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Best Bitcoin Exchanges for Day Trading 2020 – Start Day Trading with the Best!
Summary of the Best Exchanges for Day Trading
We know that the value of bitcoin is not stagnant and it keeps on changing. Making a profit with this volatile price is quite a challenge. Are you a person having bitcoins and you have no clue on how to earn profit from it? Here is a way which will help you maximize the profit. Bitcoin day trading is one way where you can increase your profits on bitcoin, by trading it for other cryptocurrencies on an exchange.
Table of Contents
What is bitcoin day trading?
One must be aware and familiar with all the aspects of bitcoin trading before entering day trading. Day trading can be done using financial leverage, but it can be both profitable and unprofitable, hence one must be familiar with all the aspects before getting started with it. Day trading involves many brokers and exchanges that will help you trade easily. There are two major ways that will help you today trade within a day. The two ways include:
1. CFD trading
If you are a trader and doesn’t want to get involved in the technical side of the blockchain, then CFD is a right option for you. With CFD you can buy and sell bitcoins just like bitcoin exchange, but with an advantage of not waiting for the confirmation from the blockchain, which is time-consuming. In day trading, consumption of a lot of time wouldn’t be efficient. CFD is much better compared to normal buying and selling of bitcoins.
2. Trading on regular bitcoin exchanges
The second option is for those who want to retain the bitcoins with them and trade them directly via bitcoin exchanges. There are many platforms that involve bitcoin exchanges, but these platforms charge some fee for the transactions. It is better if all the sites are checked and compared before starting to trade (which we have done). Here you should look out for high fees as they can quickly add up and eat up your profits.
There are some platforms that offer extra features along as low fees for using them (which is perfect for day trading). Here is a list of the best sites for bitcoin exchange which you can consider for day trading.
Top 5 Best Exchange for Day Trading 2020
BitMEX offers to trade bitcoin and other cryptocurrencies. You can trade and deposit funds here and gain profit in bitcoin. The company was founded in the year 2020 of November. The financial professionals of this site have an experience of more than 40 years. This site accepts and carries out its transactions only with bitcoins and no other currency. Future contracts and swaps are the two major types of trading offered by this site.
This site doesn’t have any fee for bitcoin deposit and withdrawal. There is only one type of account for all the users and there is no room for any special accounts. It has a simple interface, but users who are new to this platform might find it hard to use initially. The security level of this site is very high. It offers a rebate of 0.025% as maker fees and applies maker-taker trading fees.
Having a user base of over 2,000,000 customers, CEX.IO offers trading cryptocurrency against several fiat options – USD, EUR, GBP, RUB. CEX.IO serves two purposes:
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1) traditional cryptocurrency exchange service – it allows buying and selling cryptocurrency for fiat instantly;
2) advanced cryptocurrency trading platform – users are able to place market and limit orders, engage in margin trading (up to 1:3 leverage) and use API solutions for automated trading.
CEX.IO is easy to start with. Registering on the platform is straightforward and doesn’t require much time. However, to use CEX.IO to the full, customers must be verified. The exchange supports deposits and withdrawals via credit cards or bank transfers. The deposits can be made in any fiat currency as it is then converted to the one available on the platform automatically.
When it comes to trading fees, they vary with a monthly trade volume for all pairs. According to the CEX.IO fee schedule, traders are charged 0%-0.25%. For the market makers the fee is set in the range of 0%-0.16%, and for the takers, it is 0.1%-0.25%. Margin trading fees differ and include an open fee (0.2%), rollover fee (0.01%) and close fee (0%).
As for the API solutions for automated trading, CEX.IO offers several options with full trading functionality – REST API, WebSocket API, FIX API. They suit both individuals and institutions.
To manage trades and track the market data, customers can also use a mobile app developed by CEX.IO.
Whaleclub serves thousands of traders every day. It accepts and processes its transactions only with the digital currency. It offers low spreads with zero transaction fee to its customers. There is no fee involved to deposit bitcoin and account activity, but yes, it charges some fees during withdrawal. It follows a bid and ask policy. The withdrawals are carried out in an hour after a request is made. It is carried out manually most of the times for security purpose. This site supports order book trading. As the site offers margin trading, the trading involved here is bit specific. It offers an easy user interface and is fast comparatively.
Bitfinex offers spot trading for all the major cryptocurrencies. It offers easy and high liquidity with Bitcoin. It offers margin trading and allows a leverage of 3.3x for trading by obtaining funding from the peer to peer margin funding platform. By providing funding to traders who are wishing to trade with leverage, margin funding market provides a way to earn a profit on bitcoin and other cryptocurrencies. Users can borrow the desired amount of fund at the rate and duration of their choice by entering the order.
This exchange offers a lot of order types for traders, which is very helpful for day traders. It even accepts and deals with fiat currencies. It involves maker-taker fees with 0.1% and 0.2% of fee respectively. The user interface is simple and suitable for beginners as well. It offers customized user interface which is a unique feature. This site provides advanced security measures.
Binance supports various cryptocurrencies. It offers two types of bitcoin exchange that is, basic and advanced. Based on the user’s preference, these two options show little and detailed information about trading. The data in the chart can be modified between “candlestick” and “depth” based on user’s choice of viewing.
This exchange offers free deposits and works on 0.1% trading fee. It offers high liquidity. Beginners might find it difficult to work with this site, as the interface is quite complex. The website doesn’t lag which is an advantage for day traders.
Cryptopia offers various types of cryptocurrencies. It allows users to sell anything around the world in exchange for the cryptocurrency. The trading fee is 0.20% of the total amount of bitcoins. It doesn’t charge any fee for deposits. A new feature called “arbitrage” is used, which compares the bid and ask price or the price difference from other markets for you. This site provides you information about the market disparity with a few clicks.
The demand for bitcoin is increasing and hence the desire to earn profit from bitcoin is also increasing. The above-mentioned sites help both newbies and experienced professional to earn profits with day trading. One has to be familiar with all the aspects of bitcoin trading before jumping into it in order to avoid hindrance during trading.
Learn How to Trade Bitcoin: [Most Comprehensive Quick Start Guide]
Let’s get started learning how to trade bitcoin!
Bitcoin trading is actually pretty straightforward once you get the hang of it. Being the premier cryptocurrency, it is pretty straightforward to buy and sell them as and when you want to. Bitcoin has a history of volatility which has brought in a lot of traders and media interest into the ecosystem.
How to Trade Bitcoin: Quick Start Guide
Every time Bitcoin’s price rises, new investors and speculators want their share of profits. It is extremely easy for anyone to trade Bitcoin as the barrier for entry is so low. So, how do you get your slice of the pie? What do you have to do to make sure that you are going to trade bitcoin in an efficient manner?
Well, this guide will help you make your trading decisions. So, before you get into the “how” let’s start with the “why.”
Why Should You Trade Bitcoin?
The reason why you should invest in Bitcoin, and cryptocurrencies in general, is because there is nothing quite like it. There are several features that makes Bitcoin trading both exciting and unique.
Bitcoin is Not Fiat
Bitcoin isn’t fiat currency, i.e., it is not under the control of one single government. So, instead of one single economy having a stranglehold over the price of the asset, Bitcoin’s price has reacted to a wide range of events.
Let’s look at some events over the last few years which has affected the price of Bitcoin.
UK’s decision to opt out of the European Union has caused quite a scene with their local economy. As a result of this, exchange giants Binance had stated that they have been “overwhelmed” by registrations for its new Jersey-based trading platform because of insane demand. Binance Jersey allows users to trade euros and British pounds with bitcoin and ethereum and access digital asset management services.
#2 India’s Demonetization
Demonetization was a move by Indian Prime Minister Narendra Modi which made the Rs. 500 and Rs. 1000 notes non-legal tender. Just 18 days after the demonetization declaration, Bitcoin’s price on Zebpay, one of India’s leading exchanges, went up from $757 to $1,020 (per bitcoin). Back then, BTC was trending for $770 in the US.
#3 Trump’s Election
Immediately after Trump’s victory, the markets started falling. Dow Jones, S&P 500 and Nasdaq were all plummeting. Quite similarly, Australian markets lost USD 30 billion. However, Bitcoin was a whole different story. Just before the election night, it went up to $740 due to problems encountered by the Mexican peso. After that, it went down to $705 and then went to $739 as soon as Trump got elected.
From all these three cases, we can make one simple and obvious conclusion. People have a tendency to invest in Bitcoin when faced with unstable markets and obstacles confronting fiat currencies
Bitcoin is open 24/7
Unlike stock markets, Bitcoin is open 24X7. The reason being stock markets are specific to the country they operate in and usually reflect the working hours of that country. Anyone can purchase bitcoin on most of the exchanges. There are hundreds of exchanges around the world that operate 24/7. Meaning you can trade bitcoin 24/7!
Bitcoin is Volatile
Bitcoin and cryptocurrencies, in general, are infamous for its rapid and frequent price movements. This volatility can help traders make an easy, quick buck.
How does Bitcoin work?
Before you invest in an asset, you should at least know how it works. We have covered the mechanics behind the crypto several times here in detail. However, for the uninitiated, we will give a brief overview. If you are already aware of the mechanics, then please skip to the next section.
Bitcoin was created by an unknown programmer who goes by the pseudonym “Satoshi Nakamoto.” Bitcoin is powered by blockchain technology.
The blockchain is a time-stamped series of an immutable record of data that is managed by a cluster of computers not owned by any single entity. Each of these blocks of data (i.e. block) is secured and bound to each other using cryptographic principles (i.e. chain). Ok, so what does that mean in simple terms?
Imagine a universal ledger that anyone can download and write into. Anybody who has a copy of that ledger can:
- Check the records that have been logged into the ledger.
- Check the time at which those records were logged.
- Cannot tamper with any of the previously made entries because the ledger is immutable. This property of “immutability” is one of the most important features of the blockchain and it gains it through cryptographic hash functions.
That is what Bitcoin gave to us, the first proper implementation of a technology that can act as an immutable and transparent ledger. This innovation gives us a system that is completely incorruptible and free from human corruption since each and every transaction made into the blockchain can be checked.
How Do Transactions Work?
One of the most valuable things about Bitcoin is that you don’t need to go through a bank to send a transaction. As the community likes to say “you are your own bank.” So, how do they manage to do that? Through public key cryptography.
Every Bitcoin user has a private key and a public address that are both mathematically derived from each other. So, how does it work? It is actually pretty straightforward. The public address is like your account number and the private key is like your PIN code When you receive Bitcoins, people will send it to your public address. You can then send your Bitcoins to anyone via your private key.
So, going by that explanation, we can make two observations:
- You should reveal your public address to everyone.
- You should never tell your private key to anyone.
It really is as simple as that.
This should give you a brief idea of what Bitcoin is and how it works. This is the reason why Bitcoin has become such a big deal. Now, let’s look into how we can get your hands on some, the first step to learning how to trade bitcoin!
Exchanges: The Gateway to Cryptos
The exchange serves as one of the most critical functions in the crypto ecosystem. It acts as a portal between the Fiat world and the crypto world. A cryptocurrency exchange is similar to a stock exchange, but with a focus on cryptocurrency tokens rather than stock trades. Put simply, a crypto exchange is a platform where customers can buy and sell cryptocurrency assets.
An exchange can be designed with certain goals:
- To make the process as beginner-friendly as possible.
- To offer competitive pricing.
- Provide a platform for experienced and professional crypto traders.
Broadly speaking, there are two forms of crypto exchanges:
- Fiat-to-crypto exchanges.
- Crypto-to-crypto exchanges.
Fiat to Crypto
Fiat to Crypto exchanges helps you buy Cryptocurrencies in exchange for Fiat money. These exchanges have been designed to be as beginner-friendly as possible. Kraken and Coinbase and Bitbuy are perfect examples of fiat-to-crypto exchanges. You can use BitBuy to directly buy Bitcoin, Bitcoin Cash, Ether, Ripple, and Litecoin.
Crypto to Crypto
These exchanges help you exchange certain cryptos like BTC, ETH, BCH, etc. for other cryptocurrencies. Binance is a fine example of a crypto-to-crypto exchange. These are the exchanges that are geared more towards the experienced traders than the beginners.
Crypto exchanges deal with an insane amount of money on a daily basis. In fact, check out how much the top 5 exchanges (ranked according to transaction volume in the last 24 hours) measure up:
Adding everything up, these five exchanges have had a staggering $9,544,591,940 worth of transaction volume in the last 24 hours! Alright, so that’s a lot of numbers. So, where exactly do you get started?
If you are Canadian then the answer is pretty straightforward. Bitbuy.
Bitbuy – The Premier Canadian Exchange
Bitbuy is a Canadian owned and operated digital currency platform. Founded in 2020, Bitbuy has consistently provided Canadians with a dependable and trustworthy platform to buy and sell their cryptocurrencies. As already explained, Bitbuy was a fiat-to-crypto exchange where you can deposit Canadian dollars directly onto their website, to be exchanged for digital currency. Their headquarters are located in Toronto, Ontario and their services are available for Canadian traders across the country.
Bitbuy’s Purchases and Payment Methods
Bitbuy.ca accepts the following payment methods:
- Bank wire
- Interac Online
- Interac e-Transfer
- Flexepin vouchers
- Express Interac e-Transfer
Another interesting feature of Bitbuy is that there are no fees for withdrawing your cryptocurrency. You can send your crypto to a private wallet, free of charge. This makes it ideal for long-term investors who want to hodl on to their cryptocurrency.
Your first-time purchases will be held for one to three business days for security reasons. If you have a verified account and have made more than three transactions on Bitbuy, your funds will be available in real-time.
Kraken – The Premier American Exchange
If you are American then the answer is pretty straightforward. Kraken
Kraken is a well established international cryptocurrency exchange, originally based out of San Francisco. Kraken allows users to fund their accounts in Canadian dollars and has several Canadian dollar trading pairs. Kraken operates a small office in Halifax, Nova Scotia, that handles their Canadian operations and support.
Kraken has limited funding options compared to other Canadian exchanges. Currently, the only way to deposit Canadian dollars onto Kraken is by bank wire, meaning you will need to physically travel to your bank and process a wire transfer in order to use the service. Certainly not the most convenient funding method, but if you are willing to complete the process, Kraken is a good platform to use for advanced features.
Maybe their best feature, Kraken allows users to margin trade, meaning users can borrow funds to buy digital assets. This is an advanced tactic that can be tricky, but it can profitable if you know what you are doing.
Kraken also offers discounts to high volume traders, something not many other exchanges offer. Although Kraken offers some of the best feature sets and a selection of many altcoins, it suffers from a lack of popularity in Canada. Some of the CAD pairings that they offer have low trading volume, meaning if you are planning on buying a large amount, you may encounter price slippage and pay a higher price than you would have hoped for your digital currency. Kraken benefits from being a top international exchange and has good support as well as constant upgrades.
- Low Fees
- Margin trading
- Advanced trading platform with many features
- Limited funding options
- Low volume for Altcoin/CAD pairings
Ok, so how do I become a verified member?
The moment you become a verified member, you are entitled to use any payment method you want to fund your Bitbuy account. For verfiication, you will need to submit the required KYC details. The documents you must submit are:
- A color copy of your passport or driver’s license.
- A copy of a bank statement or utility bill showing your name and proof of address.
- A photo of yourself holding your government-issued ID.
- If the account is a business account, then additional documents proving the “authority to act on behalf of a corporation” should be submitted.
The entire verification process usually takes between one to three business days.
Customer support in Bitbuy
Bitbuy also has very prompt customer support. You can do the following to receive support on your query:
- Access the support section of the site and use the “Submit a request” button.
- Use the live chat support.
- Contact them via email or phone.
- If you live in Toronto then you can simply go to their office if needed.
How safe is Bitbuy?
Bitbuy is a division of First Ledger Corp, which is a Toronto based blockchain and digital currency company. They have stated that the exchange complies with all Canadian laws. They have also taken the following precautions to keep your data safe:
- Bitbuy uses Secure Socket Layer (SSL) technology to protect users.
- They also utilize two-factor authentication for additional security.
- Bitbuy.ca operates with a 95% cold storage reserve for all digital currencies held on the site and executes daily encrypted and distributed backups to avoid any implications or attacks.
Pros and Cons of Bitbuy
- Buy cryptocurrencies directly with Canadian dollars.
- Searches for competitive rates across multiple exchanges.
- Express Interac e-Transfer allows for two-hour funding
- Users can choose from several payment options.
- Bank Wire payment method allows for high deposit limits.
- Pre-purchase transaction pricing calculator.
- Allows for quick CAD withdrawals.
- It only offers BTC, BCH, ETH, XRP, and LTC.
If you are a Canadian citizen, then you can go to Bitbuy right now and create your own account to start trading. Click here to create your account.
How to Trade Bitcoin
There are a lot of ways that you can trade Bitcoin and cryptocurrencies and it is entirely dependent on what you want to gain from your investments and how much time are you willing to give to trading. As per IG , there are four main kinds of trading:
- Day trading
- Swing trading
- Passive trading
NOTE: Diagrams in this section have been taken from IG.
Day traders open and close their position within one single trading day.
This strategy works for traders who want to take advantage of short-term opportunities in the Bitcoin market which may come about in light of developing news or emerging patterns.
Swing traders catch trends in price movements the moment they form and hold onto it until the trend experiences a reversal. This strategy is great if you want to take advantage of market momentum.
Make several intra-day trades on minor price movements. If you are the kind of trader who would make several small frequent profits rather than wait for a big opportunity,
If you are a long-term holder or you want to just get into the crypto market and try out your hand then passive trading may be ideal for you. The idea is as straightforward as it is timeless. Wait for the price to drop to a certain level and buy-in. Wait for the price to go up to a certain level and buy out.
Unlike the other forms of trading, the time length between buying and selling can last for several days, weeks, months, and even years.
Fundamental Analysis vs Technical Analysis
The two most important tools to keep in mind while trading, are fundamental analysis and technical analysis.
This analysis looks at the big picture instead of price movements. When you are doing a fundamental analysis of a coin, you are looking at:
- The developer’s activity surrounding the coin. How many projects or positive developments is the project going through. Recently, Cardano’s value jumped by a significant amount after they released the mainnet version 1.5.
- The mainstream integration of the coin. Is some company or mainstream platform integrating the coin? If yes then that is going to significantly affect the price. Stellar XLM gained almost 50% in March 2020 after IBM announced the launch of World Wire, a model for cross border payments using the Stellar protocol.
- Significant world events can alter the price of the cryptocurrency as well as has been already discussed in this guide.
Keeping yourself up-to-date on all the current events is imperative for solid fundamental analysis.
Technical analysis is a tool, or method, used to predict the probable future price movement of a currency pair, cryptocurrency pair, or stock. It can be creative and dynamic which helps you gain a very deep perspective into the coin.
The core assumption behind Technical analysis is thus: Regardless of what’s currently happening in the world, price movements speak for themselves, and tell some sort of a story that helps you predict what will happen next.
You can read the first part of our two-part guide on technical analysis to gain more insight.
Bitcoin Trading: Common mistakes to avoid
#1 Having an itchy trading finger
Because of crypto’s volatility and the general public’s FOMO, people tend to overtrade. One thing you need to understand is that trading cryptocurrency is quite like gambling and isn’t an exact science. Don’t overplay your hand especially when you lack disposable income. Sure you can gain a lot but you can lose a lot as well.
#2 Blind Trading
Trading without any strategy is a fool’s errand. Take your time and do some research. Learn about the coins and learn about certain trading strategies. Learn about the exchanges and choose the one which will benefit you the most.
Also, people tend to invest in the same coins that their friends are investing in. While there is nothing in taking advice, you should combine advice with your own research.
#3 Giving in to emotions
Fear and greed are the two most common emotions when it comes to investors. Fear can cause you to not dive into a coin when it is ready or it can cause you to leave your trade prematurely. Conversely, greed can cause you to have blind and baseless faith in a particular coin or it may make you hold on to a trade way past its expiry trade. Do not give in to emotions, stay as rational as possible.
#4 Not learning from mistakes
It doesn’t matter whether you are a beginner or an expert, you will make mistakes. However, what separates the professional traders from the novices is the ability to learn and grow from those mistakes. If you misread a pattern the first time then that’s an honest mistake. If you misread the same pattern a second time then it is completely on you.
#5 Keeping your crypto in the exchange
Actually, this point provides a pretty awesome segue into our next section which is….
What are Cryptocurrency Wallets?
Every exchange has its own wallet, however, it is not the safest of options. If you plan on holding on to your crypto for a long time then you should look into cold wallets. The two kinds of cold wallets that we would recommend are hardware wallets and paper wallets.
Hardware wallets are physical devices where you can store your cryptocurrency. They come in a few forms but the most common is the USB stick style typified by the Nano Ledger series. Although many swear by them, hardware wallets are still prone to compromise. Firstly, you’re trusting that the company who made your wallet hasn’t logged all the private keys with a plan to raid wallets in the future. This applies to those bought from the company themselves, but particularly if a hardware wallet has been acquired second hand. Under no circumstances should anyone ever use a pre-owned hardware wallet.
Although loss or damage can spell disaster for the unprepared, hardware wallets can be restored. Therefore, it’s just as important to back up your hardware wallet, as it is your online hot wallets. You should keep restoration details in a safe place that only you, and anyone you plan to leave the money to know about. Remember, your restoration details open the wallet. Think very carefully about who (if anyone) you share them with. It’s also vitally important that you transfer all coins to a new wallet, should something unfortunate happen between you and anyone else who knows your private keys (spouse, etc.)
Here are some hardware wallets that you can use:
Paper wallets are an offline cold storage method of saving cryptocurrency. It includes printing out your public and private keys in a piece of paper which you then store and save in a secure place. The keys are printed in the form of QR codes which you can scan in the future for all your transactions. The reason why it is so safe is that it gives complete control to you, the user. You do not need to worry about the well-being of a piece of hardware, nor do you have to worry about hackers or any piece of malware. You just need to take care of a piece of paper.
You don’t need to pay any money to create paper wallets. This makes it an economically viable option. You can go to Wallet Generator to create your own Bitcoin paper wallet.
Conclusion: How To Trade Bitcoin
Whatever you have learned in this guide should help you get started with your trading. However, you will need to keep learning and to gain more and more knowledge. Having said that, you should be at least ready to make your first simple trade. So, why don’t you hop on to Bitbuy right now and trade bitcoin!
Best Bitcoin Trading Platforms
The Bitcoin and Altcoin Trading sites on this page show our opinion only and BestBitcoinExchange.net is not responsible for any losses that may happen by trading on these trading platforms.
What are altcoins?
Although bitcoin is the leading cryptocurrency on the market, there are several different alternative digital coins are available on the market. Altcoins have the similar background as bitcoin, they are all based on blockchain technology although different technical algorithms and features are associated with each altcoin.
As of today there are almost thousand different altcoins have been issued to the market. The number of alternative digital currencies is growing every week as new coins hit the market through the ICO – the Initial Coin Offering processes.
The altcoins are placed to market through ICOs which becoming more and more popular for startups to raise money and for investors to jump into hot investment opportunities. The initial coin offering process is the exercise during the altcoins are issued to the market for first public purchases. It is similar to the IPOs on the exchanges, however during an ICO in stead of shares, a new cryptocurrency is issued to the market.
The process begins with issuing a white paper, where the owners of the new digital coin details the features and specifics of the cryptocurrency that will be placed to the market along with the initial prices.
You can check the ICO Calendar for the newest altcoins, or just follow the Bitcoin Talk forum thread about emerging altcoins. Investors can purchase new altcoins through pre-orders and once all the funds have been raised the new altcoin is available to trade on the altcoin market.
The most important altcoins are listed on Coin Market Cap. The top five altcoins from the market capitalization perspecive include Ripple, Litecoin, Ethereum, Etherem Classic and NEM coin.
Each have its unique feature which gained them popularity among others. Many altcoins have a decentralized nature and does not have a leading body, while others are owned by private companies.
The idea behind altcoins is that any community can have their own digital currency. Some of the altcoins have a supporting community behind them which facilitates the marketing activity of the coins. For example the Dogecoin community is well known for it’s generiousity and have supported several good causes in the past with charity events.
Dash even works as a corporation with decision making board and a development team concentrating on updates and new features. Strong social and media activity also helps growing the values of altcoins.
What is Altcoin / Bitcoin trading?
Altcoins can be traded on the market just like bitcoin with the help of cryptocurrency trading platforms. Trading between altcoins and bitcoin is as popular as trading with altcoins against fiat currencies such as USD, EUR, RUB or CNY. The market is continually growing, the popularity of ETH altcoins trades have been increasing recently.
Altcoin trading works similar to the forex trading, so general background knowledge of the forex markets can be beneficial for new traders. You can trade the major altcoins without the need of picking up the technical knowledge of cryptocurrencies, however it is suggested to follow the news associated with the industry to be able to act quickly on major market moves.
In order to start trading, the traders should pocess altcoins that can be transferred from the altcoin wallet to the altcoin exchange. There are some exchange on the market, where you can purchase altcoin directly on the site before starting trading. In other cases you have to own altcoins upfront.
Couple of trading site offers the option to trade with CFDs, like Bitmex. This enables traders to benefit from the market movements of the underlying altcoins without actually owning cryptocurrencies. By purchasing a certificate which value is linked to an altcoin, all the benefits of the altcoin trading can be enjoyed, without the technical background needed to open a cryptocurrency wallet.
Altcoin trading have two different pricing models. Platform can charge each order a fixed or pro-rata fee than can be decreased by increasing the trading volumes. An other approach is the spread based model, where the platform does not charge specific fees on the orders but the bid and ask prices of each trade already includes the trading fee.
Couple of exchanges apply the maker-taker fee schedule, which gives discount to those traders who provides liquidity on the market and charge fees to those who are taking the orders from the order book.
Just like during forex trading platform, altcoin trading sites also offers trading on margin. Trading on margin means borrowing money in order to increase the exposure to a certain market to benefit more on the price changes.
Margin trading can be very risky, so it is only suggested to advanced traders. The amount of leverage can be widely different among the sites, the most common leverage used by altcoin trading platform is 2-3x, but at couple of places the leverage can be increased up to 100x. Tutorials on margin trading can be found on BitcoinTradingSites.
Advantages of altcoin trading
Altcoin trading can earn significant money while trading from home in case the necessary research has been performed by the traders. Due to the high volatility of the altcoin markets, the trading profits can be higher compared to forex trading or even compared to bitcoin trading. This volatility can be taken as an advantage if the trader joins the market at the right time.
During trading with altcoins, the pump and dump scheme is often used on the market. This happens if a new coin on the market received significant amount of publicity and the prices are inflated artificially through misleading or exaggarated information.
When the price of the new coin reached it’s peak, the owners just dump the coins and sell off all of them to gain short term profit. It is advisable to pay careful attention to any news associated with cryptocurrencies that can affect the price of the altcoins.
Disadvantages of altcoin trading
Besides it’s obvious benefits, altcoins trading has it’s own challanges as well. The extreme volatile altcoin prices can lead to significant losses if the traders does not apply an appropriate risk management system.
Markets can change rapidly, it is very common to see 20-30% differences in the altcoin prices intra-day.
Some trading platform does not allow fiat currency withdrawals, so the profits from altcoin trading must be first converted to bitcoin on an exchange and then it can be transferred to another exchange to withdraw the amount in USD. These transfers have fees that is charged from the profit earned.
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