There are Two Types of Cryptocurrency Investors
The crypto industry has been growing at an incredible rate over the last decade, and has proven that there is a lot of money to be made (and lost). For some, the money is made similarly to long term investors in a company or precious metal. For others, they make money by trading short term pricing movements similarly to traders of ForEx or day traders in stocks.
There are two types of crypto investors:
Cryptocurrency Buyers (HODLers)
- Buyers (or HODLers) who buy and hold for long periods of time.
- Long term investors have high long-term conviction of the crypto in their portfolio and do not want to sell – even during volatile price movements. Long term investors zoom out and look at months or years into the future for sell price targets.
- To read in-depth research on our recommended exchanges for HODLers, click here.
- Traders who buy and sell based on short term price movements and exchange arbitrage.
- They may not have any conviction at all in what they are trading – they might just be reading price movement charts and want to make money off the volatility. This is similar to how a ForEx trader operates.
- Traders may also have high conviction in a crypto, but believe their best way to accumulate is to buy and sell based on trading charts.
- To read in-depth research on our recommended exchanges for Traders, click here.
If you’re interested in day-trading stocks or trading ForEx based on technical or fundamental analysis trading crypto should be right up your alley! You’ll be looking at a lot of the same trading charts, but with many, many more tradable pairs and higher volatility (opportunity).
Why Trade Cryptocurrencies?
Cryptocurrency Trading Volatility
Volatility is the lifeblood of short term asset trading. In ForEx trading, traders look for tiny fluctuations (PIPs in ForEx trading) in price relative to the other half of it’s tradable pair. Volatility is a GREAT quality since you can make money up or down. Traders don’t need their asset to go up like traditional equity investing – they just need volatility to trade back and forth.
Be careful. Fortunes are made and lost trading cryptocurrencies as the volatility is amplified compared to other assets.
Crypto trading is ForEx trading on steroids.
This is a pretty standard week in Bitcoinland – just look at that price volatility! Good traders make money on price movements up AND down meaning profit opportunity is endless. Did we mention that there are hundreds of other cryptocurrencies that are even more volatile?!
While Bitcoin is volatile and going through intense price discovery, don’t forget that the price of Bitcoin has tended to go up over the long term – so don’t risk your whole stack! If you want to trade we recommend dollar cost averaging your Bitcoin stack (Binance.us) and trading (Best Exchanges for Traders).
Cryptoccurency Trading is Open 24 hours a day, 365 days a year
Regular trading hours for the U.S. stock market, including the New York Stock Exchange (NYSE) and the Nasdaq Stock Market (Nasdaq), are 9:30 a.m. to 4 p.m. Eastern time on weekdays (except stock market holidays).
You can trade crypto 24 hours a day, 365 days a year. Crypto trading doesn’t take any days off, and the best traders don’t either.
Number of Tradable Pairs
As stated earlier, you don’t need to believe in or have conviction toward a certain cryptocurrency – you just need to be able to track it’s technical indicators and trade it’s price movements. There are thousands of cryptocurrency coins to choose, and thousands more of tradable pair options, so the opportunities are endless.
If you believe in the long term appreciation of Bitcoin compared to the US dollar (doesn’t take a genius to see that!) you can trade it. This is a pretty conservative approach. If you believe there is an under-the-radar cryptocurrency that you believe will appreciate quickly vs either the USD or another cryptocurrency, in the short term, you can margin trade with leverage to get incredible returns. This carries with it very high risk and should be reserved for only the most experienced traders.
Cryptocurrency Margin and Leverage Trading
Margin trading is when you use borrowed funds from a broker to trade a financial asset, which forms the collateral for the loan from the broker.
Leverage trading is the use of borrowed funds to increase your trading position above what would be available from your cash balance alone. Forex traders use leverage to profit from tiny price changes in currency pairs. Leverage amplifies profits and losses and should only be used by experienced traders.
If margin and leverage trading is your top priority we recommend using CEX.io (link) as they offer margin trading with up to 100x leverage. Like we’ve said many times before, leverage is an incredibly powerful that only experienced traders should utilize.
Crypto is a Free Market – one of the last ones left
Traditional finance markets like the New York Stock Exchange utilize ‘market-wide circuit breakers’ to stop trading due to intense sell pressure and intense price decreases. Trading stops immediately and all the sell triggers can’t sell anymore.
This is not a free market. This is a decision made by a handful of people that affect millions of investors and traders. Crypto does NOT have these gatekeepers. Some exchanges temporarily shut down due to incredibly high price changes (up and down), but this is likely a liquidity issue – not the removal of ‘free’ from the free market.
The crypto markets aren’t dominated by high frequency super computers
Huge investment banks have been building and refining trading algorithms on supercomputers that are not available to your traditional investor. They are then able to manipulate prices to shake out traders, or pump an asset before dumping it on other investors.
Crypto is a nascent industry that doesn’t have legacy establishment institutions. The advantages many investment banks have over ForEx and stock traders don’t exist in crypto, yet. This levels the playing field for cryptocurrency traders.
Cryptocurrency trading is still in its infancy but is growing in popularity everyday. Trading crypto is a learnable skill IF you are willing to put in the time to study and IF you are willing to accept the risk associated with it.
We’re here to help you make a few good, early decisions. Picking the right exchange will put you on the right path and hopefully save you a ton of time and headache. We can help with that. The rest is up to you!
For a detailed writeup of which exchanges we recommend for traders, click here.
|Binance US||CEX||Kraken||Bittrex||FTX US|
|# of Pairs||105||151||214||580||15|
|Fees||0.10%||0.0% – 0.25%||0%-0.26%||0.25%||0%-0.4%|