Basics of trading on the stock exchange (crypto currency)

As Bitcoin began its development, thousands of people appeared ready to invest in a promising project and the emergence of specialized crypto-exchange exchanges became inevitable. However, it took several years to form a full-fledged market. And even now it can not be denied that there are only a few stock exchanges with a professional approach, which you can entrust your money. Development continues, and probably we are still waiting for big changes.

Trading on the Exchange Crypto-Currency for Dummies

In the early years bitcoins were sold and bought in private transactions or on the IRC channel # bitcoin-otc. On May 22, 2010, the user laszlo bought two famous pizza from jercos, which cost $ 25, for 10,000 BTC.
Bitcoin’s first major exchange was MtGox.com. It was founded in 2007 by Jed McCaleb, developer of eDonkey 2000 and Ripple payment protocol, for the trading of Magic the Gathering game cards, and bitcoins trading was opened on July 17, 2010. In March 2011, Jed sold the stock exchange to the Japanese firm Tibanne Co. Ltd. Then Bitcoin cost only a few cents and orders in tens of thousands of BTC were common.

So began the slow, but true growth in the popularity of Bitcoin. November 6, 2010, the price touched 50 cents, and February 9, 2011 equaled the US dollar. In the spring of 2011, Bitcoin exchanges began to appear around the world and trade for different currencies — Britcoin for pound sterling, Bitcoin Brazil for Brazilian reais, BitMarket.eu for euro and Polish zloty. By the end of April, Bitcoin became more expensive than the euro and pound. The summer of 2011 is called the time of the first Bitcoin-boom. People around the world bought up AMD Radeon video cards and launched mining, the complexity of mining and the price of Bitcoin rushed up. By June 2, 2011, the price soared to $ 10, and only a week later — to $ 32.

In the crypto-currency industry, serious money began to turn around, which attracted the attention of crackers. On June 19, MtGox was hacked and the hacker, dropping fake orders by 3000 times — up to 1 cents, bought tens of thousands of BTC for copecks.

It was a powerful blow that led to disappointment in Bitcoin for many of those who came in the forefront. Return to the old border price was able to only 600 days — February 28, 2013. April 1 for bitkoyn gave already $ 100, and the peak of the price fell in December and reached 1320 USD. Since 2013, Bitcoin has come seriously and for a long time, gaining a foothold not only on exchanges, but also in politics, causing serious concern among bankers, regulators and even governments of most developed countries.

Such a rapid increase in the value of digital currencies could not but attract the attention of professional traders. As mushrooms after the rain, exchanges for trading in crypto-currencies multiplied, Bitcoin quotations appear on terminals Bloomberg, Yahoo Finance, Thomson Reuters Eikon, funds are created on the basis of digital currencies, the Bitcoin index is entered on ETF exchange platforms.

Crypto currency — trading on the stock exchange

It is necessary to distinguish several types of work in crypto-currency trading:

  • Classic trading, repeating strategies in the stock and currency markets.
  • Arbitration between crypto-exchange exchanges.
  • Investment of funds at the start (or before the start) in the project for forex or fork.
  • Work with derivatives (derivatives) Bitcoin.
  • Work on PAMM accounts.

To date, arbitrage between exchanges has practically lost relevance, despite the huge number of automatic trading systems working in this direction.

Working with forks at the very start is quite a high-risk business, fraught with both great opportunities and big losses. In addition, guaranteed success in this type of trade is possible only if there is insider information, which is usually questionable and not always legal.

Legal information on promising forks can be found on thematic forums — in the official topics of new crypto-currencies, where users can draw a description of a particular coin and thanks to properly submitted information and visible advantages, they will start buying it. The main source of such information is the bitcointalk.org forum, but when information appears in wide access, it is already losing relevance.

Since stable and serious work with large volumes for beginners in forks will not work, only crypto-currency trading remains, which completely repeats the principles of ordinary currency or stock markets, as well as work with Bitcoin derivatives, the simplest example of which is working with CFDs (contracts for difference) on Platform MetaTrader 4.

Crypto-currency exchanges operate like ordinary stock and currency exchanges. An experienced trader needs to spend a little time studying the features to get started in the new conditions, and the beginner risks no less than playing the lottery. In order to quickly learn and not get a serious loss, beginners in crypto trading should learn and understand two or three simple strategies that can be applied to any of the existing exchanges.

Marginal trading on the stock exchange

Margin trading on the stock exchange cryptocurrency quite common and almost every platform and market have such a possibility, but it deserves special attention Bitfinex, the benefits of which are not only in the fact that there is realized the possibility of margin trading, but also in other aspects. In the role of investors, that is, providers of liquidity, the users of the site act — they provide crypto currency in loans to traders. Commission for the use of funds is an income item.

There are three types of accounts on the exchange:

  • Exchange. Standard account for normal trading operations;
  • Total Return SWAP. An account intended for investment. Translate to him the currency is only if you want to create an offer for traders. The user assigns the amount, daily commission and credit period (from two days to a month);
  • Margin Trade. Funds from this kind of accounts are used for margin trading. All transactions are made with borrowed funds from investors. In this case, the trader has no right to withdraw money from investors, and any trade deal must be completed counter-transaction.

The size of the commission charged by the exchange from liquidity providers (investors) for the use of funds is 15%. Tariffs for withdrawing and entering USD by bank transfer 0.1% of the amount, which, by the way, can not be less than USD. LTC and BTC commission are not charged.

To start working on the Bitfinex exchange, you need to register and pass the verification procedure by sending a passport scan. In addition, you will need a document confirming the address of residence — for example, scanned utility bills.

There are a lot of such exchanges where there is margin trading on the exchange, but we indicated the most relevant and elaborated on the territory of Russia and neighboring countries.

The article is in the translation stage, and is still being updated. I’m sorry for the mistakes. Good reading.