My Simple Trading Indicators

Quick Update

It’s been more than two months since my last post mainly because of two things. First, I’ve been drained for having sleepless nights the past weeks in my day job. Second, the bear market made it harder for me to look at my portfolio to find motivation to continuously do trading. I left my current company and will be joining a new one soon so that should give me a few days for writing something up. And since I went back to trading, I’ll be sharing my simple trading indicators I use which have worked out for me so far.

My Simple Trading Indicators

I’ve been reading posts and watching videos for the past few weeks already but so far I really loved the approach of Philakone. I follow him on twitter and his YouTube channel videos were very helpful. He also has a steemit account you can checkout here. Most of the items I’ll be talking about will be based on some of the things I learned from watching and reading his stuff online.

Exponential Moving Average (EMA)

Moving averages have been a staple indicator in the tools used by multiple Technical Analysts. Some traders use Simple Moving Average while others use the Exponential Moving Average. The main difference between the two is that the Exponential Moving Average gives more weight to the recent data. This means EMAs provide a more reactive approach to recent price changes which is very good for a volatile market like Cryptocrurrencies.

MACD (Moving Average Convergence Divergence)

Since I’m already using EMA, I also include MACD as one of my indicators. MACD uses both then 26-day and 12-day EMA coupled with the 9-day EMA to use for signals. I tend use MACD to check for crossovers which can be a signal for buying or selling.

RSI (Relative Strength Index)

One of the more popular indicators among traders is the RSI. This indicator helps traders check if an asset is already in an “Overbought” or “Oversold” state. I still use the traditional approach for RSI in my indicators where if the  RSI is > 80 it means an asset is overbought and its price may go down soon and if RSI < 20 it means an assest is oversold and its may go up soon.

Tying the Three Together

So how do I use these indicators for trading? Let’s take it step by step. Let’s first start off with the EMA. For the EMA, I used the suggestion mentioned by Philakone and primarily use the 55-period EMA. From what I picked up from one of Philakone’s video, you need to check the last two candles and its relationship to the 55-period EMA. These two candles should satisfy the following:

  1. The first candle should be a green candle whose lower wick or body touches or passes the 55-period EMA
  2. The second candle should be a green candle who has higher low and higher high than the first candle

Once I see this indicator in my 55-period EMA, I then check both MACD and RSI.  When both the MACD moves above its 9-day EMA and when the RSI is near the oversold range I use it to as a signal to buy. I then use the “Long Position” tool in tradingview to setup my Risk/Reward ratio. This last part varies from trader to trader as we have varying Risk Management/Appetite.

Wrap Up

I have managed to increase my $BTC holdings with the use of this trading practice. It doesn’t always yield positive results but it has given me more gains than losses. As always, please remember that using Technical Analysis doesn’t mean that you’re certain that the price can go up or go down. It just helps traders better manage their risks. That’s it for now and I should be posting a long overdue update to my 10 mBTC challenge soon!

January Update and the Market Crash

I’m Still Here!

It’s been 3 weeks since I last posted and provided an update to my 10mBTC challenge. My day job required a lot of focus for the past few weeks because of some tight deadlines I had to finish but it looks like I’ll have more time in the coming days to blog again. This post will mostly revolve around my January update and the market crash.

Note: Trading cryptocurrency is very risky due to the volatility of the market. Only invest what you can afford to lose.

January Update

I started this challenge with the goal of reaching 1 BTC eventually through event driven trading. As of February 12, 2018, my 10 mBTC is now at ~30 mBTC. A 300% profit in a month is not bad considering I’m mostly doing this during my spare time. I learned a lot during the first month of this challenge and will be using that knowledge to my advantage moving forward.

Some statistics for those interested:

Quick Analysis

The biggest gain I had this month came from eBoost. The reason I bought eBoost then was because of an upcoming new token announcement which will result from a hardfork. As expected, the hardfork factor contributed a lot to my gains here. If I just placed some trailing stop loss then I could’ve gained much more as eBoost more than doubled in price during this period.

On the other hand, my biggest loss came from Edgeless. My reasoning behind purchasing Edgeless was because they were about to release their new platform. It was a great update for the coin itself, unfortunately this is the time when the market really started going down. The mistake I made here was that I didn’t properly set a stop loss which led to me losing more than expected.

In the 11 trades I made for January, the average length of open trade I have is roughly 2 days. Looking closer at the difference between the length of open trades I have, it seems like most of my shorter trades gained much more compared to the longer ones.

Another thing I noticed is that out of the 11 trades I made last January, 3 of them involved Edgeless. Looking back, it seems like there were just too many good events for Edgeless which made me choose it over the other coins. Unfortunately, Edgeless also made me lose the most this month. Something I’ll consider in my future trades.

Market Crash

I won’t pretend that I expected a market crash this huge. I knew that the growth of the cryptocurrency market was not sustainable especially in the early days of December. However this big market crash or correction or whatever you like to call it can be considered a wake up call for most investors who went in during Bitcoin’s all time high.

There were a lot of news that affected this crash. The usual China banning bitcoin, trading and all sorts of stuff related to cryptocurrency is one of them. Actually I’m surprised that the market still reacts negatively to China’s “ban” since most of the time, they just go back on their word. There were also some negative news from South Korea like market manipulation and rumors of cryptocurrency trading ban. India also contributed to the crash with some miscommunication/misinterpretation of some speech delivered regarding cryptocurrency. And of course, we should not forget and discount the still looming Tether issue which up until now is still unclear.

The great thing though is that somehow, it looks like the market is stabilizing around the $8000 range. Some folks are still expecting it to crash down to $4000-$5000 while others are already expecting a bull run right after the Chinese New Year expecting that new money should be flowing in the market. The recent SEC and CFTC hearings also helped pump up the market with some good news. Cryptocurrency is still quite new and as seen from the recent events, news and events still greatly affect the price of the market.

Updates

In my last post, I mentioned that I’ll be looking for ways to easily communicate my trades other than my blog. I decided to go with both approach. I created a telegram channel dedicated for my 10 mBTC challenge. I’ll also be tweeting all updates in my blog as well as all trades I’ll be doing for my 10 mBTC challenge. If you’re interested, you can follow me on twitter here.

Wrap Up

This wraps up the first month of my 10 mBTC challenge. There were lots of missed opportunities and but there were lots of learning as well. Hopefully the market starts to turn around so that I can reach my 1 BTC goal earlier. I’ll post the details of my latest trade tomorrow.

That’s it for now and as always, happy trading!

Other Details

You can find my previous posts related to this challenge here:

You can find my updated trade history in my google sheets here.

For tracking events, I use the Cryptocurrency Calendar at coinmarketcal.com and Coindar.

Lastly, if you are new to trading cryptocurrencies, you can try reading my overview post and how to start doing it, here.

10 mBTC Challenge – Past Trades and Event Updates

Updates

It’s been almost two weeks since my last post. My day job demanded a lot of time recently and as a result I was not able to do a regular post on my trades. I still managed to put in some buy and sell orders for some coins but I was unable to blog about it. Past Trades and Event Updates will be my focus on this post to make sure everything is as transparent as possible in my 10 mBTC challenge. It was hard to catch some nice profits in the past few days because of BTC’s movements. With the market somewhat recovering, I can hopefully get back on track to my road to 1 BTC.

Past Trades

After a very nice profit from $EBST, I decided to try my luck with $GUP. It didn’t turn out quite well because of the market crash that happened during that time. Since there were some more upcoming events around that time, I decided to cut losses and move my funds to a new coin.  I lost about 1.1 mBTC in that trade which is roughly 3.4% of my total coins for this challenge.

With the market going down, I tried my best to look for an event which can still result in a price increase despite of what is happening. I was looking at Syscoin ($SYS), and Edgeless ($EDG) then. $SYS was going to release a wallet with a built-in exchange so I thought it was a good choice. $EDG on the other hand was going to release a new version of their platform which I thought was also good.

I only had two choices so I just did a coin flip. That led to me buying $EDG. I earned almost 3 mBTC from my trade in $EDG which roughly 10% translates to an almost 10% profit. What made me feel good about this trade was that despite the market being down, I managed to pull out at the right time and still made a small profit.

Right now, my coins are with $LBC. They will be releasing a new website which I think may not be that great in terms of driving the price up. However there is something in my gut telling me that I can still earn a few coins from this trade. Hopefully this trade turns out well so I can move on to other coins with events which I think can really drive their prices up.

Future Events

With the first month of the year coming to an end, different coins are scrambling to catch up and deliver their promises made from last year. This can be seen with the vast number of events going to happen as the month closes. I’m still thinking of how to maximize my gains with those many events. I might divide my stake to multiple coins or I might still stay with just one single coin.

At the start of my challenge, I mentioned that I will be basing my events from coinmarketcal but a friend of mine recently introduced me to coindar which I think is also a good source to compare information across different crypto calendars. Both calendars are community driven so most of the time, news or events found there are often reliable.

I aggregated a collection of future events this January which I think will help drive the price of the coin up. You can find that list below:

$SC – Jan 21: Hardfork for difficulty update. NOTE: No new coins!
$TRX – Jan 22: game.com partnership/possible Kucoin listing
$GUP – Jan 22: New product launch
$EOS – Jan 23: First partnership announcement
$ICX – Jan 24: ICX Mainnet launch
$EDG – Jan 24: Platform updates (new games, updated UI)
$XLM – Jan 25: 2018 Roadmap
$THC – Jan 26: New website, whitepaper and fork updates
$ETC – Jan 29: A2A Messaging System release
$NEO – Jan 30: Developers’ Conference
$ADX – Jan 31: Beta Release
$BTG – Jan 31: Roadmap update
$TRX – Jan 31: Multiple events
$SYS – Jan 31: Blockmarket Web 1.0 and Desktop 1.x release
$FUN – Jan 31: January Updates
$ICX – Jan 31: ICON Annual Summit
$BNB – Jan 31: Coinburn

Wrap Up

I guess that wraps up everything I wanted to share so far. I’ll try my best to provide updates as much as I can but I may not be able to always blog about it. However I always make sure that I update my google sheet to properly reflect what I buy and sell. I’m still thinking of ways to properly update folks outside my blog. I’m thinking of setting up a telegram channel just for updates as well as tweeting my trades. I should be able to setup something right before January ends.

That’s it for now and as always, happy trading!

Other Details

You can find my previous posts related to this challenge here:

You can find my updated trade history in my google sheets here.

For tracking events, I use the Cryptocurrency Calendar at coinmarketcal.com and Coindar.

Lastly, if you are new to trading cryptocurrencies, you can try reading my overview post and how to start doing it, here.

10 mBTC Challenge – Trade #5 eBoost ($EBST)

Updates

Trade #4 was a bit disappointing. $BTC suddenly went up causing some alts to bleed, $EDG included. I tried holding for a bit but decided to just sell at a loss in order to ride the next trade. The following weeks have tons of good events to choose from so it’s better to get in a good position as early as possible. For my 5th trade, I went with eBoost ($EBST).

Note: Trading cryptocurrency is very risky due to the volatility of the market. Only invest what you can afford to lose.

What is eBoost and Why I Chose it

eBoost is a coin created for eSports. Users will have a “universal ledger” which they can use to hold coins for store of value. Users can then later use their eBoost tokens for wagering on eSports events. Like other coins, they also claim to be a decentralized platform. What sets it apart from other eSports based coin is that instead of choosing to run of top of Ethereum, eBoost decided to use its own platform. This makes sure that even the other blockchains get congested due to multiple and different uses, eBoost will run smoothly on its own dedicated network.

For this trade, I was choosing between $MUSIC and $EBST. Music Coin has a big announcement scheduled for January 10 while eBoost has a scheduled Token Announcement on Jan 12. Lot’s of folks got disappointed with $EMC2’s mind blowing announcement last year so I decided not to go down that path with $MUSIC. I’m also an avid eSports fan so investing on something I love made the decision easier. To add to this, eBoost also has two more events scheduled this month. This could easily help pump up the price a bit more.

Update on Future Trades for January

January has tons of great events we can take advantage of.  Below is a rough outline of my future trades this January. Take note that this is not set in stone and may change due to different reasons.

Coin/Date Event
$EBST – Jan 12

$SYS  – Jan 16

$GUP – Jan 18

$POWR – Jan 23

$ETC – Jan 29

New Token Annoucnement

In-Wallet Exchange Release

Product Launch

World Economic Forum

A2A Messaging System

There will be times where I’ll be positioning early to setup for these events and exit as soon as I reach my target profit and move on to a different coin. That way I can maximize my profit with the multiple events happening this month. I’ll make sure to post it here whenever I enter a new trade.

Wrap Up

The first week of January flew by so fast. Starting with 10 mBTC, I now at ~20 mBTC (according to Blockfolio). I managed to double my starting capital in about 4 trades. Lost a bit in my last trade but I learned something from it. Now I move on to the next one which hopefully will bring me more coins! As always, happy trading!

Other Details

You can find my previous posts related to this challenge here:

You can find my updated trade history in my google sheets here.

For tracking events, I use the Cryptocurrency Calendar at coinmarketcal.com.

Lastly, if you are new to trading cryptocurrencies, you can try reading my overview post and how to start doing it, here.

10 mBTC Challenge – Trade #2 Cardano ($ADA)

Updates

My first trade revolved around the Masternodes AMA of $TRIG. Before I slept yesterday I decided to put up a sell order which will give me exactly a 20% profit. When I woke up, I did my usual morning routine and went to work. On my way to work I read that the Masternodes for $TRIG will be delayed so I thought to my self I might end up waiting for the listing on January 9 to reach that number. I told my friend about it and he told me his $TRIG was already sold. Quite unsure why (because we almost had the same sell order amount set up), I logged in and checked Bittrex. Luckily, $TRIG went up high enough that it triggered my sell order for a nice 20% profit! That wraps up my first trade for the 10 mBTC Challenge! Next up, Trade #2 Cardano ($ADA)!

Note: Trading cryptocurrency is very risky due to the volatility of the market. Only invest what you can afford to lose.

Trade #2 Cardano ($ADA)

In my initial post in this blog series, I mentioned that I didn’t choose $ADA because I’m already holding it for the long term. After selling my $TRIG, I looked again at the list of events that I’m currently tracking. Nothing else caught my attention in what’s left except Cardano’s ($ADA) Roadmap updates and Triggers’ ($TRIG) Exchange listing. Since I just sold off my $TRIG, I went with Cardano ($ADA) for my second trade.

Reasons for Choosing Cardano

Other than the fact that I love the fundamentals behind Cardano, I considered other things like what will be my next trades after this and what would be the best time for me to exit Cardano. Let’s discuss them in detail.

  1. Cardano will be having its roadmap updates in 3 days time (January 5). I’m looking forward to updates in wallet performance, light client support and of course delegation and staking with Ouroboros!
  2. After buying in at 5171 sats (0.00005171 BTC), and seeing that the support level is at 5500 sats (0.00005500 BTC) as seen in the 30m chart below, I’m convinced that I should be able to wrap up this trade with at least 10% profit. 
  3. Most people in the Cryptocurrency market are getting hyped up with the new coins becoming available. Cardano is attracting lots of attention not just because of Charles and the entire team, but also because of its promises as a 3rd generation Cryptocurrency.
  4. My plan is to sell off the $ADA I bought with all my $BTC from the $TRIG trade prior to the roadmap updates. I know I might miss a big price bump should they announce something big like Ouroboros. However I’m also planning to go back and buy $TRIG in one of its dips to set myself up for the listing event on January 9.

Wrap up

That’s it for this post fellow crypto lovers/traders. Below you can find some screenshots I have from my Blockfolio. I also included a screenshot of the aggregated trades I have from Bittrex for this challenge. Finally, I also updated the google sheet that keeps track of all my trades on our road to 1BTC!

 

 

 

 

 

 

PS: I started talking to some friends because I got interested in participating in some ICOs too. I’ll be writing something about experty.io in the coming days so watch out for it. Happy trading!

10 mBTC Challenge – Introduction and First Trade

Intro

People usually think that in order to start trading Cryptocurrencies they need a large capital. In this series, I’ll be doing what I will call a 10 mBTC challenge. The goal of this challenge is to show that you can profit from trading Cryptocurrencies even with a minimum starting investment. I’ll be following a set of guidelines while doing this challenge which I’ll discuss later.

Note: Trading cryptocurrency is very risky due to the volatility of the market. Only invest what you can afford to lose.

Guidelines

Below are some guidelines that I’ll be using in this challenge:

  • The coin or token that I’ll invest in must be part of coinmarketcap’s top 100.
  • The coin or token that I’ll invest in must be in coinmarketcal’s list of events.
  • Bittrex will be the only trading platform that I will use. Optional trading platforms will be suggested.
  • A shared google sheet will keep track of all my buy and sell orders.
  • Screenshots from Blockfolio and Bittrex will be shared in blog posts to show updates.
  • At least one trade per week will be done.

Event Driven Trading

The cryptocurrency market is a very volatile market. Coins can go from +50% to -20% in a matter of hours. Unlike what most traders do, I won’t be using Technical Analysis for this challenge. I’ll use what I call an Event Driven Trade which I have been using successfully in the past. In my experience in crypto, buy the rumor sell the news works most of the time as long as you set a good entry point and an exit point. I’ll give an example on how I usually do my trades.

I’ll be using Einsteinium ($EMC2) in this example. In the last week of November, I checked coinmarketcal’s list of events and saw that $EMC2 was going to have two events. One event involves a coin burn and the another event involves what they pegged as a mind blowing announcement. I bought some coins at 8100 sats (0.00008100 BTC). I later sold the coins before the coin burn event at 13709 sats (0.00013709 BTC). That’s almost a 70% profit just from one event alone. I later bought some coins again at 8500 sats (0.00008500 BTC) at one of the dips after the coin burn event in anticipation for their mind blowing announcement. A day before the announcement, I sold the coins at 12119 sats (0.00012119 BTC). That’s almost a 43% profit. Later it turned out the mind blowing announcement was a flop and $EMC2’s price went downhill from there.

Assessing a Coin to Invest or Trade

Traders often use Technical Analysis prior to buying or selling a coin. Since I only started learning how to read charts, I always fall back on reading and checking the fundamentals of the coin I’m going to invest in or trade.

For coins that I will hold for long period of time, I prefer reading their white paper first to check if their idea is good and if there are use cases to it in the real world. I also follow their official twitter account and subscribe to their subreddits. Registering on their slack or discord channels is also a good way to interact with the community and the dev team. Finally, I also check the activity in their respective Github repositories. If I’m satisfied with all of these things then I invest on the coin.

However I normally don’t do all those stuff when choosing a coin to trade. I participate in telegram channels from time to time and check recommended coins by some groups. More often that not though I skip them since most of the suggested coins are just pump and dumps and I don’t want to get caught during the dump. What worked for me in the long run is looking out for events or updates from a coin and assess them to see if it will positively impact the price of the coin.

Let’s go back to my example on $EMC2. The first event was a coin burn event. Events like these usually help increase a coins price simply because of the law of supply and demand. Most of the time, coin burn events increase the price of the coin days before the date itself because traders will automatically assume that lower supply often leads to a higher price.

Ethereum Classic ($ETC) for example showed a price increase in the days following the announcement of capping their market supply. Some people thought that it might still go up and still bought in a few days leading to the fork but the price didn’t budge. This is because most people already bought in early anticipating that some folks will buy in late. This is why it is very important to keep yourself updated with news and updates in Crypto as much as possible.

First Trade

Now let’s get on with our first trade for this 10 mBTC challenge! I consulted coinmarketcal again to see which coins or tokens will have an event in the first few days of the year. I came up with the following high level list:

  • Monday, January 1, 2018: $ARDR, $PAY, $XRB, $EXP, $POT
  • Tuesday, January 2, 2018: $ETN, $TRG
  • Wednesday, January 3, 2018: $QTUM
  • Friday, January 5, 2018: $ADA, $GNT, $BTC
  • Sunday, January 7, 2018: $TRX
  • Monday, January 8, 2018: $XLM, $NEO, $EDG
  • Tuesday, January 9, 2018: $POWR, $TRIG

As you can see there are a lot of events and coins to choose from and I had to narrow down my selection. I removed $ADA, and $XLM because I’m a long term investor of these 2 coins and won’t be trading them anytime soon. I even try to buy in more during dips to accumulate more units. Some events were not really noteworthy to me like Bitcoin’s Peer Summit and Neo’s meetup. I also have invested a small amount on $EDG early this week in anticipation of their registration event so that’s also out of the equation.

This narrows the list quite a bit. Now let’s see which have some real world use cases. $PAY seems good but it’s too late for me to invest on it. $GNT’s Blender rendering sounds nice but I don’t think folks need shared processing right now for Blender. $POWR has a good use case but the event doesn’t seem to fit its use. Finally we have $TRIG with two events: an AMA and new exchange listing.

Token Selected

Given the choices above, I ended up choosing and investing my 10 mBTC on $TRIG. One of the reasons is that $TRIG has two events within a week of each other. This historically helps price go up simply because of the hype on succeeding events.

The AMA event may not seem like a big deal but it will help early investors and speculative traders learn more about the tech and concept behind the token. This can lead to more money pouring in as AMA’s usually end up like advertising stints. The AMA for Masternode setup for $TRIG helps satisfy early investors by providing updates on the development updates and shows that their is progress being done on the token’s roadmap.

Being listed in an additional exchange also always help pump up the price of a coin or token. This is because it makes $TRIG accessible to other investors and traders. Take note that as of writing, $TRIG is only traded in Binance (TRIG/BTC, TRIG/ETH, TRIG/BNB) and Bittrex (TRIG/BTC). With Bittrex limiting new registrations, new folks joining are only left with Binance to invest and trade with. Adding an a new exchange will surely help bring in more money to the token.

Details of the First Trade

As I said earlier, I’ll keep everything transparent so folks can see the progress of what I’m doing. Below are some screenshots to show the details of my first trade for the year:

Bittrex Order History:

Blockfoliio Screenshot prior to posting:

And finally, the google sheet to track everything can be found here. That’s it! If you haven’t started trading yet and don’t have any idea how to start, you can check out my previous blog post here.

How to Start Trading Cryptocurrencies

Bitcoin is gaining lots of attention recently because of its insane rise in price. If you bought it in the early days and held them through all its ups and downs you’re probably rich now! Right now, folks are still joining the bandwagon and trying to buy Bitcoin. They still think that holding them long term will be a good investment since Bitcoin’s price has always been going up. An alternative approach to increase your Bitcoin holdings is thru trading Cryptocurrencies. In this post, I’ll be explaining how can start trading cryptocurrencies.

WARNING: Trading cryptocurrencies is very risky. if you don’t know what you’re doing chances are you will lose money. Trade at your own risk!

Requirements

  • An understanding of basic Bitcoin concepts
  • A Bitcoin Wallet
  • A place to buy Bitcoins
  • A trading platform
  • An idea on how trading works

Bitcoin Concepts

Let’s start with the basics. Before you start trading, you must be familiar with some basic concepts of Bitcoin. I gave an overview of what Bitcoin is in one of my posts. I also discussed some basic concepts like blocks, miners and the blockchain here. I also blogged about Bitcoin transaction fees and confirmation times here. Another thing you need to be familiar with is sending your Bitcoins to different wallet addresses so that you can fund your trading platform.

A Bitcoin Wallet

There are lots of available Bitcoin wallets right now. It is still important to remember that you must always have the private keys/recovery seed of your Bitcoin wallet so that what ever happens, you can still recover your coins.

For mobile users, I highly recommend Jaxx since it also supports different coins other than Bitcoin. It also has ShapeShift built-in for easier conversion from one coin to another.

For PC users, I highly recommend Electrum. Electrum is a full node Bitcoin wallet. It allows you to sign your transactions, adjust the transaction fees and gives you an option to enable 2FA in the event that your PC gets compromised.

A Place to Buy Bitcoins

With Bitcoin becoming mainstream, there are lots of places now where you can buy Bitcoins. One of the most reputable places to buy is Coinbase. It allows you to link your bank accounts and credit cards so that you can easily buy Bitcoins.

From folks in Manila, the most convenient place way to purchase Bitcoins is via Coins.ph. They have multiple cash-in and cash-out options which makes it easy for anyone to purchase and sell Bitcoins. You can reference by previous blog post on how to setup you Coins.ph account.

You can also buy Bitcoins using your credit card at different sites online. What I have used so far are the following:

Once you have your Bitcoins ready, you need a few more steps before you start trading.

A Trading Platform

There are a ton of trading platforms out there and each has their own pros and cons. I use multiple trading platforms depending on the coin I’m trading. Below is a list of trading platforms that you can use:

There are many more platforms available but I mainly use these five exchanges. I like Bitfinex because of different options you can do within the platform. Bittrexx has lots of altcoins which is good for trading. Poloniex has a low withdrawal fee and a good interface for beginners. Binance has some coins that I hold (eg. IOTA) which is not available in the other sites. And lastly, GDAX because of the seamless integration it has with Coinbase.

Choose the platform based on your preference and sign up for an account. You can even sign up in all of them granted there are no restrictions on your location. After creating an account, follow each of the sites verification process so you won’t have any issues depositing and withdrawing from your accounts later. Once verified, go to the wallets section of your chosen platform and generate a new Bitcoin address. Send your Bitcoins to that address and you can now start trading.

An idea on how trading works

Assuming you received your Bitcoins in your trading platform’s wallet you can now start trading. But what is trading? According to Investopedia, trading involves the buying and selling of goods or services between parties. Typically, trading involves Fiat (real money). In our case, instead of using real money, we will be using Bitcoin to buy and sell different altcoins.

The basic premise of trading is simple. You buy something low, and sell it at a higher price. It sounds simple but it’s very hard to do it consistently. In the traditional market, there’s an opening and closing hours for trading. However in Cryptocurrency, trading happens 24×7. If you don’t keep yourself updated with the latest news and don’t regularly check the charts you might lose money in an instant.

So how can you increase your Bitcoins by trading Cryptocurrency? The simple way to buy an altcoin at a low rate, and sell it later at a higher rate. However some folks get confused when they start trading with Crypto. The traditional trader is used to looking at the Fiat value (USD) of a coin instead of looking at its Satoshi value. They sometimes end up being confused as to why their USD value goes up but their Bitcoin amount goes down.

Right now all altcoins revolve around Bitcoin. Sure you can buy some coins with Ether or Litecoin. You even use services such as Shapeshift and Changelly to convert your coins to another coins but those services incur fees. The easiest way right now to buy the coin you like is to have Bitcoins. And since all of them revolves around Bitcoin, their value is also derived from Bitcoin. Let see an example.

Example

Let’s say I have 1 Bitcoin at 18k USD and I wanted to buy Ripple because it’s all the hype right now. I’ll check my platform and look at the BTC-XRP pair (Bitcoin-Ripple pair). As of this moment, XRP is around $0.81 USD and that is equivalent to 0.00004496 Bitcoin each or 4496 Satoshis. Satoshi is the smallest denomination of a Bitcoin. So if I were to use .5 BTC to buy XRP, I will get 11121 units of XRP (that is 0.5 divided by 0.00004496). Now let’s say BTC price goes up to 20k USD. Because you saw the rise in price, you thought to yourself, “I need to get more BTC since its price is increasing” and immediately sold all your XRP back to BTC. After selling your XRP you noticed that you now have less than 1 Bitcoin. So what happened?

First, all trades that you do in trading platforms incur commissions. This is how trading platforms make money. For example, Bittrexx charges all filled orders with 0.25% commission. Second, you probably didn’t check the amount of XRP in Satoshis when you sold. In Crypto, the normal movement of the market is when Bitcoin goes up, some altcoins go down in value. This is because people are selling off their altcoins to buy more Bitcoins which drives the price of Bitcoin up and drives the price of altcoins down (law of supply and demand). However, there are times when some altcoins still increase in value but this is not always the case. So what should you do?

Since our original goal in trading is to accumulate more Bitcoins, we should always look at the Satoshi value of a coin. This means that whenever we buy a coin, we take note of its Satoshi value and make sure that we sell it at a higher Satoshi value later. So in our example above, if we wanted to increase our Bitcoin holdings, we should have sold XRP if its Satoshi value was greater that 4496.

Wrap up

What I wrote above is just a very basic example of how trading cryptocurrency works. It may sound simple but it’s very hard to pull off. It takes a great deal of experience to become a good trader. In my succeeding blog posts, I’ll share some tips on how I usually perform my trade.