How to place crypto trades in Grand Capital
When Bitcoin was created in 2009, only a few people paid attention. Then came the 2017 massive crypto bull run, which pushed the price of major virtual currency through the roof. While it captured the attention of investors, not many people were convinced about crypto potential.
The next bullish market came in 2020, and the price of Bitcoin proliferated from $5000 and hit $64,000 in May 2021. Other digital tokens like Shiba Inu grew by 60000000%. Suffice it to say cryptocurrency trading is insanely profitable. But you are probably wondering, where should you start?
This article provides a rundown of everything you should know about crypto trading in Grand Capital. Read to the end, and you will be ready to identify great trading opportunities.
Overview — What is Cryptocurrency Trading?
Crypto trading involves speculating the price of virtual currency. There are two ways to trade virtual currencies.
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First, you can buy and hold on crypto exchanges. This involves buying and waiting for the value of the crypto to grow. This method is used for long-term trading.
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The second method is CFD trading, our main focus in this piece. You can either open a financial position of crypto against a currency, i.e., BTC/USD, or crypto against crypto (BTC/ETH).
Trading Crypto CFDs on Grand Capital
Contract for Difference (CFD) trading involves speculating the price of derivatives of the underlying assets. A derivative is a financial instrument that gets value by mirroring the price of an underlying asset, cryptos in this case.
You don’t have to own the virtual currency. For instance, if you are trading Bitcoin, you speculate its price without necessarily owning the cryptocurrency. Unlike buying crypto on the exchanges where you can only benefit from the price rise, with CFD trading, you can go long when the price rises and short/sell when the price falls.
Moreover, CFD trading is leveraged, meaning a relatively small deposit, known as margin, allows you to open a bigger position and make bigger profits. However, margin trading is a double-edged sword, magnifying profits, and losses.
Generally, there are two market trends, bullish (uptrend) and bearish (downtrend) price trends. The upward price movements are called price pumps, while downward movement is known as dumps. Downward movement can occur within the larger uptrend and vice versa. If the market is not trending, it is ranging or consolidating, a move that usually precedes price reversals.
Example of Trading Leveraged Crypto CFDs
Let's take Bitcoin trading as an example. Currently, Bitcoin (BTC/USD) is trading at 23,170.00/23,190.00. In this case, the difference between the bid and ask (20 USD) is known as a spread. It is the cost you incur to open a trade. This means that the price must cross this bridge to start making a profit.
Now, Grand Capital offers a 1:10 leverage for crypto trading. Therefore, you can control trading positions worth $10,000 by depositing $1000. This deposit is also known as the initial margin requirement. It is the collateral required to borrow funds from the broker.
Let's assume you buy Bitcoin when trading at $23,000, and the value rises to $24,000. This value growth would make a $1000 profit.
But with leveraged trading, a $23,000 deposit would allow you to control a $230,000 trade. When the price rises to $24,000, the total trade position would grow to $240,000 (24,000 * 10).
Your profit would be $10,000 ($240,000 – $230,000). Therefore with leverage trading, you will make profits ten times more than unleveraged trading.
Note that leverage is a double-edged sword. If the trade goes against you, the loss would be magnified.
Cryptocurrencies Analysis — How to Identify the Trend
You probably have the old market adage that the market is your friend. Essentially if your strategy is based on trend trading. If the price rises, you should open a long position and short the instrument when the market falls.
There are two ways to analyze the market to determine the existing trend. The major ways to analyze are:
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Fundamental analysis
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Technical analysis
Fundamental Analysis
Fundamental analysis involves using news events to determine the market. For instance, Bitcoin has an inverse correlation with inflation. However, unlike conventional assets like commodities and currencies, cryptocurrencies are decentralized. Therefore, some economic and financial decisions might not affect the crypto market.
The fundamentals incorporate internal and external economic, political and social factors. It takes into account the crypto community, future utility, and real-world application of the cryptocurrency.
On-chain metrics such as hash rate and staked amount can give you a clear picture of the potential performance. For instance, you will want to buy a cryptocurrency with an increasing hash rate for Proof of Work cryptos. A high staked amount is good news for Proof of Stake digital currencies.
Inventors also check the whitepaper and tokenomics. Who wants to invest in crypto with no real specified use case? Other important fundamentals include liquidity, market capitalization, and volume.
Technical Analysis
Technical analysis involves using technical tools such as indicators, channels, and trend lines. Some of the most useful indicators include relative strength index, stochastics, moving averages, and Fibonacci levels.
Relative Strength Index
With RSI, the idea is to buy when the price is above the 50-level and sell when it dips below this line. However, if the price enters an overbought level, it is a telltale sign that the trend is likely to reverse, and sellers might take control of the market. You should therefore get ready to open a short position. The same case applies to the oversold area.
Moving Averages
Moving averages act as resistance and support levels. If the price action is an uptrend, the moving averages act as support. They also act as resistance during a downtrend.
Fibonacci Levels
Fibonacci levels are high potential reversal points. The most popular levels are 38.2%, 50%, and 61.8%. Once the market pullback hits this level is likely to rebound and resume the initial trend.
A Four-Step Process of Opening Crypto Position on Grand Capital
1. To start trading cryptocurrencies, you need to open an account on Grand Capital.
If you want to trade virtual currencies, you should open a Crypto account. Grand Capital automatically opens an account for you when you agree to the terms and conditions. The good thing is that you don't have to struggle with arduous installations. You can use the Grand Capital WebTrader to start reading your digital currencies of choice.
2. Choose the crypto you wish to trade on the Market Watch window on the right side of the WebTrader.
3. The price action will appear on the terminal interface. Analyze the price movement keenly. Open a buy or sell order depending on your analysis.
4. Fill in the lot size, the stop loss, and the profit target of the order's take profit. Remember, there is no foolproof strategy. You should therefore incorporate loss management by using a stop loss.
Final Word
You don’t have to wait for the next bullish market to make money using the buy-and-hold strategy on the crypto exchanges. Grand Capital enables you to take advantage of the market's typical up and down movement by buying during uptrends and short selling when the price is falling. The current market dip provides excellent trading opportunities.
Open a Grand Capital trading account today, incorporate an excellent trading strategy and watch your account grow!
By Granvile Wambugu
This article is an informational piece, does not contain individual investment recommendations, and is published for educational purposes only.
Age restriction 18+
The opinion of the author may not coincide with the position of the Company.
