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Cryptocurrency markets are volatile and people can make a lot of money from the up and down price variances. When digital assets touched all-time highs this past December, a great majority of digital currencies lost more than 70 percent of their value. Now some traders were able to call the top, while others ‘hodled’ in hopes of better prices in the future, and then some traders shorted the markets all the way to the bottom. There are a few exchanges that offer leveraged BTC/USD futures contracts and other margin positions that allow traders to make decent profits even when markets are extremely bearish.
Long and Short Cryptocurrency Positions: Making New Trading Opportunities With Leverage
When people think about trading cryptocurrencies they think about traders who make money by buying cryptocurrencies at a low entry price and selling it for higher than the original purchase price. And because digital asset values usually fluctuate, they can wait for markets to drop again and repeat the cycle. However, there are many other ways to trade virtual currencies and over the past six months of bearish crypto-markets, some people have been utilizing leverage and margin trading to turn negative market values into profitable opportunities.
Traders using exchanges like Bitfinex, Kraken, Bitmex, and others could have shorted bitcoin this year making a lot of money if their strong convictions were timed right. Markets like the ‘Crypto Winter’ of 2018 was the perfect landscape for those who wanted to short cryptocurrencies and ride the slopes all the way down.
A list of exchanges that offer leverage trading:
- Huobi Pro
- Coinbase Pro
Start With Small 5-10X Positions and Improve Your Trading Skills Before Venturing to Extremely Risky 100X Positions
If you predicted the tides were going to turn after BTC touched $ 19,600 per coin on global exchanges, then you should have opened some short positions. That means you believe the BTC/USD exchange rate was going to drop during after that period of time. So what you can do next time this happens is choose an exchange like Bitmex, Kraken, and others to open a short contract within the exchanges margin section. If you are new to leverage and margin trading, then you should start off by using as little as 5-10X leverage to get used to these types of market plays. Exchanges like Bitmex offer 100X leverage, which you should only use if your margin trading skills are extremely accurate. Moreover, the Bitmex exchange offers an exact replica of its website that accepts testnet coins so people can learn to trade with leverage without actually using real funds.
Opening a Simple Short or Long Position With 10X Leverage
To begin, first open a ‘short position’ on an exchange that offers this type of trading and set up a margin sell order with a specified amount, order type, and price. If you have strong conviction the BTC/USD exchange rate will fall and you have 10 BTC worth of equity ($ 82,071 USD) you can choose a 10X (or less) short position which gives you futures contracts worth 100 BTC ($ 820,711). Essentially, if the spot price of BTC drops by 1 percent, the overall 100 BTC value drops 1 percent as well. You can continue to gather profit until it drops 10 percent and pull out a fraction of your profit early as well. Or another way to look at leverage trading is you can also purchase 1 BTC ($ 8,200) for 0.1 BTC ($ 820) and short the price as BTC’s value slides. The absolute most you can lose with this type of trade is your original margin ($ 776) plus leverage fees.
The same applies for traders going ‘long’ and if they think the price of BTC will rise they can open a ‘long contract’ for 10X leverage or more. Again, you pay 10 percent, 0.1 BTC ($ 776), plus the takers fee, and you can profit if the price rises. If the price doesn’t rise and say moves down in the opposite direction by 10 percent, your loss is still limited to your initial margin. There are also different types of trading processes as well you can select after choosing the desired price and quantity. Some exchanges offer limit orders and stop order approaches to leverage trading. ‘Stop orders’ are the exact opposite of ‘limit orders’ which means the price must end up lower for a ‘stop sell’ order or climb higher for a ‘stop buy’ order. A ‘market order’ is the fastest way to start trading as it will use the best prices in the books to initiate a trade. Getting familiar with each type of trade will improve your margin trading skills immensely.
In addition to limit, market and stop orders, there’s also a process called a ‘stop-limit’ which acts as a safety net and you can place a ‘stop-limit’ order by setting the ‘stop price’ to a predetermined amount. This means it will sell before the price goes lower than the specified price trajectory. A method called the ‘trailing stop’ order sets the ‘stop price’ at a specified amount below the market spot price that’s tethered to a ‘trailing amount.’ Then there’s also the ‘fill or kill’ technique that represents an order to purchase or sell and its usually executed instantly.
Risk and Reward Is Greater
Unlike typical trades, there are a few more associated costs with leverage trading like paying interest on borrowed BTC, because essentially you are borrowing liquidity from the exchange. Leverage trading is far riskier than traditional trades but the reward can be much higher as well. The reason for this is because leverage allows you to pay a fraction of the price for a full price trade, allowing individuals to enter much larger trading positions. Many of the trading platforms listed above also offer leverage options for a variety of other digital assets. The best thing to do is practice your leveraged trades with only a small fraction of coin and some small leverage. Some exchanges don’t offer huge amounts of leverage anyway and limit exposure to only 2-10X
After honing your margin trading skills, ‘Crypto Winters’ like the past six months of 2018 can look more like opportunities than losses.
What do you think about leverage trading? Do you short or long cryptocurrency markets on any of the exchanges mentioned above? Let us know how you trade in the comment section below.
Disclaimer: Trading articles and markets updates are intended for informational purposes only and should not to be considered as trading advice. Neither Bitcoin.com nor the author is responsible for any losses or gains, as the ultimate decision to conduct a trade is made by the reader. Always remember that only those in possession of the private keys are in control of the “money.”
Images via Shutterstock, Pixabay, Bitfinex, Bitmex, and Kraken.
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The post A Look at Leverage Trading: Learn to Run With the Bears and Ride the Bulls appeared first on Bitcoin News.
Cryptocurrencies have become very popular, and over the past few years, and due to new applications and infrastructure they’ve become easier to spend compared to the early days. Nowadays, individuals are starting to be paid for their services in cryptocurrencies like bitcoin cash or other digital assets, and living off of cryptocurrencies is the next step towards having a stress free crypto-based income.
Living Off a Crypto-Income
Today we’re going to talk about people being paid in cryptocurrencies, and how to maintain the same lifestyle you did when you were being paid in fiat currencies. Unfortunately, right now, digital assets like bitcoin cash (BCH) haven’t seen mass adoption yet, and there aren’t as many merchants as we’d like to see all around the world. So people who opt to be paid in BCH or another cryptocurrency, need to know how to pay for everyday items with their assets and settle their monthly bills as well.
The Gift Card Method
As far as paying for things with cryptocurrencies there are a few options available. One of them is using platforms like e-Gifter and Gyft to purchase gift cards to a wide variety of stores. There are a few hundred merchants who sell their gift cards on these sites, and customers can purchase cards from places like iTunes, Amazon, Best Buy, Whole Foods, and a slew of other establishments and restaurants. There are also other sites that sell gift cards for cryptocurrencies, and our Bitcoin.com store sells Amazon cards for bitcoin cash. For years now, individuals who get paid in cryptocurrencies have purchased gift cards to buy things at their favorite stores.
Looking for Merchants Who Accept Crypto Directly
Finding merchants who accept cryptocurrencies directly is another option for buying things for everyday living, as you might find a merchant near you that fits your needs. Most of the most popular digital assets out there have online directories that show a list of merchants and their locations. For instance, bitcoin cash fans can utilize the ‘Accept Bitcoin Cash Initiative,’ which is a curated list of merchants who accept BCH directly. With a simple Google search, individuals can also find a merchant directory for cryptocurrencies like dash, monero, and bitcoin core. Some people find that purchasing items directly helps the cryptocurrency ecosystem as a whole because these merchants accepting digital assets like BCH directly are not immediately selling for fiat.
Sell the Crypto to Exchanges
Another way you can live off of cryptocurrencies is by selling them to people on peer-to-peer exchanges like Localbitcoincash.org, or the various exchanges available online. However, a large majority of online exchanges will require you to verify your identification, because they are required by law to follow KYC and AML regulatory guidelines. This means you will have to verify a few things like your phone number, a picture of your license, and some exchanges also ask for proof of your address.
This process could take as little as two minutes or it could take weeks depending on the exchange and how busy they are, and some may deny you for specific reasons. However after jumping through a few hoops with a particular exchange, selling your cryptocurrencies is very simple and most platforms are fairly intuitive. Keep in mind when you sell on an exchange you are exposing your income to another party, and they may even ask you if you have paid your taxes in order to continue using their services. There are a few decentralized exchanges, but most of them (minus a few) only swap crypto-to-crypto assets.
Crypto-Infused Debit Cards
One popular way of living off a cryptocurrency income is the use of debit cards that allow users of these cards to purchase things wherever Visa or Mastercard is accepted. There are crypto-infused debit cards provided by companies like Wagecan, Bitpay, Shift (Coinbase), Wirex, and many more. Most of these cards support a bunch of the most popular cryptocurrencies, and when using them users can pay for bills or shop virtually anywhere. Some cryptocurrency cards are used just like your debit card after loading up some of your digital assets. Some cards operate differently too, like with the Bitpay card you pretty much sell your bitcoin cash for USD or EUR, and the value doesn’t fluctuate. But the Coinbase Shift card operates differently, because it deducts the exact value of the purchased item from whatever value your holdings are at the time.
Get a Backup Method and Ask Your Co-Workers How They Live Off a Crypto-Income
There are many ways you can learn how to live off of bitcoin, and these are just a few examples of how you can get started. It’s worth noting that using multiple exchanges and cards and having a backup plan on hand is highly recommended. Sometimes things happen and your provider may not be able to process your request when you need them. So having a backup provider on hand (like another exchange, another crypto-debit card, or another idea) so you can get by if your processor or merchant experiences downtime, is a pretty good idea.
Another good avenue to take when you start getting paid in cryptocurrencies is talking to your co-workers who have been paid in digital assets for years, and ask them how they live and pay bills. They may tell you some good tricks of the crypto-trade so you can move forward towards the digital age.
What do you think about the various methods available so people can live off of a crypto income? Are there any methods that we forgot? Let us know about your methods in the comment section below.
Images via Shutterstock, Pixabay, e-Gifter, Bitpay, and Wiki Commons.
Verify and track bitcoin cash transactions on our BCH Block Explorer, the best of its kind anywhere in the world. Also, keep up with your holdings, BCH and other coins, on our market charts at Satoshi’s Pulse, another original and free service from Bitcoin.com.
The post Paid in Bitcoin? Learn How to Survive Off a Crypto-Income appeared first on Bitcoin News.
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