To answer the scaling problem, Bitcoin forked in August 2017 as Bitcoin Cash (BCH). It quickly gained popularity amongst crypto traders as they traded. As a result, Bitcoin Cash Trading is also gaining popularity amongst traders.In this article, we will guide you as you trade Bitcoin Cash using tools prevalent within the crypto market.
What is Trading Bitcoin Cash and How Different is it from a Standard Purchase?
It’s one of many ways to invest in Bitcoin Cash; you can also trade it utilizing broker platforms like BlockchainTradein. With the former, you genuinely own the coins you purchase. Some exchanges even permit you to use your coins as collateral to obtain loans.
You can perform transactions with a broker company without having to own BCH tokens; instead, you can trade derivatives based on Bitcoin Cash’s price. Typically, three choices are presented to traders via broker platforms:
- CFDs – Contracts for Difference (CFDs) are assets on whether the price will rise or fall over a specific time frame. To hold a CFD, the trader does not need to have any Bitcoin Cash on hand.
- Futures –Trade contracts called futures have predetermined expiration dates. The trader enters into a binding contract to purchase or sell Bitcoin Cash at a set price and date in the future.
- Options – The contracts for buying or selling Bitcoin Cash at a fixed price on a specific date are similar to futures contracts. Still, unlike futures, the contracts for buying or selling Bitcoin Cash are not legally enforceable. Therefore, the seller has a lot of flexibility in deciding whether to complete the underlying trade on settlement day. However, this benefit comes at a price, as options contracts themselves demand a payment called a “premium.”
Holding Bitcoin Cash to sell it later can be a successful long-term investment. However, buying or selling CFDs, futures, and options contracts will generate gains more quickly.
To reduce the danger of fraud and scams, novice traders looking for cryptocurrency brokers should only choose platforms licensed by local authorities. A trustworthy broker will have enough security precautions, strong financial support, and a user-friendly trading interface. In addition, multiple brokers will offer numerous derivative kinds, risk profiles, and other features. In light of this, it is advisable to have a trading strategy prepared before you begin trading Bitcoin Cash.
The use of social or copy trading by novice traders to imitate the behaviors of seasoned traders is common. Although it has drawbacks, it is a fantastic way to get your feet wet. Large-volume traders with experience have safety nets in place to prevent catastrophic losses. Additionally, they frequently have more significant financial resources to cover brokerage costs that might quickly eat into your tiny gains.
Where to Trade Bitcoin Cash?
There are many platforms where Bitcoin Cash trading is done. Below is our choice of some of the best.
Online Brokers
The market value of Bitcoin Cash determines the trading platforms where you can invest. These marketplaces offer derivatives instead of actual Bitcoin Cash, whose value is linked to it. When a derivative trading contract is closed, traders have the right to their initial investment plus any profit or loss. A few brokers offer physical cryptocurrency for sale, but most deal in derivatives.
Advantages of Using a Broker to Trade Bitcoin Cash Â
Buying an asset on a cryptocurrencyexchange and holding it until its value increases, allowing you to sell it for a profit, is the usual definition of trading. However, using brokers provides a quicker short-term option while still being a wise long-term investment approach.
Bitcoin Cash tradingcan be done without the need to purchase, and brokers provide investment opportunities. Available contracts can be bought (for as little as $100) and sold after you attain your desired profit. These platforms also offer leveraged trading, which enables users to expand their exposure to the market and boost trade profitability (often by as much as 100x or more).
Security, fraud, and scams are natural worries when working with cryptocurrency. It is crucial to only work with reputed broker platforms that adhere to regulatory authorities because of this. The platform’s operation is transparent, and reputable broker businesses have a fair fee schedule. Experienced traders frequently like brokers since they provide a wide range of cutting-edge trading instruments that facilitate trading.
Derivatives Exchanges
Everyone is aware that the best place to purchase and sell tokens is on a cryptocurrency exchange. That is accurate, but in recent years, exchanges have added derivatives to their services. So, in addition to buying cryptocurrencies, you may now trade derivative contracts on exchanges.
Advantages of Using an Exchange to Trade Bitcoin Cash
There are advantages to using an exchange. First, you can purchase and hold Bitcoin Cash instead of only buying or selling a contract whose price is linked to the value of BCH. In addition, tokens in your exchange wallet are always available for withdrawal. Second, a wide range of cryptocurrencies is frequently supported by exchanges, meaning there are more alternatives for deposits and withdrawals. Finally, a more comprehensive range of cryptocurrency trading pairings is available to traders who can draw from a more diverse crypto pool.
Exchanges for Bitcoin Cash typically cater to novice customers and are simple to use. Numerous websites offer in-depth tutorials on how to carry out trades. Some even offer virtual trading sandboxes where you may test your skills with play money before moving on to actual trading. Exchanges and broker platforms both offer similar functionality; it’s only that exchanges are more user-friendly. Users willing to take on risk can even trade using leverage on most exchanges.
Short or Long Position?
Short and long positions represent the two directions a trader can earn from the price of Bitcoin Cash. A trader “goes long” if they purchase Bitcoin Cash to sell later when they anticipate a price increase. But if traders sell BCH because they think the price will fall from a certain point, they are “going short.” When the price of the coins reaches their target level, they repurchase them at a lower price, keeping the difference as their profit.
Generally speaking, shorting is riskier than buying. A short position will begin to lose money if the market rebounds, and if the price of BCH rises more than you anticipated, you may find yourself liquidated or in debt. However, shorting can become a much more appealing alternative with prudent risk management.
Limit or Market Order
A quick purchase or sale order is known as a market order. The execution of the order is assured, but the cost of the execution is not. Based on the state of the market, it can be higher or lower than you anticipate. A limit order is a request to purchase or dispose of a derivative at a predetermined price or higher. Because limit orders ensure a fair buy or sell price, some traders like them.
Although limited orders can be beneficial, they occasionally take longer to execute because the market may still need to be at the desired level. But if your cost-benefit analysis is accurate, the wait will be worthwhile.
Trade Position Amount and Leverage
Your order’s total value is referred to as your trade position amount. Leverage is a feature that some trading platforms give to consumers to boost their market exposure. For example, a trader could open a position to buy or sell a derivative for more than their trade position amount with the help of leverage.
For instance, a trader with $1,000 can start BitcoinCash trading for $10,000 if a platform allows for 1:10 or 10x leverage. The broker offers additional user credit. Trading using leverage is a terrific technique to increase the size of your position and generate more revenue. But if the market unexpectedly swings the other way, it can also lead to significant losses.
Risk management: How to choose the appropriate stop-loss and take-profit levels for your Bitcoin Cash trades
Every trader must have a risk management plan if the market turns negative. Use at least two inputs—stop-loss and take-profit values—in combination. When you place a stop-limit order, you can provide a stop-loss value or the price you want your order to be filled if the market turns against you. Typically, the value is less than your trade’s price aim. However, a take-profit value increases profits to the greatest extent. Once it hits the profit threshold you choose, the trade is closed.
The more adaptable trailing stop-loss order is a stop-loss order variant. With each increase in market price, it continuously modifies the stop-loss value. If the price of Bitcoin Cash drops below the most recent adjustment, the order is filled. Trailing stop-loss orders are excellent because they allow you to constantly modify your closing positions in reaction to changing market conditions. They’re a perfect option for passive investors who don’t want to spend all their time monitoring the market.
Check and Finalize your Bitcoin Cash order.
Take a minute to review everything you’ve set up, including the order type and the size of your trading position. Then, verify that the appropriate order type, amount, leverage, limitations, and other criteria were entered.
Click the “Buy/Sell” button to submit your order if you are confident that everything is correct.
