Some investors in cryptocurrencies ask themselves an important question. Can I improve my results in investing, using the same amount of time? Can I achieve similar results, only much faster?
The issues of productive and effective use of hours spent on the cryptocurrency market are at some point worth analyzing. The search for inspiration begins with the most successful investors. How do they manage your capital? What investment methods do they use that can be implemented?
Trade with leverage on the cryptocurrency market
Why is it worth considering Bitcoin trading with leverage? The most important reason is the possibility of staking borrowed capital and collecting a larger profit if you are right. This is the quick scheme to earn money, but it comes with considerable risk.
There are many places offering leverage trading. Bitmex, Binance, KuCoin, Bitfinex are the first to come to mind, but there are many more. You can use up to 100x leverage, which is huge.
How to trade BTC with a leverage up to 100x? Step by step instructions
Registration is simple, still open and everyone can try their hand at the market.
- Register on the Bitcoin exchange with leverage (you only need an e-mail address)
- Top up your Bitcoin account. You can transfer funds, for example from the most popular cryptocurrency exchange.
- Make the first purchase of futures contracts on the BTC price
Interface seems complicated at first, but it’s just an impression. After a moment, it will turn out that most of the information is useful. Let’s use BitMEX as an example of the trading interface.
How to open a long position, a bet on the increase of Bitcoin prices? Please take a look at the leverage.
How to open a short position, a bet on dropping Bitcoin prices? Please note the possibility and amount of used leverage.
The way the setting up works and maintaining a position is not difficult. It is worth carrying out the first transactions with less risk and no leverage to get used to the interface and mechanisms for opening and closing positions.
How to make regular profits from trading?
Cryptocurrency trading is an activity in the digital asset market that consists in making profits from betting on the direction of the price movement of Bitcoin, Ethereum and other cryptocurrencies. Correct prediction leads to a profit that can be multiplied even 100 times using the so-called leverage. Trading appeals to many investors’ imaginations and promises quick profits. It also carries the risk of a rapid loss of capital, especially when playing with a margin account.
Investors who want to start trading quickly and make profit from the volatility of BTC usually start with Binance. The most important argument, in addition to being one of the safest platforms with the highest liquidity, is the possibility of receiving a commission discount. Why is it important? Commissions on contracts, especially with high leverage, can exceed the invested capital with active game, especially if we make profits.
Why is it worth it? Binance is a large and secure platform. On the other hand, it’s competitor Bitmex, In order to protect investors’ funds from excessive risk, the platform secured more than $300 million as insurance (0.15% of all BTC).
Take advantage of the trading platforms’ offers
Several players joined the competition for the title of the most popular cryptocurrency trading platform. The main criterion is the number of participants and their capital. This means that gathering the greatest speculative capital around the platform will allow for the highest liquidity, and thus a chance for the most accurate representation of the real price. In addition, liquidity will allow all participants to find a pair to trade virtually at any time, 24 hours a day.
Leveraged trading on BitMex
BitMEX is a cryptocurrency exchange that allows you to trade with leverage, which is associated with greater risk and greater potential profits. Up to 100x leverage!
BitMEX is the first choice for most traders. A trusted platform that allows you to trade with a leverage of up to 100x, offers futures on the price of the most popular cryptocurrencies: Bitcoin, Ethereum, Litecoin, Ripple, EOS and others, and contracts for the difference in price.
Leveraged trading on Binance
The Binance cryptocurrency exchange is the best place to start trading. Lots of currency pairs, API for trading bots and automatic trading systems are just some of the advantages.
Binance is the fastest growing exchange. It is the most popular cryptocurrency exchange where you can exchange Bitcoin for hundreds of other tokens with potential. Binance also allows cryptocurrency trading with a lever, among many other services and possibilities.
Leveraged trading on BitFinex
BitFinex is one of the most recognizable cryptocurrency exchanges, especially popular in countries in the west. It enables you to trade both cryptocurrencies and a large number of tokens as well as derivatives on the BitFinex Derivatives market. Registration on the stock exchange has opened again.
How to get an advantage over other traders?
The key word for the advantage is still automation. It will be it both in the development of the entire cryptocurrency space, as well as in trading. What’s uplifting and hopeful, you don’t need to be a programmer to be automating. Scripts and facilities are created every day, published under an open license and available to everyone. Basic knowledge of programming in languages such as Python or JavaScript will certainly be useful. More practice would let advance through levels much faster.
What should a cryptocurrency trader’s workshop consist of? We already have an account that allows trading, we need a source of knowledge and data at the beginning. The prices of the relevant instruments can be found on Trading View, at the beginning, information in which direction the speculators are betting on price changes: long positions on Bitcoin: BTCUSDLONGS, short positions on Bitcoin: BTCUSDSHORTS. The DataMish website provides detailed data from the trading taking place on the major BitFinex exchange. Coinfarm will show the signals of technical analysis and the situation on the largest exchanges enabling trading. A list of places where you can trade cryptocurrencies can be found on CoinGecko, among others.
How to automate trading?
There are many ways to help yourself achieve even greater profits in even less time. We have already developed this topic in an article on trading bots. We can summarize the topic briefly: the trading automation market is still growing and more and more advanced services are available at ever lower prices. The most popular way to automate trading is to link your account on the platform to the trading bots service.
CryptoHopper cryptocurrency trading bot
The most popular service is CryptoHopper, which allows you to manage your cryptocurrency portfolio, connects to the most popular trading platforms and allows you to copy the strategies of the best traders. Without the need to know programming languages, you can apply strategies such as market maker, arbitrage, or strategies based on technical analysis. You can sign up with free 7-day bot access.
Market Maker strategy on BitMEX
It is not easy to earn from trading, as the results of many eager enthusiasts have proven. However, the vision of big wins ignites the imagination of more and more new players. How to start so as not to burn yourself with too much failure and not lose everything? You should have… a strategy.
The action plan is the most important aspect a trader should have. The right mental attitude, more capital, experience comes later. By the way, the beginnings can be more difficult because the missing starting capital can be replaced in the initial stages with a leverage. This increases the risk hugely.
What’s the simplest strategy that even a beginner can use? Market making on BitMEX. Careful reading of the regulations will allow us to realize that for some orders the commission fees are… negative. This means that if we order a buy or sell at an appropriate price, we will receive additional money from the exchange when executing this order.
Attention! In order to receive payment for an order, someone has to execute that order from the ledger, i.e. buy at our price (when we sell) or sell us at a given price (when we have a buy order).
In addition to the completed transaction, we receive a return from BitMEX in the amount according to the table above. Sometimes you have to wait for a long time for order execution, especially when the market moves in the opposite trend. You can even stay with your unfilled order “forever”. It is worth remembering that if we trade with leverage, the commissions will be correspondingly higher when we convert them to absolute values in BTC or USD.
Case study on the falling prices market
Earning in the cryptocurrency market is not for everyone. The strategy of holding and not selling under any circumstances, the so-called “hodl”, paid off only for those who invested early enough.
Investors must look for other ways to increase their cryptocurrency holdings. It is good practice to rarely check cryptocurrency rates and only pay attention to how much BTC, LTC, ETH or other digital assets you have under your control.
How to speculate in the cryptocurrency market?
The condition for participation in active speculation on the cryptocurrency market is having capital, an appropriate mental attitude and strategy. Contrary to how it does look, these are not simple conditions.
Capital, despite being readily available in times of low interest rates, rarely makes its way into cryptocurrencies in large amounts due to high volatility, low adaptation and a healthy approach to risk.
Investors’ mental attitudes can change quickly from euphoria to despair. Trading involves an emotional approach to gains and loses, when ideally trader wants to completely cut off emotions. This can be achieved through a strategy. An overall plan that gives you an edge over other market participants. The plan allows you to implement your assumptions and end up with more money than you originally had, if you are right.
Speculation on the cryptocurrency market is so easily available that starting is no longer an obstacle, even for a user who is not very experienced or familiar with computers. The websites allow you to trade (even with a lever) seconds after your account is credited with cryptocurrencies. So let’s try to go through an example transaction that meets the principles of reasonable trading.
How to invest in a downtrend?
Investing in a downtrend, if we assume that playing with the trend is correct, requires the ability to play “short”. It means you can firstly sell the asset, only afterwards to buy it back cheaper and profit from the difference. Otherwise, the rebound strategy does not have its full potential.
You can also sell your cryptocurrencies on the tops and buy them lower, which leads to profits. Our transaction was based on the assumption that we are facing too rapid rise in BTC rate. We predicted a downtrend, when BTC price would have to be corrected. The “revert to average” strategy works well in the long term and on historical data.
Comments of this particular trade? The rapid increase in the price of BTC from $4,000 to over $14,000 made us look closely at the potential for further gains. The first two sales decisions were made on a too steep (in our opinion) approach to the top. The next ones were taken after the retreat had been confirmed. The last one after the formation of a double peak, using the last reflection.
Then all that’s left is to wait patiently and watch the price. Two months after the first transactions, the price broke the support and allowed BTC to be bought back almost 20% cheaper.
The example shows what is a mid-term trading strategy. It is not catching highs and lows, it has not been possible to catch the highest prices in this period, and the BTC price will probably drop from 8k. However, it is worth leaving some profit opportunities on the table for other investors.
It is also not sitting in front of a monitor every day looking for patterns on the screen. In the following months, we gave up looking at the charts as the market showed neither an up nor a break, it was just a time to wait and get into something productive.
What signals do the markets give?
Investors in cryptocurrencies have enjoyed exciting profits. Unfortunately, it turns out very quickly that they have to say goodbye to new price peaks, though probably only for a while. After rapid gains, the market goes downhill, the pace of which can be seen in the summary below, which shows the top 20 cryptocurrencies in terms of capitalization couple of years back.
This type of market requires strong psychological skills and a strategy.
It is rather rare for the top cryptocurrencies to drop 5% or even 7% as with EOS. For the cryptocurrency market, rapid declines can only be a short phenomenon. The subsequent rapid spikes can not only compensate for the losses… The market may end up even higher in the end!
Do rapid declines show the direction of a long-term trend?
Rapid downturns can be offset by the demand of investors who are “buying the dips”. Speculators, and more specifically bots that have been programmed to open long positions after reaching certain distance from the average. How is a long-term investor supposed to behave in this situation?
If the price that has been ticked off the chart seems attractive, it’s a good idea to leave a long-term buy order and keep your cryptocurrencies in a secure wallet for the long term. Without a clear breakdown of the resistance, we are still in a long-term downward trend, at least until new, even local, price peaks are reached. It is worth remembering that in such a situation there is a greater chance of seeing lower prices, and therefore the possibility of buying at even more attractive price.
The overnight cryptocurrency crash, especially on Monday, means Asian investors are not feeling very confident. A quick return to previous valuations means that the market is indecisive about the further direction. This is not a good sign for other markets, which would be more likely to see continued and calm increases in deflationary assets like Bitcoin. We monitor the liquidity of cryptocurrencies and continue to believe that they are an indicator of health for other markets, including the most important one for the average market investor.
What patterns repeat during the growths?
Despite the fluctuations in the rate of Bitcoin and smaller cryptocurrencies, the market is increasing capitalization and the value of individual coins increases. It is also thanks to innovations and designs that do not appear or are significantly undervalued on coinmarketcap lists. Some of the cryptocurrencies we describe have achieved dizzying returns.
Correlation of cryptocurrencies with US stock market
Diligent financial market observers have certainly noticed a pattern that can be used to gain advantage over the market. The general liquidity ratios that are reflected in the major US stock indices show dollar liquidity. High liquidity and “risk-on” means that part of the speculative capital flows also to the cryptocurrency market.
Despite the conviction of investors that cryptocurrencies already play an important role in the global financial system, a sane investor will view the influx of speculative capital into Bitcoin as simply an attempt to make a profit.
Can the rule in which good information from world markets cause an inflow of capital to cryptocurrencies and increases in their prices be used to generate profits? It is worth watching news not only from the world of cryptocurrencies, but also general information from the world economy and the sentiment of producers and investors.
Is the pattern real? Altcoins first, then Bitcoin.
The strong rises that brought cryptocurrencies to the price peaks were remarkably regular. First, the capital flowed to the most promising projects, with good sentiment in the industry media and among investors. The capital then spilled over into other altcoins, pumping out their value.
Then the situation reversed, Bitcoin was catching up with the gains, with some of the capital flowing out of the alts, reducing their prices. Once Bitcoin reached a level that was satisfactory to speculators, there was a period of greater volatility at the same price level. This cycle was repeated several times, allowing speculators to expand their positions during downturns and take profits after rising prices.
Needless to say, we witnessed this pattern all over again. The gains concerned the most promising projects such as Binance Coin or KuCoin, large projects such as Ethereum or new projects such as Chainlink, Solana, Terra or PolkaDot. Can a speculative strategy be based on such a scheme?
What to do when we have significant gains behind us?
After significant increases in cryptocurrency prices, it could be concluded that this is a good time to sell and wait for better prices. Unfortunately, this strategy has not worked well in the past.
The first risk is the possibility of long consolidation at higher levels and missing lower prices on the way up. The second is very simple, prices may not fall to satisfactory levels in the coming months. The last one is the hardest to overcome and it is about perception. A drop in prices can create the impression that the cryptocurrency market is more dangerous than it really is.
This may result in aversion to investments at lower prices, due to a worse market sentiment. There is an additional factor, which is the attempt to hit the low price. For such investors, a good advice is to limit the number of transactions, use the cryptocurrency exchange with the lowest commissions and averaging.
What is the risk of BTC trading with leverage?
The most important thing to understand about risk in Bitcoin trading with leverage is the possibility of a quick loss of the deposit. This is most often due to the rapid market movement in the opposite direction than assumed.
However, it may be different, and the loss of the deposit will take place over a longer period, for example due to the investor’s lack of response in the appropriate, previously established levels of stop loss or take profit.
Is it worth risking leverage on the cryptocurrency market?
A very important argument in favor of trying is the possibility of connecting trading bots dedicated to cryptocurrency markets. Automation of trading will allow you to compete with a completely different class of traders. Exposure to the competition in trading with a leverage on cryptocurrencies’ market should mobilize the investor to learn capital management and a deeper understanding of the psychological aspects of trading.