Trading Bitcoins for beginners
The gods do not burn pots. Everyone once understood very little about business and only by persistent study of the theory, and later by trial and error in practice, increased skill to a decent level. In this case, to a level allowing, with a high degree of probability, to trade in crypto-currencies on exchanges in plus. Most crypto-exchange exchanges, in fact, are not regulated. No one controls how exchanges protect their clients’ funds or manipulate the price. One of the largest exchanges in the world, Bitfinex, has already been hacked, and it is not known for sure where it keeps the money of its customers. Crypto-currency wallets also attract hackers, they are more vulnerable than traditional bank accounts. So, what is trading bitcoins for USD?
Trading bitcoins for cash
If you invested in bitcoin as an investment, there are two ways to advance: either leave it alone and watch how the price rises, or trading bitcoins for profit for other altcoins. The success of the bitcoin trade will depend on whether the country’s crypto currency is allowed in general. For example, trading bitcoins in India can be successful.
Trading bitcoins between exchanges
Among the current methods of earning on the crypto currency, trading (or trading on the exchange) is the simplest way with a minimum entry threshold. Trading crypto-currencies on stock exchanges is very simple and fascinating. A constantly growing market allows making a significant profit, so trading with crypto-currencies has become so popular. However, the apparent complexity of the whole process of trading on the stock market stops many. The most adequate tool to trade the crypt is currency pairs. To start trading, for example, with a pair of USD / BTC, you need to go to the exchange, put a deposit on the account, enter into a deal cheaper, get out more expensively (or vice versa). Everything is as usual. Depending on the level of the trader, you can use 4 trading strategies:
- Scalping. It is suitable for couples with a high spread (to repel the commission). The purchase is carried out using a limit order, followed by a quick sale. The profit is made due to the number of transactions.
- Exchange arbitrage. The trader buys for dollars a certain amount of crypto currency, which he sells for another type of crypto currency, and again buys dollars. (Example of the chain: dollar-ether-bitcoin-dollar). With a competent implementation, it brings up to 0.5% of profit on one transaction.
- Volatility trading. A trader chooses a tool with high volatility and using the skills of technical analysis, calculates risks, finds advantageous points of entry and exit from transactions. In principle, you can trade with any crypto currency. And remember: not all currency pairs are equally useful!
- Margin trading. It gives the trader an opportunity to increase the potential profit due to the agreed multiplier, so-called, leverage. In fact, such exchange lending can benefit only very disciplined traders. After all, non-compliance with risks in margin trading threatens almost instantaneous calls. First you will be asked to replenish the deposit, and in case of failure to fulfill the requirement, your account will be closed. Existing exchanges of crypto-currencies, we offer credit shoulders in the size from 1: 1 to 100: 1. This is a strong temptation, and almost guaranteed death for the beginner.
- Irreversibility. After confirmation, the transaction can not be canceled. Under no circumstances. No one can interfere in the process – neither you, nor your bank, nor the president, nor Satoshi Nakamoto, nor your miner. No one.
- Anonymity. Typically, you can track the flow of transactions, but the address does not need to be at least somehow connected with the real identity of the user.
- Speed and global reach. Since the whole process takes place in a global computer network, your physical location does not matter. No difference, you send bitcoin to your neighbor or someone on another continent.
- Security. The balance of bitcoins is fixed in a cryptographic system with a public key.
- Deregulation. You do not need to ask someone for permission to use the crypto currency.
Basic tips for trading crypto-currencies:
- Keep track of the top ten crypto currencies that are leading in terms of traded volume. It does not matter if you are going to trade them, or not. The first and the main crypto currency has always been, and in the near future will be bitcoin. But if something goes wrong with it – you will always have other options.
- During the drawdown of the instrument – buy, but do not sell. If your money management, and the level of experience allows – you can take advantage of the leverage.
- Regularly withdraw a part of the profit. It is necessary to insure your profit from the surprises of the market, and also to feel real money.
- Follow the news. Crypto currency is a very young industry, and here all kinds of surprises are possible. Within a few trading days, bitcoin could collapse by $ 1000 and then rise to $ 1500. In addition, crypto-currencies do not have a unanimous legal status. For example, the Chinese government banned crypto-currencies, and Australia plans to release its own. Without knowing this, you can find yourself in a disadvantageous or unpredictable situation.
- Always observe risk management. Do not rearrange stops, or even better – use limit orders.
For traders with limited crypto-currency resources (Bitcoin or other coins), there is the possibility of margin trading, which allows increasing the amount of investments. In fact, your investment is increasing, although you do not even have such assets. It is important to note that marginal trading can not be recommended to all and involves very high risks. Pay attention that when investing in crypto currency, buying it through small trading pairs may sometimes not be very profitable because of the overvaluation and small volumes at the top of the glass. Do not like these pairs and visitors bitcoin-cranes. If you are in doubt about your trading talents, then select a pair whose minimum deal size is smaller, and you like trading dynamics more, and, without investing, before acquiring experience, large funds, begin gradual training (including on your own mistakes). You can download the manual on trading bitcoins for beginners (PDF format).