Education
to Cryptocurrency

Introduction

Besides Bitcoin, there are a lot of other Cryptocurrencies and digital currencies. You can use your invested funds into Coin-Banks to trade all of these currencies. This allows you to trade multiple currencies. Although Bitcoin is the biggest and most known Cryptocurrency it is not the only one.

We able you to trade any Cryptocurrency you choose it makes your life much simpler and opens the full menu of Cryptocurrencies for you to trade without having to open an account in each currency separately. If you had to open multiple accounts is would dilute your ability to trade when you choose and if you needed your funds to trade a different currency then you would have to wait to sell and receive your funds form one before you can trade the next.

If you want to trade Bitcoins, you need to research on what Bitcoin trading is all about before jumping in. Trading Bitcoins is just like trading any other currency, buy low/sell high concept. It’s the same as the other currencies in terms of the idea and functionality behind it but it is still comes with risks caused by volatility and unpredictability, that is why we recommend you follow the education structure and/or work with a Bitcoin analyst. If you want to succeed then you need to have a well-defined strategy. You need to know precisely what you want when you open a trade. You need to know what duration you are dealing with and what kind of changes would make you rethink your position. There are multiple levels of trading strategies which may give you an idea where to start.

Trading

Cryptocurrency

Trading the NewsThe price will often go up or down according to what is happening in the news. For example, a big exchange getting hacked or a government announcing draconian legislation may make the price go down, whilst exciting new start-ups getting funded, established businesses integrating Bitcoin or friendly regulations being announced may all make the price rise. Trading the news directly is very difficult to do as your main strategy – because it’s difficult to always hear the news first and react instantly. Most of the time, the market will already have moved before you get there – although if you are an obsessive news junky who is always logged into an exchange website or app then you may be able to get their first often enough for it to be worthwhile. Another method is to capitalize on corrections. Often the market will over-react to big news stories as people get caught up in the moment or jump on the bandwagon without really thinking things through properly. Because of this a 20% fall, for example, will often be followed immediately by a 5-10% rise as the market corrects this over-reaction. This provides an additional way to trade the news and make a profit.

Fundamental analysis- Fundamental analysis may be more familiar to stock market investors, but can also be used as a Bitcoin trading strategy. All it means is that you look at the fundamental data which affects the price – number of wallets, number of active wallets, number of transactions per day, volume traded on exchanges, volume reported by retailers who accept BTC, and so on. You then use this data to estimate what you think Bitcoin should be worth right now. You can then decide whether you think it is currently undervalued or overvalued (and how confident you are in that assessment) and then buy or sell accordingly.

Tools and Indicators-There are many tools to help you profit, and minimize your losses. Two you should learn about are limit orders (which execute a trade at a certain price, whether or not you are there) and stop-losses, which can be used to lock in profits when the price changes direction after moving in your favor. You will also learn to read the market by keeping track of different indicators.

Technical analysis is an extremely complex discipline, but you can start to understand the underlying trends and forces that shape the market by learning about volumes, moving averages of different kinds, and different patterns that emerge in the charts.

Methods

of Trading

Riding the TrendMost financial markets will have long-term price trends, in which the general direction of motion will be in one direction for months or years at a time. The price will go up and down all the time, of course, but a clear trend will remain. Some longer term traders will simply look for this long-term trend and trade in that direction. You do not even have to spot the point at which a trend turns and a new one begins in the opposite direction, as long as you don’t need to cash out any time soon. If an average trend takes 1 year to complete, then it really doesn’t matter if it takes you 5 months to be confident that it’s a new trend – you will still be right enough of the time to come out in profit (this is a gross over-simplification, of course, but is simply meant to illustrate my point).

What is day-trading?Unlike ‘value’ investing on fundamentals, where you might hold your investment for months or years, day-trading involves profiting from the short-term movements of a stock or commodity. These can happen on a time scale as short as from minute-to-minute or even less, since the markets are driven by sentiment and herd mentality as well as by appreciation of the long-term value or potential. Bitcoin is still in its infancy and has a relatively small market cap, and comparatively small amounts of money (by expert day traders’ standards) put into or taken out of it can push the price significantly one way or another – only to have the effect amplified by other traders who want to get in on the next major movement. At times of low volumes this can be particularly pronounced. It can also leave the market vulnerable to outright manipulation by those who hold large amounts of fiat money or Bitcoins, and dump them on the exchanges at strategic points in order to profit shortly afterwards.

Swing Trading All of the methods described above are long or medium term strategies. They will probably take many months or years to generate a good return for you, and you can easily end up taking losses or making minimal profits for many months on end. A faster paced way to either make or loss yourself a lot  of Bitcoin is day trading – buying and selling on the basis of short-term price movements, over the course of minutes, hours or days rather than months or years. The most common strategy for day trading is ‘swing trading’. This method uses a range of technical indicators (see the section below on technical analysis) to look for the turning points in short-term trends. You can then profit from the daily swings up and down in the price of Bitcoin, regardless of whether the long-term direction is up or down. This often involves looking for ‘support’ and ‘resistance’ levels. A support level is one where a downward price level is expected to meet resistance as buyers come into the market to pick up a perceived bargain, whilst a resistance level is one where an upward price move is expected to meet resistance of sellers taking a profit.

Leverage and Short Selling There are two techniques commonly used by day traders to increase their profits from market movements. Leverage, or margin trading, means borrowing money on a short-term basis to speculate on the price of Bitcoin. The loan is paid back when you exit the position. For example: The price of Bitcoin is $500. You borrow $5,000 to buy 10 Bitcoins. The price of Bitcoin rises to $550. You sell your 10 Bitcoins for a total of $5,500. You pay back the loan of $5,000, plus interest (say, $50). Profit: $450, on a price movement of $50.

Of course, you can also lose a lot of money this way: if the price goes down instead of up, you will lose ten times the price movement. This is what makes margin trading so risky – it is potentially extremely profitable, but can also be very costly.

Short Selling-Is a way of profiting from downward movements in price. Usually you would need to buy Bitcoins to profit, selling them at a higher price and pocketing the difference. If you want to profit from the price falling, you have to own Bitcoins in the first place. You sell them and buy back at a lower price. This is the simplest way of shorting, but it only works if you have Bitcoins in your account.

With true short selling, you effectively borrow Bitcoins, sell them, and buy them back at a lower price before returning them to the lender – keeping the difference in price. This is carried out in various different ways (you may or may not actually be borrowing Bitcoins from the exchange or another user), but the effect is the same. You can also leverage your short sells in the same way that you would leverage a long position.

ScalpingScalping is a strategy is applied mostly within short trading timeframes. The trading profit earned is the difference between bid price buying and ask price selling. Scalping works well in a quiet market, and for smaller amounts.

Position Trading This is a more complicated strategy compared to day trading where the timeframe can be as long as from many days to months. To execute this trading strategy, you will have to consider many different factors and analyze the long-term market trends. In general, positions can be opened as soon as a trend is established, and closed when it breaks.