The daily trading cryptocurrency has grown in recent months. High volatility and the trading of cryptocurrency is well suited for the trading day. Here we offer some tips for daily crypto trading, including information on strategy, software and trading bots, as well as specific things that new traders need to know, such as taxes or rules in certain markets. We also list the best crypto brokers in 2020 and show you how to compare brokers to find the best one for you.
How to trade cryptocurrencies
Afraid of losing? Here’s a quick plan to get you trading crypto fast:
1. Decide if you want to own the cryptocurrency, or just have a feeling that its value will increase or decrease.
- If you want the coin, you must have an exchange. Try Hodly. It is a simple and easy application.
- If you want to speculate on the price, you need a broker. Check out the list above or use the broker page for a full list.
2. Fund your account.
3. Buy the cryptocurrency you want or open a trade at its price.
Congratulations, you are now a cryptocurrency trader! Remember, you can buy or sell cryptocurrencies in a broker demo account. Unfortunately, you cannot train in an exchange. Cryptocurrency trading is generally about speculating on its price, rather than owning any of the actual currencies. For this reason, forex and CFD brokers are generally an easy introduction for beginners as an alternative to buying real currencies through an exchange.
How brokers compare
The cryptocurrency platform you choose to trade on is one of the most important decisions you will make. The exchange will act as a digital wallet for your cryptocurrencies, and don’t jump in without first considering the following factors. Some brokers specialize in crypto trading, others less so. Others offer specific products. For example, IQ Option offers traditional crypto trading through Forex or CFDs, but also offers cryptocurrency multipliers. It provides greater leverage and therefore carries risks and rewards. Innovative products like this can be the difference in opening a crypto trading account.
Applications and Software
Day traders need to be constantly connected, because just a few seconds of delay in reacting to major events can mean the difference between profit and loss. That’s why many brokers now offer easy-to-use programs for cryptocurrency, ensuring you can stay up-to-date whether you’re on the train or drinking your sixth coffee of the day. The cryptocurrency trading platform you sign up for is where you spend a significant amount of time each day, so find one that suits your style and trading needs. Exchanges like Coinbase offer deep platforms, such as their Global Digital Asset Exchange (GDAX). It is always worth setting up a demo account first to make sure the exchange has the technical tools and resources you need.
Security
Always check the reviews to make sure the cryptocurrency exchange is safe. If your account is hacked and your digital currency is transferred, it will disappear forever. While secure and complicated credentials are half the battle, the other half is fought with commercial software.
Rate
Each exchange offers different commission rates and fee structures. As a day trader doing high trading volume, only a marginal difference in rates can seriously reduce profits. There are three main rates to compare:
- Exchange rates – this is the amount you pay for using your cryptocurrency software. The currency and currencies you exchange may affect the rate.
- Trading fees – this is the amount you pay for trading currencies on your exchange. A markup fee is the cost of making a sales offer. A fee for policyholders is the cost of accepting someone’s offer.
- Deposit and withdrawal fees: this is the amount charged when you want to deposit and withdraw money from the exchange. You will often find it cheaper to deposit your funds. Also note that some exchanges do not accept credit cards. Using debit / credit is usually charged 3.99%, a bank account will usually be 1.5%.
Final word about runners
This is not a light decision. Do the math, read the comments and test the exchange and software first. Coinbase is widely regarded as one of the most reliable exchanges, but cryptocurrency trading on Bittrex is also a wise option. CEX.IO, Coinmama, Kraken and Bitstamp are other popular options.
Cryptocurrency trading for beginners
Before choosing a broker and trying different platforms, there are a few simple things you need to understand first. Understanding and accepting these three things will give you the best chance of success when entering the crypto arena.
- Discover What’s Growing: Bitcoin, Ethereum and Litecoin top the list for tradability and ease of use. However, there are also Zcash, Das, Ripple, Monero and many more to keep an eye on. Do your homework and see what’s going on and direct your attention there.
- Embrace volatility – Cryptocurrencies are very volatile. For example, the price of Bitcoin went from $3,000 to $2,000 and then rose to almost $5,000, all in three months in 2017. While this means that the risk is high, it also means that the profit potential is also high. . It always makes sense to look at the volatility of the exchange you decide on.
- Understanding blockchain: you don’t need to understand technical complexities, but a basic understanding will help you react to news and announcements that can help you predict future price movements. It is essentially an ever-growing list of secure records (blocks). Cryptography secures interactions and then stores them publicly. They act as a public ledger and eliminate intermediaries such as banks.
Purses
If you want to own the actual cryptocurrency, instead of speculating on its price, you should store it.
There is a wide variety of wallet providers, but there are also risks in using lesser-known wallet providers or exchanges. We recommend a service called Hodly, which is backed by regulated brokers:
Strategy
Once you’ve decided on a broker, familiarized yourself with their platform and funded your account, it’s time to start trading. You need to use an effective online strategy with an effective money management system to make a profit. Below is an example of a simple cryptocurrency strategy.
Swing Trading
This simple strategy simply requires vigilance. The idea is to watch for a correction in a trend and then detect the ‘swing’ outside the correction and return to the trend. A correction is simply when the candles or price bars overlap. You will find that the price of trends moves quickly, but on the other hand, corrections will not. Let’s say on your 250 minute candle cryptocurrency chart, you see 25 candles where the price stays within a 100 point range. If the price were to rally to a daily move of only 20 points, I would be seriously interested and watchful. You should see a lot of overlap. This tells you that there is a substantial possibility that the price will continue the trend. Next, you should sell when the first candle moves below the previous series of candles, and you can stop the last small swing. It is simple, direct and effective.
Tips
Even with the right agent, software, capital and strategy, there are a number of general tips that can help you increase your profit margin and minimize losses. Here are some helpful cryptocurrency tips to keep in mind.
Use news
Short-term cryptocurrencies are extremely sensitive to relevant news. When news such as government regulations or the hacking of a cryptocurrency exchange appears, prices tend to drop. On the other hand, if a large company announces that they will incorporate the use of a currency into the enterprise, prices can rise quickly. If you know news and can react quickly, you will have the advantage of the rest of the market.
Technical Analysis
Analyze historical price charts to identify revealing patterns. History has a habit of repeating itself, so if you can follow a pattern, you can predict future price movements, giving you the edge to make an intraday profit. For more details on identifying and using patterns, see here.
Study statistics
This is one of the most important tips for cryptocurrency. By looking at the number of wallets versus the number of active wallets and the current trading volume, you can try to give a current currency a current value. Then you can make informed decisions based on the current market price. The more accurate your predictions, the higher your chances of making a profit.
Trading on margin
If you anticipate a specific price change, trading on margin will lend you money to increase your potential profit if your prediction comes true. Exchanges have different margin requirements and offer varying rates, so it’s wise to do your homework first. Bitfinex and Huobi are two of the most popular margin platforms.
Remember that trading or speculating on margin increases the size of the potential losses as well as the potential profit.
Rules and Taxes
The digital market is relatively new, which is why countries and governments are struggling to incorporate crypto taxes and rules to regulate these new currencies. If you are not aware of this before you start trading, you can find yourself in an expensive awkward situation later.
Rules
Many governments are unsure whether cryptocurrencies should be classified as, currency or property. The United States introduced crypto trading rules in 2014, meaning that digital currencies will fall under the umbrella of ownership. Operators are classified as investors and must comply with the complex reporting requirements. Details can be found by going to IRS Notice 2014-21.
Taxes
In addition to the possibility of complicated reporting procedures, the new regulations may also affect your tax obligations. EE. In the US, the “ownership” ruling means that your earnings are now treated as capital gains tax (15%) rather than normal income tax (up to 25%). Tax requirements of each country’s cryptocurrency are different, and many will change as they adapt to the evolving market. Before you start working, do your homework and find out what taxes you will pay and how much.
Clashes
If you already have a strategy that works, it is worth considering a crypto trading robot. Once you have programmed your strategy, the bot will work, automatically performing the operations when the standard criteria are met. There are two advantages to this. First of all, it saves a lot of time. You don’t have to spend all day looking at the charts and looking for opportunities. Trade execution speeds should also be improved, as manual input is not required. Second, automated software allows you to trade multiple currencies and assets at once. This means greater potential profit and all without the heavy lifting.
Risks
That said, bots aren’t all plain sailing. If you want to avoid losing your profits due to computer crashes and unexpected market events, you will still need to monitor your bot. It can also be expensive. Although there are many options, such as BTC Robot, which offer 60-day free trials, there is usually a monthly subscription fee that will reduce your earnings. It can also be expensive to set up if you have to pay someone to program your bot. Additionally, you will have to pay to update your bot as the market changes. Although bots can help you increase your cryptocurrency earnings at the end of the day, there are no free rides in life and you should be aware of the risks. Perhaps the best asset is if you already have an established and effective strategy that can be easily automated.
Education
The most useful guide to cryptocurrency trading that you can follow is the one that can be given with a demo account. First of all, you have the opportunity to test your possible brokers and platform before you buy them. Second, it’s the perfect place to correct mistakes and develop your craft. Usually, you will be trading simulated money so that mistakes don’t cost you your hard-earned capital. After testing your strategy and fixing the kinks, start executing trades with real money. Online, you can also find a variety of intraday crypto trading courses, in addition to a variety of books and e-books. The more information you absorb, the better prepared you are, and the more likely you are to maintain an advantage over the market.
Key points
Think of this as your guide to day trading cryptocurrency and it will avoid most of the hurdles many traders face. Consider ease of use, security and its fee structure when choosing a broker and platform. There are a number of strategies you can use to trade cryptocurrencies in 2017. No matter what you choose, make sure that technical analysis and news play important roles. Finally, be aware of the regional differences in rules and taxes; you don’t want to lose profits due to unforeseen regulations.
