How to Trade on Cryptocurrency
Cryptocurrency is the new BUZZ word in the world of investment. We can either trade or invest in cryptocurrency. There are many investors who made their fortune by investing on Bitcoin and by doing Algo trading on Crypto. Where Investment needs more fund and trading needs less fund.
The Blockchain Technology will be there to stay, and crypto is going to be an alternate of currency in many places and an asset class for years to come.
Below chart shall depict how Bitcoin investment has exponentially increased over the years. In this below weekly chart of Bitcoin, we can see how Bitcoin increased from 2019 till 2022. In Jan 2019 it was at Rs. 3L and by November 21 BTC made a high of 54L, making an investment 15 times, with an ROI of 1800% in just 2 years.
Future of Cryptocurrency:
This is just the beginning of cryptocurrency industry where more and more participants are joining. The blockchain technology is also maturing and getting accepted by all countries. Slowly this technology will become the hart of our day-to-day activities as internet or www is today. 25 years back in India hardly we had our own email id, we use to carry floppy drive to save anything from computer. Today we are not even use pen drive and use cloud spaces to keep our documents. Technology has emerged significantly over the last 25 years.
Where Blockchain technology will reach in coming 25 years is out of our imagination. There will be few cryptocurrencies which is going to rule the crypto industry, identifying them and investing on them need fundamental analysis on them.
History of Bitcoin and Ethereum:
If you are new to Cryptocurrency then, let me give you few more information about Cryptocurrency before we dig into the trading of this asset class.
Its assumed that Santoshi Nakamoto has invented Bitcoin in 2008. This is still a puzzle who is actual Santoshi Nakamoto, or was it a pseudonym. Bitcoin is the first crypto which is now traded in the crypto exchanges as BTC. After Bitcoin, comes next is Ethereum, which was conceived in 2013 by Vitalik Buterin which is again a platform powered by similar blockchain technology that is best known for its native cryptocurrency ETH, or simply Ethereum.
There are many such cryptocurrency currently available for trade in different crypto exchanges. Algo trading on Crypto can be executed in almost all those crypto currencies. All crypto exchanges are private exchange, they not regulated by any governing body i.e. SEBI in India who governs our stock exchanges NSE and BSC.
Now the question is how as a small-time retail trader we shall get benefited from this humongous Crypto industry. The answer is either we can become an investor or become a trader.
If we choose to become an investor with an investment ranges between 1L to 50L, then hold it for minimum 10 years to get the real fruit.
You should purchase crypto specific wallet if you’re buying cryptocurrency to hold for the medium to long term.
Algo based Investing:
When we shall talk about trading on Cryptocurrency using Bot. It’s much convenient, due to the nature of the asset class.
Crypto Exchange Market hours:
The good part is, Crupto exchanges runs 24×7, there is no off day or off hours, market is up and running all days 24 hours. As the market runs all the time, there is no Gapup or Gapdown. All the Stock exchanges generally have this Gapup and gapdown opening due to overnight news, causing your short term investment uncertainty. As there is no shut down time of Crypto market there is no off market hours and there is no manipulation possible in this market.
Indian Crypto Exchanges:
To start trading on crypto you need to open an account in Indian crypto exchanges. Here is the top 8 crypto exchanges of India.
- Binance India
- WazirX India
- Coinbase India
- Kraken India
- Bitstamp India
- Bitfinex India
- OKEx India
To start trading, you can open an account in either of them, or I suggest to open in both.
Once the account opening process completes, now is the time to fund your account. Transfer fund using mobikwik wallet to your wazirx account.
Once fund transfer is compete, you are all set for Crypto trade.
You can Buy and Hold or Invest using Algo bot, depending on what you prefer to do.
- If you want to hold, then buy your preferred crypto and keep them in your wallet.
- Or you can trade on them based after selecting a profitable bot.
Algo Trading with Crypto:
If you decide to invest on cryptocurrency, then it is always preferred to use a Crypto trading bot. Let me explain why am I suggesting for a bot to invest on Cryptocurrency.
Prior to entering into trade, it is important to know how much you are willing to lose. Hence you need a time tested trading strategy. The strategy can vastly differ from person to person, based on preferences, personalities, trading capital, risk tolerance, etc.
To mitigate risk, for a trader entry and exit time is crucial to book profit or exit at small loss. Due to the market timing i.e. 24×7, you never know when your strategy may generate Buy or Sell signal. It is practically impossible to remain infront of the computer screen and wait for the signal. Hence the best option is to choose a good Algo service provider and go for Algo trading on Crypto or trade using Crypto trading Bots.
Alternatively if you plan to hold cryptocurrency, then you can just buy your preferred Cryptocurrency and hold. Let that grow over time. However during your holding phase you may have to see you fund decreased by 50-60% or more. As Cryptocurrency market is exceptionally volatile. But still you can hold, as cryptocurrency market is extremely volatile.
Algo Bot Selection:
Once you have decided to opt for Crypto trading bot, its time to choose which Crypto trading bot to choose. While choosing any crypto algo services check if that Crypto Algo is integrated with the exchange you have account.
Binance is the most preferred Exchange to plan for Algo trading on Cryptocurrency. Due to their variety of Derivative offerings as well as huge volume.
In case if your service provider is not integrated with your exchange, you may need to open a new account with Binance account. In that case for an Indian trader first you have to fund your Wazirx account with INR and then you can transfer your Wazirx fund to Binance in two simple steps.
Buy USDT in WazirX from your INR fund then transfer that USDT to Binance account.
Moreover as Binance offers Future and options trading, in case you want to trade with leverage, then this is the best choice for you.
However great return comes with higher risk. Crypto trading has substantial risk associated. Any time any crypto price can fall more than 20-30% or more.
If you have any further question, do write to us.