quick profits anytime a day. Bitcoin is also the cheapest asset to trade as there are minimal fees in Bitcoin exchanges comparing to traditional exchanges for forex trading. Bitcoin deposits and withdrawals are also quick, and documentation is not as hectic as in traditional trades. You just need to have Bitcoins in your wallet, and you can start trading.
- Leverage at Trading platforms
Leverage trading means you can trade way more than your capital investment. Bitcoin exchanges like Bitmex offer leverage of 1:10. For example, every 10 $ you invest, you will have the possibility to trade for 100$ at Bitmex. And on trading platforms like e-toro or Whaleclub, every 10$ let you trade for 250$ of Bitcoin. Any forex exchanges do not offer leverage trading.
Finding right Bitcoin exchanges as trading platform
When it comes to investing money everybody wants a platform where one can invest with a peace of mind. Just as the number of altcoins is increasing in the market so are the Bitcoin exchanges So finding a best Bitcoin exchange is not a piece of cake. The problem is that not every Bitcoin exchange is legit and can be trusted. If any Bitcoin exchange runs away with your coins or shuts down, then there is no way you can get your Cryptocurrency back.
There are some criteria’s which makes a Bitcoin exchange safe for trading.
1.Regulation & Security –
Bitcoin exchange should be regulated by concerned authority then only it can be trustworthy. You also want the security of the website must be top of the line. The website should be reliable and give transparent details of the coins. Almost every Bitcoin exchange offers two-factor-authentication. But there are websites which go further to protect user account by adding an extra layer of security like advanced encryption method, unhackable ledgers etc.
2.Fees –
Fess generally express a percentage of the transaction amount and an average cap around 0.30%. Bitcoin exchanges offer a volume based fee structure means if you buy or sell a large volume of Altcoins you have to pay smaller fees.
3.The number of altcoins –
Higher the number of altcoins and fiat currency available to trade, higher the legitimacy of Bitcoin exchange.
4.Trading volume –
Trading volume is also a major factor in the verge of a legit Bitcoin exchange. The high trading volume provides you an insight of that Bitcoin exchange, that people are willing to spend their money on that trading platform. This justifies the reliability and good business practices of that network.
Accordingly, there are some Bitcoin exchanges which can be used for cryptocurrency trading
Bitmex exchange, Coinmama exchange, Coinsecure exchange, cex.io, Poloneix, Bittrex, Coinbase
NOTE – You can read in detail about Bitcoin exchanges in my article Best Bitcoin exchanges worldwide.
Ways of Cryptocurrency trading
There are two types of cryptocurrency trading approach.
Long-term cryptocurrency trading – The first is long-term trading which is known as ‘buy and hold.’ In this method trader study price trends of an asset over an extended period and hope that asset price will increase in future. This approach is based on assumption. In case of Bitcoin trading, this method is proving profitable as you can see the boost in Bitcoin price recently. As more and more people are adopting Bitcoin and its associated technology thereby creating more demand of Cryptocurrency which will eventually cause an increase in Cryptocurrency price.
Short term cryptocurrency trading – The second is short-term trading where a trader buys the coin and hold it for a short period before selling them. Short-term traders rely on real-time data feeds and liquid markets to enable rapid entry to and exit from trades.
There are three to four approaches for short-term trading.
The first is day trading. In this method, transactions are completed within a day. A trader buys crypto coins and sells in short span of time. No transaction is held overnight.
The second approach is swing trading. A trader uses this method when an asset is most volatile. This method uses technical trading signals to look for the turning point in short-term trends. Traders make the profit on the daily swing of the price of BTC whether upward or downward. Swing trading can prove to be very profitable in short span of time if a trader learns to read the technical indicators.
The third approach is scalping. Here traders attempt to profit from minute to minute moves, often capitalizing imbalances in order-book to make a heap of minor gains. Traders tend to read charts of 5 minutes or less to make the profit using scalping.
There are few basic cryptocurrency trading strategies which may help you to maximize your profits.
1.Referencing prediction market –
Kocurrency prediction market predicts the price of cryptocurrencies based on the trading pattern of most successful traders in Cryptocurrency trading. It provides an insight into the method used by leading players in the market. Thus before start trading always refer to KoCurrency prediction market. It is like getting coaching from the experts of the trading industry.
2.Stay up to date with trending Bitcoin news
Buy the rumor, sell the news. If you want to make consistent profit from Cryptocurrency trading then it is very important to follow the recent Cryptomarket news. Sometimes it allows traders to predict up’s and downs of the Cryptocurrency market. For example, if a big country ban Cryptocurrency or a reputed Bitcoin exchange got hacked. It may make the price go down. And if established business integrated with Bitcoin or friendly regulation announced may make the price rise.
3.Fundamental analytics of trading asset
Analyze the critical data of Cryptocurrency which affects the price like a number of wallets, a number of active wallets, number of transactions per day, trading volume of currency etc can help predicting the value of the coin.
4.Crypto technical analysis
Technical analysis means studying chart patterns to predict the future price of Bitcoin. Technical analysis is purely based on the past (price and volume pattern) and trends of the coin. Technical analyst will analyze the past patterns and trends which will indicate the direction of price movement.
They will look for continuous patterns as well as repeated patterns of a coin to analyze whether the trend will be ongoing or it will reverse at this very point. In short, technical analysis uses mathematical formulae by studying past chart patterns and trends of coin to forecast its future price movement.
If you find technical analysis difficult and it is too much for you then there is a company which will provide you trade signals with complete details. You can signup it for now and get seven days premium membership as the bonus. Here you can seek help from experts. Sign up for sunshine profits
5.Trading the trends
‘Make trend your friend until it ends.’ If I explain it in simple words, here, you have to simply read the long-term price trend and trade in that direction. Generally financial market has long-term price trend in which overall motion of price will be in one direction for weeks, months, and even years. Of course, the price will move up or down all the time, but an apparent trend will be visible.
6.Trade with a clear strategy
Start a trade with the right mindset and a clear strategy. Bitcoin trading is a zero-sum game i.e for everyone who benefits someone else loses from another side. This determines that not everybody makes fortunes with Cryptocurrency trading. Cryptocurrency market is driven by large investors and they eagerly wait for new investors to make mistakes.
7.Beginners should start with minimal investment
Only trade with funds you can afford to lose. If you are new to Cryptocurrency trading then there are very good chances that you will lose. But with practice and time, you will eventually make the profit in future.
Gain as much as experience as you can because there is no alternative to experience. Don’t give up. Ultimately you will come out with your strategy and will become a professional Bitcoin trader.
8.Stop being emotional think like professional – Target and Stop
You should set a clear target level for taking profit and stop loss level for cutting losses. It means before starting trade you should set a clear goal that at this profit level you will halt the trade. Stop-loss means setting the loss level when you will stop the trade. Sometimes when a coin value is depleting than trader assumes situation will turn around and he will come out with minimum loss or even profit. But they fail to understand the high volatility of Cryptocurrency, in a matter of few hours that coin can get dumped up to 100%. This may make trader suffer a huge loss. So don’t allow your emotions get better of you.
9.Risk management –
Never put your all eggs in one basket. Your trading capital should be broken into smaller lots for multiple positions at different price levels.Manage risk across your portfolio.
Manage risk across your portfolio. Invest a smaller percentage of your capital in the non-liquid market. For those trades, we will assign greater tolerance.
10.Don’t be too greedy – Better go for smaller profits.
Before you embark your journey to become successful Cryptocurrency trader than think about this:
‘Pigs get fat, and hogs get slaughtered.’
It pays to be greedy, but not too greedy—or else you’ll get into trouble. If you get too greedy like a hog, you can end up losing it all.
Never look for the peak of the movement. Look for smaller profits that will accumulate into a big one.
11.Choosing Altcoin for trading
Altcoins are very volatile. Most Altcoins lose their value over time, in fact, sometimes very rapidly. So always trade Altcoin which has some weight behind them. Therefore it means choose Altcoins which have high or medium daily trading volume and have a broad community with continuous development.
12.Avoid crowd sales (ICO)
ICO stands for Initial coin offering. Many newly launched coins or going to launch coins offer a crowd sales for the investor, i.e., opportunity to buy it at a discounted price for a day or two. This is done to increase the trading volume of the coin from day one. Sometimes it yields a good profit for the investors as currency value doubled or tripled in respect to crowd sale price.
But many coins proved to be a scam, either they are traded for a day or two then they disappear, or they run away with your Bitcoins. So be cautious when a newly launched project offers a crowd sales.
13.Use hardware wallets to store your coins
After completion of trade never leave your Cryptocoins on the exchange. It will be more secure to store your coins in a hardware wallet. Where you can leave them without the worry of losing them. Most recommended hardware wallets are Trezor and Ledger Nano S hardware wallet. These both are cheap and safest place to store your coins.
Cryptocurrency trading derivatives and trading platforms
Bitcoin CFD trading
CFD stands for Contacts For Differences. The whole concept of CFD is that you can trade any asset without owning it. Regarding Bitcoin, it is same that you can trade Bitcoin without owning it. Originally CFD was created to gain exposure to Bitcoin without owning it.
CFD is the contract between buyer and seller where the seller will pay the buyer difference of the current value of Bitcoin to the value of Bitcoin at the end of the contract.
Benefits of CFD trading
1.The government regulates security and trust – CFD platforms. So they offer a high level of safety to the investors.
2.No hassle of wallet – As you don’t own Bitcoin in CFD trading. So you don’t need to worry about wallet to store them.
3.Leverage – CFD platforms provide high leverage. At plus500 trading platform if your capital investment is 100$ then you can trade up to 2500$ worth of Bitcoins.
4.Flexible – CFD allows a trader to go long (which is to bet the price will rise) or to go short (which is to bet the price will fall). A trader can even enter (start) a trade anytime or any-day and also opt out (close) anytime or any day.
5.Demo account – e-toro and other brokers offer demo trading account. Which mimics their real trading platform. You can use their demo trading account until you feel to trade for real.
Disadvantages of CFD trading
1.Higher fees – CFD trading platforms charge slightly higher fees than Cryptocurrency exchanges.
2.Not suited for long-term traders – Although CFD trading is a less risky form of Cryptocurrency trading. They are not ideal for long-term traders as there is a cost to maintain an open trade. Which is 0.1% of your daily position.
Below are best CFD trading platforms with their features.
1.e-toro
Incredible trading interface
Support most Cryptocurrencies
Robust security
Offers copy trading
Demo account with bonus to learn the basics
96% customer satisfaction
Most recommended broker
2. Whaleclub –
Can trade Forex, Commodities, Cryptocurrencies, indices, and Stocks
Regarding Cryptocurrencies, you can trade Bitcoin, Ethereum, Litecoin, and Dash.
Instant withdrawal and deposits
No transaction fee, only fees charged by Bitcoin network.
User-friendly interface
Demo account with 10000$ bonus
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3. +Plus 500
Can trade multiple assets including most cryptocurrencies
99% customer satisfaction
Incredible customer support
Provide leverage of 1:200
Demo account with 100000$ bonus to get a feel for the real trading interface.
Forex, Commodities, Cryptocurrencies, indices, Stocks, and ETF’S
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4. Avatrade
Can trade Forex, Commodities, Cryptocurrencies, indices, and Stocks
Support most Cryptocurrencies.
One of the trusted trading platform
User-friendly interface
Provide leverage of 1:200
Demo account with 1000$ bonus
5. Fortrade
Can trade Forex, Commodities, Cryptocurrencies, indices, and Stocks
Support most currencies
can trade 24 hours 7 days a week
Sign up bonus of 30$
Demo account with 1000$ bonus to get accustomed to cryptocurrency trading
Provide leverage of 1:200
Margin Cryptocurrency trading
In a nutshell, Bitcoin margin trading means borrowing funds from a trading site (broker) for trading. It allows a trader to trade more than their capital investment.
For example, If your initial capital investment is 100$ and you choose an exchange which offers 1:10 leverage. Then you can borrow 900$ from that exchange hence you will be allowed to trade for 1000$. If the price goes up for 1%, then your overall profit will be 10% and id if the price falls to 1% then you lose 10%.
As you can see above as the chance of making profit increases so the risk of losing more. But maximum you can lose is your initial investment. The exchange will close your position at a value before your balance enters in negative values this is called liquidation value. This is done so you can not lose borrowed money, only lose your own invested money.
Keep in mind you have to pay interest on the borrowed money. Take into account amount you are willing to risk, considering you can lose all your money. Set clear levels for making the profit or a stop loss.
Because of excessive volatility of cryptocurrencies try to open short-term trading positions. Daily fees in margin trading are almost negligible, but in the long term, it can sum into a substantial amount. Plus interest you have to pay on the borrowed amount will also add up to a significant sum. So it is always wise to open a short-term position.
Best Bitcoin margin cryptocurrency trading platforms
Bitmex – Bitmex is the best margin trading exchange online. It offers leverage of 1:100 in both short-term and long-term margin trading. Which is by far the most than other Cryptocurrency exchanges. You can read the complete review of Bitmex exchange here.
You will receive 10% discount in all types of cryptocurrency trading on Bitmex if you sign up using this link. Sign up for Bitmex.
Cex.io exchange – Cex.io is another Bitcoin exchange which offers margin trading. It provides leverage of 1:3 in Both short-term and long-term margin cryptocurrency trading. You can read the complete review of cex.io exchange here.
Coinbase – Coinbase is another Bitcoin exchange which offers crypto margin trading. It has recently started this service. It provides leverage of 1:2 in both short-term and long-term crypto margin trading. Read the complete review of Coinbase here.
Avatrade, Fortrade, e-toro, plus 500, Whaleclub all these trading platforms offer margin trading. These platforms are the first choice for traders because they are specifically designed for trading and provides a user-friendly interface for any cryptocurrency trading. They also offer demo account to get a feel of real Cryptocurrency trading. They offer 1:20 leverage for both short-term and long-term trading.
Binary options
In Bitcoin binary options trading you have to predict the price of Bitcoin will rise or fall in a certain amount of expiry time. If your prediction is correct then you win option’s payoff, if your prediction is incorrect, then you lose your investment.
That’s why they are termed as ‘Binary options’ because either you ‘win’ or ‘lose’ there is nothing in between. Binary options is a risky investment but “without risk, there is no reward.” If you are ready to make fortunes in Binary options then there are some government regulated Binary options trading platform.
Olymptrade
100% deposit bonus
96% customer satisfaction
Provide leverage of 1:200
Demo account with 1000$ bonus to get a feel for the real trading account.
Can trade with as little as 1$
Minimum deposit only 10$
Expertoption
76% success rate, highest in Binary options trading.
Start trade with as low as 1$
Minimum investment 10$
Robust security
Demo account with 10000$ bonus.
IQ OPTION
Start trade with as little as 1$
Minimum Investment 10$
Provide leverage of 1:200
Buy most Cryptocurrencies by one click
Demo account with 10000$ balance to get accustomed to real trading.
All withdrawals are processed within one business day.
BINARY OPTION ROBOT
It is a software which is programmed to do auto trades
Free of cost
More than 75% success rate
Responsive customer service
Demo account with 1000$ bonus to get accustomed to trading platform
Cryptocurrency future contracts trading
Future trading, in general, is counterparty contracts which come into existence when two parties enter into it, in our case they are trader and Bitcoin exchange. Future contracts give a trader rights to make a purchase or sell the specific amount of cryptocurrency once it reaches a predetermined price on a particular date in future. A trader can make a profit by speculating the price of Bitcoin will be higher or lower at a particular date than it is today.
In future contract, buyer buys the right to sell cryptocurrency at a particular price. On the other hand, the seller agrees to accept the cryptocurrency at that specific price on a particular date. It is a technique to hedge positions and reduce the risk of an unknown future price. Bitmex, Cryptofacilities, are some platforms which provide Bitcoin future contracts.
Successful traders open short and long position multiple times every week and capitalize on Bitcoin volatility. They use technical analyzes and pattern trends to predict the market movement. It enables them to make a small profit on every future contract they hold. Bitcoin future contracts becoming more and more popular among traders now. Bitmex exchange is the first choice for cryptocurrency future contracts traders.
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