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Has the Coronavirus shut down got you wanting to ramp up your crypto trading? There are a lot of trader tips, golden crypto rules and so on out there.
This article isn’t an attempt to collect them all together here. It is very difficult to give recommendations that work on all occasions, but we wanted to offer some generalized rules that will help traders navigate the sea of crypto trading.
So, if you’re one of those looking to get in on the action while trading is hot, make sure to use these 5 tips to get the most out of your exchange.
Consider the exchange’s order types
You probably know that limit orders are orders that you can place below or above a market price for a purchase (long) or a sale (short), respectively. In addition to limit orders, there are also market orders.
Market orders are your basic stock purchases. The difference between market and limit orders lies in the time at which the purchase or sale is made. When you perform a market order you buy or sell something immediately at the price determined by the market.
But if you want to really start trading like a pro, you will have to get good at performing limit orders. With limit orders you get to select a maximum purchase price for an asset or a minimum sales price. This will allow you to play the market rather than being subject to the jumpy rises and falls that occur in crypto.
Choose Exchange Pairs
Veteran traders know that the volatility of a crypto pair like DASH / BTC, is usually higher than the volatility of a Bitcoin / fiat pair. The overall nature of the trade for a Bitcoin pairing implies a lower risk, but a smaller profit. Remember that the style of trade in these types of pairs can be completely different.
The first pair that beginners usually opt for is BTC/USD. Using this knowledge, exchanges apply to this exchange pair the biggest commissions they can get away with. For instance, if you want to buy BTC with fiat at Paxful you will have options that are up to 30% above the current market price.
Next time you decide to buy crypto, try buying altcoins with fiat or web money, and then exchanging your alts for BTC. In the end, you will pay surprisingly lower rates than you would pay for the straight cash-to-BTC purchase. This kind of webmoney-to-altcoin exchange chain can save you up to 6%, mostly due to exchanges taking advantage of Bitcoin’s popularity.
Use margin trading affiliate programs
Despite the fact that margin trading is the riskiest, it is also an extremely profitable form of crypto trading. To put it in layman’s terms, margin trading is a form of trading in which you trade an additional amount of money borrowed from someone by leveraging the money that you already have.
Even veteran traders can face huge losses in margin transactions. However, if you are good at regular cryptocurrency trading, you can start trying margin for small amounts for crypto and take advantage of available affiliate programs. Some cryptocurrency exchanges like HitBTC offer a percentage for second-tier partners and even demo accounts where you can learn to margin trade without any financial risks.
Try API trading
An API is an application programming interface, or a program that allows applications to interact with each other. You can imagine APIs as messengers that accept requests and inform the system about them, and then return answers to you.
A trading API, as the name implies, allows you to interact with the trading system, or, more precisely, execute transactions directly on the exchange. This comes in especially handy for traders who use algorithmic models in their trading systems – they need prices that are updated in real-time, as well as the ability to execute transactions (manually or automatically) as soon as their model issues an appropriate signal.
Some cryptocurrency exchanges, like Kraken and IDEX offer their clients trading APIs that support direct tariff feeds as well as direct trading. APIs have already become an integral part of the arsenal of professional cryptocurrency traders, and their rise in popularity is indicative of the evolution of the trading industry.
Trade on better conditions with sub accounts
Subaccounts are useful for those who work with a lot of clients, or those in charge of large trading operations and who want to employ different trading strategies at the same time. But if we go beyond that, subaccounts can be used as a referral program to help a main account owner boost their trading volume and enable them to trade on favourable terms. If you know someone trading at a high rate on exchanges that provide subsidiary accounts, ask them to get you one and you’ll be able to trade with more favourable commissions.
You won’t have to worry too much about privacy as your account will have its own API key putting in control of your assets. Some exchanges like HitBTC and OKEx offer benefits, like calculating how much you pay in trading fees with master and sub-accounts combined. Additionally, only master accounts are required to undergo KYC procedures on these exchanges.
If you are new to the idea of subaccounts, you should know that they have exactly the same rights and opportunities in the blockchain as regular accounts; they have their own passwords and keys, their own addresses, etc. The difference is that they can only be created by an owner of a main account on an exchange. The main appeal of subsidiary accounts is in trading cryptocurrencies with assets divvied up from a main account, which then can be transferred back without having to jump through the usual loops. This makes it especially convenient for institutional and corporate clients.
Some extras
If you’ve read this far, you really want to know how to minimize risks, improve your trading skills, save on commissions and generate more profit while trading. Here are a few bonus tips on safety:
- Divide large sums into parts and only exchange one part after receiving payment for another. With this the probability of losing large amounts is reduced.
- Create complex passwords unique to each site. If one exchange is hacked, scammers will try your compromised password at other similar sites.
- Check your payment details at each stage. Be wary of the malicious software that can memorize Bitcoin addresses in clipboards.
- Google services and exchanges on independent sites like crypto exchange monitors and forums so you get a good idea of an exchange’s reputation.
These tips are important, but the best advice of all is to simply use attentiveness, determination and critical analysis.