Trading Crypto Currency

Up to now we have only focused on one crypto currency: Bitcoin. In reality there are thousands. Most of these currencies work the same way as bitcoin.

We are in process of putting together a Youtube channel where we will start an account with 0.001 Bitcoin and see how long it will take us to grow it into 1 BTC. Where every trade is recorded and the reasoning behind them explained.

Before we begin

Trading has exceeded my expectations. I expected to get to a place where I make an extra R1000 a month trading crypto currency and ended up making more closer to R100 000 a month.

I started trading with 0.0002 BTC that I made on faucet websites and wanted to see how much I could grow it. It took roughly 6 weeks for me to break R100 000. Since the income exceeds R100 000 I will no longer update our income with it. That level of income proves the method a success.

By trading crypto currency it is possible to turn R50 into over R100 000 in less than 2 months time, I did.

HOWEVER…

Before you start dreaming of leaving your job, and planning that long overdue vacation. I need you to take my next words very seriously.

Trading is a zero sum game. I made well over R100 000. That means someone else lost that amount. I say this often, money flows, If you receive money, that means someone else needs to give it to you. So what I am saying is. I hear many people complain about the money they lost trading. That is why I recommend that you get some BTC on faucet websites and to use that to trade. If you do not invest your own money, you cannot lose. I did not invest a cent. Yet I have thousands today. When it comes to Crypto trading, you do not need money to make money.

Both Character and Ability matters

When it comes to trading crypto currency, Your character and mental abilities will directly influence the amount of money you can make online.

CHARACTER

The first side of trading crypto currency is character. If you have a weak character (greedy, impatient, desperate, depressed) chances are that you will make mistakes and in the end you will only lose money. These things form part of who we are. But they have no place in the trading world. My mental state when trading is, I do not care whether I win or lose. This is good because I do not lose focus when things go bad.

MENTAL ABILITIES

The second side to trading crypto currency is mental abilities. I have been a programmer for the last 6 years. I constantly pushed my problem solving abilities. Trading is a numbers game. The better you are with numbers, the better you will trade. You will begin to see opportunities in the market. There are fun ways to build these skills and they are vital to a trader.

Our Strategy

I stick to Bitcoin as much as possible. I do not get attached to other coins or projects. I never hold a coin long term. My focus is on trades that can make me quick gains rather than long term. I want to enter and exit as quick as possible. In the trading world this would be considered day trading. Its all about bitcoin.

I also keep a set amount in my portfolio and cash out any access bitcoin. Currently I keep 1 BTC on CoinExchange and cash out the rest to my South African bank account. My reasoning is: If bitcoin ever dies, I dont lose money. If it grows, I will always be able to make more bitcoin by trading. So by constantly cashing out the bitcoin I make by trading, I create a scenario where I cannot lose.

Getting Started

Once you are ready to start trading, You can register on CoinExchange and deposit some Bitcoin.

Once you are logged in you can go to My Account -> Balances. Search for Bitcoin (BTC) and deposit from there. Once your deposit clears, you will be ready to start trading.

Our Methods

Spread Trading

The first method we use is pretty straight forward. We look for a coin with a large enough spread which is actively being traded. Spread simply means the difference between the buy and sell sides of a market.

An Ideal market to Spread trade would look something like this, some people want to buy for 105 Satoshi, others want to sell for 140 Satoshi.

In this market, The ideal play would be to try and buy DFS coin for 106 Satoshi and again sell it for 139 satoshi. If you are successful in buying DFS at 106 Satoshi and selling it at 139 Satoshi, you would make 33 % on your investment.

This is one of the safest forms of trading and there is very little that can go wrong.

Notes regarding Spread Trading

  1. Everyone is fighting for profits. So people will try and better your sell and buy offers. In this case you much be patient. Sometimes it is good to set the best prices, Other times its better to wait for a price drop.
  2. Keep an eye on the market trade history. Some coins might have very large spreads but they haven’t traded for days, When they do trade. Its often small amounts. When doing spread trading, The coins that are trading the most are the best
  3. Do not buy too much of a coin unless it is stable. I have had trades where I bought 0.2 BTC of a coin. And then I made 300% on the first 0.01 BTC of the trade. But suddenly the market changed and because I owned as much, I could not “get out” before losing large amounts of money. The one day I lost 0.3 BTC in a few minutes. I bought way too much of a coin and I could not exit.

Buying Dumps

Buying dumps is when you set your price well below the current market value of a coin with the hope that someone dumps their coins.

People dump coins for various reasons. Sometimes a person wants to manipulate a market’s value so that they can possibly buy more coins cheaper. Often a person wants to free up some Bitcoin for a different opportunity. Sometimes a person accidentally makes a trade mistake or a cat walks over their keyboard when their trades are open. These things happen.

An ideal market to try and buy dumps would look something like this:

If I was preparing for a dump in this market, I would have set a buy order at 8112 Satoshi. Chances of this happening is very small, But it does happen.Generally I try and buy dumps whenever I have “open BTC”. I have had days where I made 0.05 BTC overnight using this method.

You would also notice that this market is good for Spread Trading. I am currently spread trading in this market.

Notes Regarding Buying Dumps

  1. Sometimes a market does fall overnight. There are times when a dump is “permanent”.
  2. Do not leave your buy orders open for more than 1 day unless you have a definite reason. What would have been a good price this week. Could be a loss the next. So forgetting about open orders can cost you money.

Cross Market Trading

Cross Market Trading is when you buy a coin on a different market (for example the Eth market) to sell elsewhere (BTC Market). CoinExchange has different markets (Bitcoin, Etherium, DogeCoin, Litecoin).

Cross market trading is when you buy or sell coins for a much better price on a different market. Often times a person can get coins cheaper on the ETH market and sell for higher. The negative side is trades are also slower. There are however times when the wait is worth while.

A typical Cross Market Trading cycle will look as follows:

Lets assume I start with 0.1 BTC

  1. I will exchange the 0.1 BTC to for 1 ETH
  2. I will exchange the 1 ETH to for 10000 LTG
  3. I will exchange the 10000 LTG for 0.13 BTC

The reverse is also a possibility.

Lets assume I start with 0.1 BTC

  1. I will exchange the 0.1 BTC to for 10000 LTG
  2. I will exchange the 10000 LTG for 1.3 ETH
  3. I will exchange the 1.3 ETH for 0.13 BTC

These are fictional examples of your goal with cross market trading. Where you use a three trade cycle to increase your BTC over time.

A few days ago I bought 2 million PT on the ETH market for 7 ETH Satoshi. Those coins were worth 30 times what I bought them for the next day. I made 0.4 BTC overnight. They were just far cheaper on the other market.

There are times when people really do bad trades.

Notes regarding cross market trading

  1. Cross market trading can be intimidating if you are a beginner. You need to keep 3 different markets in mind while planning your trades. If you make a miscalculation you can end up trading at a loss. I have done this myself but I have made far more exploiting this method.

New Coins

Occasionally new coins get added on an exchange and this is always a great opportunity. They get everyone’s attention and the value explodes. After a while people start to take their profits and the value drops again.

In one trade. (DFS Coin). I bought 0.12 BTC worth at 11 Satoshi at 10 at night. By 3 AM (5 hours later). That DFS was worth 1.6 BTC. I had made 1.5 BTC in a few hours.

What is even crazier is that DFS even though I sold went on to reach a stable 1000 Satoshi. Had I held onto my initial investment I could have made 12 Bitcoin in roughly 2 days. The equivalent of 1.5 Million South African Rand. Enough to buy a house. No other trading methods can do this in such a short amount of time.

It is important to note however that I was first to market. I bought by far the most DFS at 11 Satoshi while most other traders was still just looking. I took a large risk but it paid off.

Notes regarding new coins

  1. Some Developers are greedy. They will create new coins simply for the sake of selling them for profit. Some developers will constantly dump their coins and kill any momentum traders try and make. For this reason new coins carry high risk as their value can drop just as quick as they raised.
  2. Sometimes a coin is new on one exchange but has existed (often cheaper) on another exchange. This is the same problem as a greedy developer. Greedy traders who bought their coins on other exchanges.
  3. It is always important to do as much research as possible on any new coin so that you can see if its good or not. We can look at things like. A coin with a low supply will do better than one with a high supply. A coin with a lot of information online will do better than one with no info. Being informed about any coin is always valuable.

Coin Market Cap

Coin Market Cap is a record of crypto coins and their current value as an average across various markets. Coin Market Cap has high requirements so any coin that is listed on it is has already proven itself to some degree.

Coins that are listed on Coin Market Cap will show the following information on Coin Exchange:

The BTC price above is a good indication what a coin is currently worth across markets. If Coin Market Cap says a coin is worth 1000 Satoshi and you can buy it for 500 Satoshi. That will surely be a great purchase price as people are willing to buy it higher elsewhere.

Notes regarding Coin Market Cap:

  1. INPORTANT: Often times theres a delay with regards to market value between Coin Exchange and Coin Market Cap. Therefor its best to open the Coin Market Cap link and look directly what a coin is going for.  There has been times where the info block above said a coin is worth 200 satoshi, where the real Coin Market Cap said its 100 Satoshi. So when using this. Always make sure of the real price on the actual Coin Market Cap website.

Cross Exchange / Arbitrage

My final method is cross exchange trading or its trading term Arbitrage. Apart from CoinExchange I also use Cryptopia. Cross exchange trading is when you buy a coin on one exchange to sell it on another for a profit.

Assuming that I own BTC and ETH on both Coin Exchange and Cryptopia. If I sell my ETH for 0.04 BTC on Coin Exchange and I can buy it back for 0.039 BTC on a Cryptopia that is considered an arbitrage trade. It is a trade where you make use of an indifference in the price of coins across markets.

Some Traders do this instantly by owning enough of a coin in different markets to be able to buy and sell immediately. They will then move their coins as their supplies run out.

This can also be done by buying coins on one exchange and moving the coins to another exchange to sell them. I have made 10 – 100% on trades before doing this.

Notes regarding Cross Exchange & Arbitrage trading:

  1. When you move coins through a block chain there is always a delay. Sometimes this delay can be as long as a day. It is important to keep this in mind when you want to buy on one exchange to sell on another. You can always send a small amount of a coin to see how long it transfers. Before attempting a large purchase. A lot can happen in a day and I have seen countless complain about the amount they are losing because their transfer is taking long.
  2. When you move coins between exchanges there are often transaction fees. For most coins this is negligible. But if you are sending BTC in between exchanges you will feel the transaction costs. Always keep your transaction fees in mind when transferring coins between exchanges.

Withdrawals can be made to either to Luno directly or to your bitcoin wallet.

If you do not have already have bitcoin wallet address, read: Getting Started
– The direct luno withdrawel guide will follow soon.

If you have any feedback or information that you believe could help other users. Feel free to let us know in the comment section below.

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