How to make money on the cryptocurrency exchange? This question stirred up all social networks last year, every person at least once heard the word "Bitcoin". But what is this sensational way of earning money? Is it possible to earn big money on cryptocurrency? You will learn about this from our article.
Ways to make money on cryptocurrency
The most important thing in this type of earnings is to correctly determine the strategy that suits you best. Today, you can earn on the cryptocurrency exchange not only through investments and trading, there are many more diverse and interesting options that you can learn about in detail. But if you have chosen the most common options for how to make money on the cryptocurrency exchange, then you need to approach the process no less thoroughly.
Trading
The most important principle of how to make money on the cryptocurrency exchange through trading isspeculation. That is, you must sell more than you bought. But beginners often forget about it and do the opposite in a hurry.
Your actions if you choose to trade:
- You have to be careful when choosing an exchange. Often these are large exchanges with a large number of trades and good reviews on third-party resources.
- Correctly choose the object of trading, that is, currency pairs. This is a pair of currencies, on the difference in the sale and purchase of which you can earn. This may be the difference between traditional and cryptocurrency, or it may be the difference between two cryptocurrencies. If you are thinking about how to make money on the cryptocurrency exchange on the exchange rate of bitcoin against the dollar, then it is better to give preference to the first option. Moreover, the dollar is now in price. And if you want to make money on the cryptocurrency exchange exclusively with the help of a new currency, then give preference to the second option. If you are a beginner, then try your hand at trading cryptocurrency and fiat currency. Here you will be in the black anyway, since fiat currencies are more stable.
- If you plan to make money on the cryptocurrency exchange, you need to carefully analyze the situation on the foreign exchange market. If you are new to this area, then wait until the value of the currency falls below the average level and buy it when its value is close to the past lows. If you missed this moment, then you can buy the currency as soon as the rate rises a little and has not yet risen to the average value. The selling algorithm is slightly different from the buying algorithm. if there is no currencystable upward trend, then sell it as soon as it reaches its maximum point. But if the currency has a stable upward trend, then wait for its value to rise as high as possible.
- If you want to make money on the cryptocurrency exchange, then learn all the trading tools, and then your efficiency and success on the exchange will increase noticeably. It is better to withdraw part of the earned funds to external wallets.
Criteria for selecting currencies
There are several criteria for a successful choice of couples. There should be many buy and sell offers for your pair. This means that there is a demand for your currency, so you won't have to sell it for a long time. If there is active trading, then a trader with a lot of money is unlikely to significantly affect the course. If the trading volume for a currency is small, then a large bet will turn the rate the way a large and experienced trader wants it.
Current changes - pros and cons
You should also pay attention to changes in the cryptocurrency exchange rate. Strong fluctuations are twofold - for experienced traders they can provide a good income, and for beginners - spent nerves and losses, since it is quite difficult to guess them without sufficient experience. If you are a beginner and want to make money on large currency fluctuations, then it is better to invest a small amount to understand the further process. If you want to make money, then it is better to choose more stable currencies.
What isinvesting in the cryptocurrency market?
Is it possible to earn on the cryptocurrency exchange by investing? Of course. There are two types of investments in the foreign exchange market - long-term and short-term.
If you want to become a long-term investor, you need to invest for a period of a year or more. Supporters of long-term investments are people who are confident in the growth of a certain currency.
Short-term investments are made for periods ranging from one week to several months.
A short-term investor does not know and does not assume what the future holds for the currency in which he has invested. He is betting on the currency's rapid and rapid growth in the near future, despite the possible belief that this currency is short-lived.
Algorithm of actions for a long-term investor
Is it possible to earn on the cryptocurrency exchange through long-term investment, and if so, what is the procedure for a long-term investor?
- First, you should study the forecasts for the future of the top currencies and choose the one that suits you as a long-term investor.
- Wait for the maximum drop in the price of your chosen currency and buy it at the lowest price.
- Withdraw earned money to the most secure wallet and forget about investing for the required period.
The profitability of this enterprise directly depends on the growth of currencies. Starts at 100% and can go up to 1000%.
Reliability depends on the stability of the selected currencies. Of course, the stability of fiat currenciessignificantly higher than, for example, Bitcoin.
This is the perfect way to make money for beginners. Long-term forecasts are the prerogative of experts with many years of experience. You just have to choose the most expert opinion for yourself, and then you can earn as much as experienced traders earn on the cryptocurrency exchange.
Short-term investment
How much can a short-term investor earn on a cryptocurrency exchange? It all depends on you.
- Find currencies you are sure about. Long-term investments involve a minimum of currencies, sometimes even one, while short-term investments involve several currencies that make up the portfolio. Study the overall picture of the currency market at the moment. Your goal is to look for currencies that are growing strongly and have good prospects, or do not slow down for a long time and have good press coverage. Short-term growth of the currency may be due to various positive events in the foreign exchange market. For example, before bitcoin futures appeared, the active growth of bitcoin began. For a successful short-term investment, the minimum required is three currencies.
- Distribute the share in the portfolio between currencies. Most of the portfolio should go to the most promising currency in the near future.
- Buy currencies when their price is close to the decline in the previous period.
- Keep your finger on the pulse of currency exchange news, and then choose a new investment portfolio. He may be the same.
Income fromsuch investments are quite high: some investments pay off in a couple of months by 40 - 60%. But at one fine moment, the investor, often because of his mistakes, goes into the red. Most often this happens with beginners.
Reliability is quite high as cryptocurrencies are now quite stable in stock markets despite a big downturn.
Difficulty for beginners is quite high. You need to know all the tools for analyzing the course, carefully follow the news, know the technical side of cryptocurrencies and accurately determine their effectiveness.
Arbitration
Such a strategy to make money on the cryptocurrency exchange as arbitrage is not much different from trading. The only difference is that the work is carried out on several exchanges at the same time. You can make good money by buying a cryptocurrency on an exchange with a high value and then selling it on an exchange where its value is higher.
How to make money on the difference between cryptocurrency exchanges? Follow the following algorithm:
- Choose a few optimal exchanges for yourself, where you can safely invest. The most important selection criterion will be their responsiveness to course changes.
- Stop your choice on the most promising currencies. The greater the difference between falling and rising, the more promising the currency is.
- At the first signs of a currency difference, you should simultaneously put up an offer to buy a currency where the cost is lower and sell where the cost is higher. Changes in the rate are quite rapid, so you should not hesitate.
It would be far more prudent for a currency arbitrage person to use a cryptocurrency trading bot for this purpose, since the work is mostly mechanical.
The higher your speed on the exchanges, the more earnings. Bots that work on several exchanges bring in $200 - $400 per month. People can most often earn $50 - $150 per month.
Reliability directly depends on the stability of the exchanges you have chosen: if there are no problems in operation, and the withdrawal of money is fast, then you should not have any problems. Unfortunately, rates vary widely on smaller exchanges, where such problems are quite common.
This way of earning does not require the most complicated actions, so it is also suitable for beginners.
Margin trading
Is it possible to make money on the cryptocurrency exchange using margin trading? Naturally, you can manage more serious amounts than those that you have. The trader uses not only his own funds, but also the currency borrowed from another person.
Here is the recommended algorithm for margin trading:
- Find a large exchange with high turnover, like Bitfinex. It provides margin trading.
- Enter your funds and take out a loan. Look at the percentage difference, because there is more percentage, and there is less. High interest rates are usually given for unpopular currencies, and low lending rates are typical for popular currencies.
Actions of a margin trader oncurrency exchange similar to traders. As soon as the loan expires, the player can keep the proceeds for himself, and the loan with interest must be returned to the lender. If a series of trades turns out to be unsuccessful, then you will be left with nothing.
Profitability can be very high for an experienced trader - 2 - 3 times higher than with regular trading (depending on the size of the loan). Beginners, on the other hand, take a lot more risk than regular trading.
Reliability depends on selected currencies, exchange and behavior.
For beginners, this process may seem complicated, because it requires certain behavior on the exchange, but the process of obtaining a loan is quite transparent and has no pitfalls.
Lending
How much can a lender earn on a cryptocurrency exchange? It all depends on the interest and the currency you choose. Let's take a closer look at the downside of margin trading.
Most often, loans are granted for 1 - 3 days, but there are such terms as a month or several months.
You can make good money lending for an unpopular currency, but it will be harder to find a trader here.
The algorithm of actions for lending is as follows:
- Must purchase funds for lending. You can combine it with long-term or short-term investments.
- On exchanges where margin trading is possible, you need to set the interest on the loan and wait for the person who suits your conditions.
- As soon as the term expires, you get your money back along with interest. You canreceive interest daily, or you can receive everything immediately after the expiration of the term. The longer the loan term, the greater the reliability.
Yield can be up to 40% per annum, the average value - from 25% per annum.
Reliability depends on the size of the loan and on the reliability of the exchange you choose. If the credit matches the amount on the account of the trader, and the exchange is trusted by traders, then the risk of your losses is reduced to zero.
Some exchanges allow you to lend a much larger amount that a trader has in his account. When choosing a loan amount of 1: 3 on a dubious exchange, there is a high probability of not waiting for your funds and a low probability of influencing the trader or the exchange in this matter. But it is worth noting that such cases are rare: usually creditors are not tied in any way to the failures of the trader and get back the invested funds.
This way of earning is suitable for both experienced traders and beginners, since the lending process has been brought to automaticity.
Results
This was a brief digression into how and how much you can earn on the cryptocurrency exchange. Some conclusions can be drawn.
In order to have a good income on cryptocurrency exchanges, you need to study the theory well and regularly read many books on economics and finance. Without a theoretical base, you significantly reduce your level of earnings on the crypto exchange.
You can make good money on long-term investing, but only as long as cryptocurrencies grow. As practice shows, this trend will soon come to naught, and yousooner or later you will have to understand the intricacies of working on financial exchanges.
