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10 Ways to Make Money with Bitcoin
Since bitcoin’s recent highs, the cryptocurrency has once again awoken the interest of the media, regulators, and speculators. Both the reputation and the regulatory environment for bitcoin is turning for the positive around the globally and speculators are once again investing heavily in the world’s first decentralised digital currency. In this post, you will discover ten ways to make money with bitcoin to help you get started with becoming a part of the bitcoin community or, at the very least, earn a bit of extra money by leveraging everyone’s favourite cryptocurrency.
Buying and Holding Bitcoins
If you want to start earning bitcoin you first need to obtain a bitcoin wallet, which is used to send, receive and store your bitcoins. You can obtain one from an online based service such as Coinbase or Blockchain.info. These are two of the most used bitcoin wallet and come with an online and a mobile version. Having said that, the safest way to store your bitcoins would be offline. For that, you could use a so-called “cold wallet” such as Trezor.
Once you have a wallet service, you can establish multiple bitcoin addresses, which allow you to receive bitcoins from others. No real life addresses are necessary, just your bitcoin address will suffice for any digital currency transfers. All transaction can then be viewed on the blockchain at Blockchain.info. This is why bitcoin is considered as a semi-anonymous digital currency as transactions are linked to bitcoin addresses but who is behind those addresses is unknown.
Mining bitcoins can be quite complex and is usually not recommended for beginners. The process entails the use of sophisticated machines that are expensive and consume quite a lot of electricity to solve mathematical algorithms in exchange for bitcoins. Bitcoin miners enable bitcoin transactions by sharing their processing power. In exchange for enabling the bitcoin network to function, they are rewarding with new bitcoins. This is what “mining” refers to.
Having said that, it is no longer considered lucrative for individuals to mine at home using mining equipment and the shift is being made towards more large-scale operations.
If you do want to engage in bitcoin mining and are willing to invest in expensive mining hardware, it is strongly advisable to join a mining pool. In a mining pool, miners pool their resources together and share their hashing power with the aim of solving a block and dividing the reward equally, depending on the number of shares contributed by each person. It is an effective way to motivate small-scale miners to continue their involvement in mining activities. Some popular mining pools are:
Bitcoin Cloud Mining
Alternatively, you could engage in bitcoin cloud mining. Bitcoin cloud mining is the process of mining bitcoins using a remote datacenter with shared processing power. Cloud mining is beneficial to individuals as it allows them to carry out their mining activities without having to manage the mining hardware.
It enables you to earn bitcoins without mining software, mining hardware, bandwidth, electricity or other offline issues. However, there is a cost associated with cloud mining as a service and this will have an effect on your bottom line.
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The most reputable cloud mining company is Genesis Mining. I personally have a small bitcoin mining contract running with them. Having said that, the time it will take you to break even on bitcoin cloud mining can easily take well over a year and that is assuming the price of bitcoin doesn’t drop. If you want to play your part in the bitcoin network and want to mine at a low cost, then cloud mining is a good option. If you are looking for a lucrative investment, however, you are much better off just buying the cryptocurrency itself or engaging in peer-to-peer bitcoin lending.
If you who enjoy playing games or simply don’t mind looking at a few ads, you can visit bitcoin faucet websites. These websites generate revenue from ads placed on their pages and pay out a small amount of the ad revenue to its users. All you need to do is sign up with your bitcoin address and start earning a few cents worth of bitcoin every day.
While it is a very slow way to earn bitcoins, these sites allow anyone new to bitcoin to get obtain bits of the crypto-currency for free.
Some of the most reputable and large faucets that have consistently made their payouts over a long time period include Moon Bitcoin, Bitcoin Aliens, and BTCclicks.
Completing Microtasks for Bitcoin
You can also earn bitcoins by completing micro-tasks on the following platforms:
Bituro is a smartphone app that pays you in bitcoins for small tasks, such as watching promotional videos, filling out surveys and testing apps.
Bitcoin Reward enables you to earn for watching videos, downloading and testing apps, filling out market research surveys and other minor tasks.
Coinbucks is a smartphone app that allows you to earn bitcoins for playing mobile games, downloading smartphone apps and completing online promotional offers.
Day-Trading Bitcoin for a Profit
If you love the financial markets and regularly trade online then day-trading bitcoin could be a way for you to make money with bitcoin.
When it comes to bitcoin trading, the basic speculation strategy applies. You buy when the currency is low and wait for the price to increase before you sell it a higher price to generate profit. It is important you understand market trends and price dynamics if you want to make successful trades and as bitcoin is primarily headline driven it is important to follow bitcoin news closely when actively trading the digital currency. Some exchanges also allow you to trade bitcoin using leverage, which can help you increase your trading profit substantially but also possess a much higher downside risk.
You can also trade in bitcoin via arbitrage; buy it cheap on one exchange and sell it at a higher price on another exchange.
Becoming a Market Marker on Localbitcoins.com
Localbitcoins.com allows you to trade Bitcoins for fiat currencies through individual trades, sometimes referred to as over the counter trading or OTC. Most people are comfortable selling bitcoins over the counter as the transactions are fast and they offer diverse methods of payment.
Hundreds of bitcoin traders from around the globe are making profits on Localbitcoins by becoming market makers (buying and selling in Localbitcoins). Here is a brief guide on how to sell bitcoins on LocalBitcoins.com.
- First, you sign up to LocalBitcoins.com
- Then, you need to create an online sell advertisement for bitcoins. When designing an advertisement you select a payment method, set you pricing limits and outline your terms of trade as a free-form message.
- Next, you need to replenish your wallet with bitcoin, for you to order customers to be able to access trade requests from your advertisements.
- Once a buyer opens a trade with you, the full bitcoin amount is automatically transferred from your wallet to escrow.
- When the buyer has made the payment and pressed the Mark payment complete button you will receive an SMS alert or a notification via email informing you that payment of the trade has been done.
- Upon confirmation of the payment, the bitcoins are released to the buyer from the escrow to his Localbitcoins wallet.
- The last step is to leave feedback for the buyer so as to gain reputation and make some trades.
Depending on the country, bid/offer prices vary greatly. If you are making markets in less saturated bitcoin markets, you can make easy money as a market maker on LocalBitcoins.
Gambling in Online Bitcoin Casinos
If you like gambling online and want to earn your gambling winnings in bitcoin, then you can choose from a variety of bitcoin casinos and gambling sites. Leading bitcoin online gambling sites include Starcoin, Crypto Games, BetKing, and vDice.
When you like playing dice, roulette, poker, lottery or slots, the bitcoin online gambling market is more than big enough to satisfy your gambling needs.
Investing in Bitcoin Peer-to-Peer Loans
You can also use your bitcoins to lend them to entrepreneurs and small SMEs using the bitcoin peer-to-peer lending platform Bitbond. You can generate excellent returns by lending through Bitbond.
Peer-to-peer lending refers to a method through which individuals, startups, and SMEs can borrow from individuals without the use of a traditional financial intermediary. This enables financing for those who are finding it hard to secure a loan from a bank and generates strong fixed interest returns, with low transaction fees and a low correlation to stocks and bonds for investors.
However, remember to always diversify your risk by lending to a number of borrowers as opposed to putting all your money into one loan.
Selling Goods and Services in Exchange for Bitcoin
And finally, one of the most common ways of earning bitcoins is by selling goods or services in exchange for bitcoins. Some of the things you can sell are clothes, old gadgets, cars and even homes in exchange for bitcoin. Presently, there a lot of sites that offer platforms for people to buy and sell products in exchange for bitcoins.
Two popular sites to sell products in exchange for bitcoin are Bitify and Purse.
- Bitify: Bitify.com is somewhat likened to the Ebay for Bitcoin. It uses an auction system to sell items in exchange for bitcoins. Bitify also offers escrow services so that buyers can ensure the goods are delivered to them first before releasing the bitcoins. The use of the escrow service is optional for buyers at a 1% fee. Sellers, on the other hand, have a 2.5% fee on the total sale price of the items. Premium advertisements are charged at 1.5% of the total cost.
- Purse.io: Individuals with amazon accounts can sell items at a discount on Purse. Buyers who use bitcoin advertise their wish lists on at their Purse.io accounts.
Alternatively, you could sell services, as a freelancer, for example, and earn bitcoin. There are numerous bitcoin-based freelancer platforms where one can offer their services, such as BitGigs or Coinality.
5 Bitcoin Trading Strategies: Make Money With Bitcoin
Over the last 12 months, cryptocurrencies, and particular Bitcoin have gone from being something that people were aware of, but didn’t really dabble in, to something that everyone is aware of, and everyone wants to dabble in.
But like most things in life, it is good to have a plan in mind before you jump in at the deep end.
From day trading to the more complex scalping, in this article, we will take a look at five of the top Bitcoin trading strategies and hopefully give you a bit of the information you need to decide which is the perfect strategy for you.
Table of contents:
What Is Bitcoin Trading?
Have you heard of Forex? Forex is the trading of foreign currencies on a market, based on the increase and/or decrease in their value.
Bitcoin trading is the trading of Bitcoin against the value of other cryptocurrencies, or fiat currencies, depending on your preference.
There are many different ways of trading cryptocurrencies such as Bitcoin, and which one you go for will depend a lot on your skill and experience level and of course, whether you are looking to make a serious profit, or you are just doing it for the enjoyment.
Remember, never to invest more than you can afford to lose, particularly if you are just starting out, as this is a highly volatile and unpredictable market. Keep your head on your shoulders, don’t get carried away, and don’t bet the kids college fund. To find out more, let’s read on!
Bitcoin for Fiat vs Bitcoin for Cryptocurrency
The power of Bitcoin trading is the CFD. They mean that you can trade Bitcoin without ever actually having to use them.
CFDs were originally created for the purpose of getting your paws on Bitcoin without having to actually own it and because of this, CFDs are a great option for those that are looking to start trading for the first time.
It is a popular belief that it is always more profitable to trade BTC for another altcoin, rather than against a fiat currency such as dollars or euros. This is due in part to the fact that altcoins and bitcoin are particularly volatile so if you are trading one for the other, you can experience bigger jumps in value, and therefore more profit for you.
The price of the dollar and euro, as well as other fiat currencies, tend to be pretty stable so trading with them doesn’t offer such valuable returns as with cryptocurrencies.
5 Bitcoin Trading Strategies
#1: Buy and Hold
Buying and holding are one of the most popular ways to trade Bitcoin and those that partake in it are called “holders” within the crypto community. They usually buy and hold a currency with a long view in mind and they tend to utilize a long-term approach, placing their hopes on the price of Bitcoin rising a lot.
They usually think in terms of monthly, weekly, and sometimes daily charts and they are a unique type of trader whose primary goal is to get as much cryptocurrency as they can get their hands on with the aim of it becoming more valuable as time passes.
At the moment, this is one of the best strategies you can employ when it comes to Bitcoin.
As it is a highly volatile coin, but that has a value that is expected to reach stratospheric new highs, it is a great one to invest in. It is by far the most popular cryptocurrency on the market and its price is continually climbing.
Another thing to consider is that with Bitcoin, there is a limit of only 21 million coins which means it has an inherent advantage over traditional fiat currencies.
Anyone that trades in the buy and hold method will usually base their methods on a range of different analyses instead of the analysis based decision. These decisions are typically made on the potential of the coin, rather than what current trends and charts are saying.
This type of trader remains rather unmoved by daily changes in the price of Bitcoin.
Fluctuations in its value that happen throughout the day rarely bother them and many remain unphased by the extreme changes that can occur, and those that have a lot of experience are aware of the volatile nature of Bitcoin due to its history.
They also consider a price crash as a major opportunity to purchase more coins at a low price and make a considerable profit in the future when the price increases. They think of crashes like a sudden discount of flash sale which is a perfect opportunity to capitalise on. They tend to pull profits if the price hits a high they think it won’t be able to maintain, but they very rarely liquidate all of their assets at once.
But when it comes to CFDs, this is not the idea trading method because they are not usually sustainable for holding for a long period of time because of the costs to maintain them.
It is much smarter to keep your Bitcoin in a secure wallet which is something that you just cannot do with CFDs.
#2: Swing Trading
Those that choose to utilise the swing trading method of trading are traders that will hold their currency for a couple of days or a few months’ maximum.
Their strategy centres around trading at a significant price and moving between two extremes. If, for example, the price isn’t following a particularly strong up or down trend, the tendency of those trading in this way is to trade on a high and low-cost range.
A buyer or seller will reliably enter the market when there is a correlation with volume which results in a fixed price of direction reverse. The price of Bitcoin can even remain within the set levels for a prolonged set period of time and it can still be profitable for the purposes of swing trading.
This type of trader will usually consider a wide range of factors and they place a lot of importance on technical indicators that can reveal oversold and overbought conditions that are seen on the market.
These conditions will indicate market sentiment and are usually dictated by intuition and common sense.
They can also indicate momentum which is something prone to imbalance and would require correction. Many of the different indicators that these type of traders look for include Bollinger Bands, RSI, and Stochastic Oscillators.
Once the price of Bitcoin reaches a certain level, the traders will then place a wager on a reversal of price.
When the indicators are based on a change or direction, and the price continues instead of reversing back then this is a good time to exit. Swing trading is also particularly effective when it comes to trading with CFDs.
When there is a good time frame match that coincides with a bigger price move, and the prices continue past a projected reversal point the there is often a small loss. If, however, they operate as predicted, there is a lot of profit to be made.
#3: Trend Trading
This type of trading requires a lot more knowledge and it is much harder to navigate than other types of trading techniques.
Traders of this type tend to use longer or more prolonged patterns of trading with the ultimate goal of capitalising on it until the end of the trend. Unlike swing trading, trend traders usually have no particular target or end game in mind and this is particularly pertinent when we consider the highs that Bitcoin enjoyed this year.
The secret to effective trend trading is to consider it as a sort of art form where the formation of the trend is subtle.
You need to be able to identify the trend at an early stage before everyone else jumps on it and realizes its potential. With trend trading, you will find you are able to hit a bigger high with an emerging trend that moves at a consistent pace, as well as continually growing prices, and declining prices as well.
It can be pretty tough to get the hang of trend trading and it generally takes some time to break through to a profit-making level so be prepared to stick with it and suffer a few losses along the way.
Be aware that trends tend to increase as people start to notice them and want to get involved. They gain momentum quickly and when they are strong, non-Bitcoin investors pick up on them, as well as the media.
Eventually, when prices go up they will reach what is known as a parabolic state before they start to rapidly extend.
It is at this point that the trends will usually crash at an alarming and almost violent rate.
Savvy traders get in quickly, make their money and then exit before the inevitable crash that hits all of the other traders hard.
Trying to win by picking out the tops is a pretty foolish way of trend trading as it is usually much smarter to just hang in there and wait for the assurance that a particular trend is growing. You can get the confirmation of this through the Rate of Change and Moving Average Convergence-Divergence analytics.
From there you will then be able to take the profit sooner, rather than much later.
#4: Day Trading
The key to successful day trading is knowing how to keep your position in a market whilst you are “on duty”.
These traders will typically operate a twelve to sixteen-hour shift as a minimum, although sometimes these shifts can be much longer.
When it comes to day trading, it has a level of intensity that is comparable to that of the stock market and you can often hear day traders complaining about their minimal sleep or the fact that they look like a zombie.
The truth is, that these are a special kind of trader and it takes a certain kind of person and mindset to make a successful one. They often switch between swing trading and day trading and they may also nurse particular accounts until the time is right to liquidate them.
The type of traders that get involved in day trading are ones that are likely to follow different hourly charts or sub-hourly charts with the occasional reference to higher time frames when needed.
The style of their trading is often better kept for those individuals that want to make trading their full-time occupation, rather than just a side-hustle.
Scalping is not a particularly well-known type of trading but there are a number of traders that employ this strategy in the hope of making a profit.
These are traders that want to make money on a minute to minute exchanges.
They generally use different imbalances that occur in the market to both order and book multiple mini-profits. They often get large returns that consist of lots of smaller profits.
It is always about the volume of trades as opposed to the size of each individual trade. Scalpers look to charts that show around five minutes of duration to help them make their decisions.
This is a really tough way of trading and you should only try it if you are really experienced and really know what you are doing. If not, steer well clear.
These five Bitcoin trading strategies vary in their complexities and the level of market knowledge that you will need before you can execute them effectively.
Remember to do your research and consider your options carefully before putting any serious amounts of money into anything.
Got excited? Check out our Guide to Cryptocurrency Trading and start today!
Day Trading Cryptocurrency – How To Make $500/Day with Consistency
Would you like to learn day trading cryptocurrency and make a consistent $500 per day? We often hear about all the money you can make by day trading stocks. But what about crypto day trading? In today’s lesson, you’ll learn how to day trade cryptocurrency using our favorite crypto analysis tools.
Our team at Trading Strategy Guides is lucky to have over 50 years of combined day trading experience. We’re going to share with you what it takes to day trade for a living, and hopefully, by the end of this trading guide, you’ll know if you have what it takes to succeed in this business.
First and foremost, when day trading, it’s essential to have a structured approach and a rule-based strategy. The same as swing trading or positional trading you are not going to trade every day, and you’re not going to make money every day. So, you need a day trading cryptocurrency strategy to protect your balance.
The high volatility nature of Bitcoin and other cryptocurrencies has made the crypto market like a roller-coaster. This is the perfect environment for day trading because during the day you’ll have enough up and down swings to make a decent profit.
Moving forward, we’re going to teach you what you need to learn how to day trade cryptocurrency and we’re going to share some out-of-the-box rule-based day trading strategies.
How to Day Trade Cryptocurrency
The crypto market’s unique characteristics require you to have a firm understanding of how it works. Otherwise, your experience can be like skydiving without a parachute.
The good news is that we’re going to provide you with everything you need to survive crypto day trading.
Day trading the cryptocurrency market can be a very lucrative business because of the high volatility. Since the crypto market is a relatively new asset class, it has led to significant price swings.
Before day trading Bitcoin or any other altcoins, it’s prudent to wait until we have a high reading of volatility. The good news is that even when we have a low reading of volatility relative to other asset classes, this volatility is still high enough that you can generate a modest profit on your trades.
Crypto day trading also requires the right timing and good liquidity to make precise entries.
A lot of the cryptocurrencies and crypto exchanges are very illiquid and don’t have the liquidity to offer instant execution that you might find when trading Forex currencies.
Before day trading Bitcoin or any other alt coins, it’s also important to check how liquid the cryptocurrency you wish to trade is. You can do so by simply verifying the 24-hour volume of the crypto trade.
CoinMarketCap is a good free resource to read and gauge the market volume of any particular coin.
Note* Always remember that not having enough liquidity could lead to substantial slippage and subsequent to bigger losses.
As previously stated, crypto day trading doesn’t require trading every single day. We only like day trading cryptocurrencies when all the conditions align in our favor. In this case, avoid trading on weekends and limit trading only on the highest-volume days.
Put your seatbelt on because next, we’re going to reveal how professional traders are day trading cryptocurrencies.
Crypto Day Trading Strategy
The idea behind crypto day trading is to look for trading opportunities that offer you the potential to make a quick profit. If day trading suits your own personality, let’s dive in and get through a step-by-step guide on how to day trade cryptocurrency.
Now, before we go any further, we always recommend taking a piece of paper and a pen and note down the rules of this scalping strategy.
In this article, we’re going to look at the ‘buy’ side.
Step #1: Pick up Coins with High Volatility and High Liquidity
As previously discussed, the number one choice you need to make is to pick coins that have high volatility and high liquidity. If you’re not day trading Bitcoin, which is the most liquid coin out there, and you like the altcoins, try to pick those coins that have good liquidity and volatility.
There are more than 1600 coins on the market and growing. By following only the top cryptocurrencies, you’ll reduce your area of selection.
Day trading smaller cryptocurrencies can also be a very lucrative business, but there are higher risks. Remember, crypto prices can crash just as fast as they have risen.
Moving forward, you’re going to learn how you can make money crypto day trading.
Step #2: Apply the Money Flow Index Indicator on the 5-Minute Chart
This specific day trading strategy uses one simple technical indicator, namely the Money Flow Index. We use this indicator to track the activity of the smart money and to gauge when the institutions are buying and selling cryptocurrencies.
The preferred settings for the MFI indicator are 3 periods.
We’re also going to alter the default buying and selling levels from 80 to 100 and respectively from 20 to 0.
How to use the IMF indicator will be outlined during the next step.
Step #3: Wait for the Money Flow Index to reach the 100 level
An MFI reading of 100 shows the presence of the big sharks stepping into the markets. When buying, smart money can’t hide their footsteps. They inevitably leave tracks of their activity in the market and we can read that activity through the MFI indicator.
Technical indicators aren’t always right, so in order to fine-tune our day trading strategy, we’ve added a few more conditions. Namely, during the current day, we need to skip the first two MFI readings of 100 and study the crypto price reaction.
The price needs to hold up during the first and second 100 MFI reading.
If the price drops after the first two MFI 100 readings, then this suggests that most likely we’re going to have a down day.
Let’s now determine the appropriate place to go buy Bitcoin and what are the technical conditions that need to be satisfied.
Step #4: Buy if MFI = 100 and if the subsequent candle is bullish
We can now wait for the third MFI reading above 100. It doesn’t necessarily have to be the third MFI = 100 reading, you can take every other MFI = 100 readings. If your time doesn’t allow you to catch the third 100 reading on the MFI indicator, you can simply pick the next one as long as all the other technical conditions are satisfied.
Next, we also need the candlestick when we got the MFI = 100 reading to be a bullish candle. The close of this candle needs to be near the upper end, giving us a candle with very small wicks.
This brings us to the next important thing that we need to establish when day trading cryptocurrency, which is where to place our protective stop loss and where to take profits.
Step #5: Hide your protective Stop Loss below the low of the day. Take Profit during the first 60 minutes after you opened the trade.
The obvious place to hide your protective stop loss is below the low of the day. A break below it will signal a shift in the market sentiment, and it’s best to get out of the trade. This can also signal a reversal day.
We’re more flexible when it comes to our exit strategy. However, the only rule you need to abide by is to take profits during the first 60 minutes or the first hour after your trade got triggered. Holding the trade longer than one hour will result in a lower success rate. At least that’s what our backtested results showed us.
Conclusion – Crypto Day Trading
If you took the time to read the whole day trading crypto guide, then you should be able to buy and sell Bitcoin and alts and make some daily profits. If you are interested in learning how to day trade cryptocurrency, be sure to equip yourself with enough information before diving into the market.
Crypto day trading can be a great way to grow your crypto portfolio and it’s a very lucrative alternative to the holding mentality that it’s crippling the crypto community.
Making a living day trading cryptocurrency can be a lot easier due to the high volatility nature of the crypto market. High volatility suits day trading very well, so you have the right environment to succeed. You may also be interested in reading our guide on the Best Cryptocurrencies Investments for 2020.
Thank you for reading!
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