Stable earnings on bitcoin: where to start and what are the prospects

The cryptocurrency market presents profitable opportunities every day, but most newbies start off at a loss. We asked traders and practitioners to share their experience and name the key rules and strategies for successful trading …

The cryptocurrency market presents profitable opportunities every day, but most newbies start off at a loss. We asked traders and practitioners to share their experience and name the key rules and strategies for successful trading

Trading in the cryptocurrency market is often associated with gambling in a casino. It's all about the strong volatility of the bitcoin (BTC) and other coins, manipulation by large players and unpredictability. Sometimes completely unexpected events become the reason for the rise or fall of quotations. For example, in October, following the announcement of the President of China on the support of the blockchain, BTC rose by 40% per day.

But in the cryptocurrency market, the same laws and principles apply as in the stock market, and technical analysis also works, says Nikita Zuborev, senior analyst at This allows you to choose a winning strategy that allows you to earn consistently. However, according to the expert, the risk of exchange rate manipulation due to lack of regulation should be taken into account.

You can invest in cryptocurrency with long-term goals, but trying to derive the formula “invested and guaranteed earned money” is not always possible, leading United Traders trader Alexey Markov is skeptical.

Practitioners trading in the market told what rules in the cryptocurrency market must be followed and when to start investing in order to minimize the risks of losing initial capital.

Where to begin. Main rules

For every novice trader, first of all, it is useful to put aside thoughts about making money and focus on not to lose. Trading is a tricky craft and rarely starts with success. Therefore, beginners are advised to first develop a trading strategy: determine the desired assets, as well as the prices at which they will necessarily come out of them both during the growth and fall of the market. Whether it works can be checked on historical data. Only after that you can proceed to the actual transactions.

At the very beginning, it is important to calculate how cheaper it is to buy cryptocurrency and to do it reliably, says Zuborev. You can deposit funds directly to the exchange or first replenish your e-wallet. Another option is through an exchanger. In order not to lose a few percent of the capital just upon entering the market, it is important to study all options for replenishment and withdrawal of funds and find the best one.

One option to mitigate risks is to divide the capital into several parts. If you trade the entire amount at once, there is a risk of "freezing" the funds in the asset due to an unsuccessful transaction. In this case, you will have to either fix the loss or wait for the price to recover. Because of this, you can miss out on a lot of other opportunities that the market provides every day.

You can also use stop loss orders: if you have bought an asset and have predetermined the price at which you will sell it in case of a decline, you can place a pending order at this level. In this case, the system will automatically sell your cryptocurrency in accordance with the specified conditions. This approach removes the need to constantly monitor the market, and also helps to avoid giving in to emotions.

Vladislav Antonov, an analyst at IAC Alpari, listed the first few steps with which it will be useful to start getting to know the cryptocurrency market:

  1. Examine the asset being traded. Look for your favorite technical analysis patterns on the chart. Perhaps they will become part of a trading strategy.
  2. Explore the trading terminal: exchange website, smartphone app.
  3. Explore several methods of market analysis and choose the one that suits you best.
  4. Develop a trading strategy.
  5. Learn to draw up a trading plan, keep a trader's diary in order to timely identify mistakes made in trading.
  6. Learn to manage capital and calculate risks.
  7. Make decisions on your own and maintain discipline, and take responsibility for your actions only on yourself.

This last tip is especially important in cryptocurrency trading. Inexperienced users often, after the first losses, start looking for help, seek advice from channels on social networks. From there, novice traders get financial recommendations, evaluating their quality, for example, by the number of subscribers. In fact, such instructions are very controversial, and most importantly, their authors do not bear any responsibility for their ideas and your failures. More on this in the previous post

It is important to think in advance how to act in the event of a sharp collapse or rise in the price of a cryptocurrency, warns Zuborev. At such moments, traders succumb to emotions and can act impulsively, therefore, one should determine in advance the reaction to abnormal situations, indicating the levels of profit or loss fixation.

The three main rules that are important for any trader, according to the leading analyst at 8848 Invest, Viktor Pershikov, are as follows. First, it is necessary to forget about attempts to speculate on exchange rate differences and focus on the "buy and hold" strategy. The second is to unconditionally comply with the rules of risk management and not risk more than 2% of the capital in one transaction. The third is to stay in a profitable trade for as long as possible.

Timing to start

In 2020, the cryptocurrency market has shown significant growth. Bitcoin has risen in price by 55% since January, Ethereum – by almost 200%. There may be a correction in the market, so now may not be the best time for a first practice. It is believed that it is much easier to train in a growing market rather than a falling one. Pershikov, on the other hand, believes that now is the right time for a newcomer to enter the digital asset market. Falls are possible, but in the next 1-2 years the price is likely to continue to rise, he predicts.

The price of cryptocurrencies is "quite stable" at certain levels, Zuborev supports. Unless the markets are shocked, there will be no major correction. It is definitely impossible to predict how the quotes of bitcoin and other coins will fail, but on the scale of the year, the market prospects are "very optimistic."

“The digital asset market is facing a new wave of growth, which I expect in 2021-2022, amid a large number of positive fundamental changes,” notes Pershikov. – If a novice investor on the crypto market is ready to wait for results on the horizon of one or two years, then by buying a diversified portfolio of crypto assets now, as a result, he will be able to receive a profitability that significantly exceeds the profitability of classical investment instruments. "

Initial capital

There is an opinion that a significant amount is required for confident and impressive earnings on cryptocurrency. This is controversial and largely depends on the chosen strategy, the ability to control risks and luck. The price of digital assets can rise and fall by tens of percent every day, this creates many opportunities for earning. Antonov is sure that you can start trading on the crypto market from a small amount, for example, from $ 10. Trading with this amount of funds is a good exercise.

Zuborev agreed that a small amount is enough to start working with cryptocurrency, just like in the stock market. However, in such a case, the trader will face relatively high fees. It is quite expensive to deposit and withdraw funds from the exchange, but with large amounts it becomes invisible.

Pershikov thinks differently. The size of the start-up capital should take into account the volatility and high volatility of the digital asset market, so it should be higher than in the case of the stock and commodity markets. The analyst “strongly” recommended starting investing in cryptocurrency with an amount of at least $ 50,000. This will allow maintaining a balance between the size of the potential profit and the risk of a fall in the rate, which, with proper risk management, will not become a problem.

Most popular strategies

Most novice users are advised to first of all diversify their investment portfolio, that is, invest not in one asset, but in several. The best option for a beginner is to buy assets from the top 10 cryptocurrency market ratings and store them as an investment for a year, Pershikov said. Instead of wasting time studying the specifics of trading, investing and the intricacies of the industry, it is better to immediately place capital in the most capitalized and stable cryptocurrencies, and then patiently wait for the price growth to continue.

But there are nuances here. On the one hand, diversification helps to compensate for the fall in the price of one asset at the expense of the rise in prices for the rest. On the other hand, in the cryptocurrency market, most assets repeat the fluctuations in the bitcoin rate, although altcoins this year showed a more impressive growth in value than BTC.

In this regard, Antonov proposes to diversify the investment portfolio not only at the expense of cryptocurrencies, but at the expense of assets from other markets: commodity currency, stock. When it comes to altcoins, there are two important criteria for choosing them. Firstly, it is desirable that the minimum daily trading volume exceeds $ 100 million. Secondly, it is important to study the peculiarities of each cryptocurrency. Perhaps in the future, for some reason, it can be removed from popular sites. Risky assets in this regard include anonymous digital coins such as Monero. Using them could violate the anti-money laundering regulations that exchanges follow.

Zuborev noted that despite the correlation between bitcoin and altcoins, there are still differences in their behavior. Therefore, diversification is the right strategy. The analyst suggested adding ETH (Ethereum) to the portfolio, which has recently been growing faster than the market amid the planned upgrade to the second version of the network. You can also look at Chinese altcoins and DeFi tokens.

“This diversification will help you benefit from as many market events as possible. But we must remember that this diversification is comparable to investments in various IT companies in the traditional market, respectively, if the whole industry starts to fall, such a spread of assets will not save you from losses, ”the expert warns.

Markov adheres to a similar position. According to him, now there is no such strong correlation between bitcoin and altcoins. This is confirmed by the charts of the first cryptocurrency and tokens of the decentralized finance (DeFi) sector, which have added hundreds and thousands of percent of their value this year. Diversification works, investors always have a lot to choose from. Even if the main altcoins repeat the fluctuations in the price of bitcoin, other sectors can confidently overtake it in profitability, Pershikov supports. For example, this year the tokens of fintech platforms and DeFi projects have clearly left BTC holders behind.

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