Best exchange for trading
Last update: January 05, 2017
bitcoin trading Tips & bitcoin Trade Exchanges
- Types of orders you need
- Briefly about technical analysis and bitcoin
If you want to start trading bitcoin, generally you can do that on a regular bitcoin exchange.
Most novice traders tend to make it complicted and seek to get overwhelmed by technical analysis indicators. The truth is it is not necessary. Keep it simple. What you really need is a bitcoin exchange with high liquidity so that you don’t wait ages for your order to complete.
To get your charts and tools you can always use bitcoinWisdom which plots charts for any major exchange.
What to look for
Find a liquid exchange. There is a trade volume in BTC for the 5 most liquid exchanges over the past day. You can also see the data at Coinmarketcap. Chinese exchanges are perfect when it comes to liquidity simply because of the number of Chinese.
If you don’t mind full verification (hence no privacy), go for Coinbase exchange (US) or Bitstamp (Slovenia). Bank withdrawals are cheap, deposits are free. Bitstamp has a flat fee od 0.25%, Coinbase exchange has 0 fee for maker orders.
If you only want to deposit cryptocoins and withdraw cryptocoins back, going through AML/KYC is an overkill. Choose an exchange that needs no papers to get you started. Check out Exchanges good for altcoin trading.
As for trading with fiat profit, you can always send bitcoin to a virtual debit card instead of selling it on a bitcoin exchange and doing bank wire.
Regular BTC exchanges good for trading
Since Bitfinex was hacked no one should want to do business with them anymore.
You can do exchange or margin trades and you have the standard possibility to do market or limit orders. To short bitcoin you can use P2P lending system for margin trading on Bitfinex (read more on that further down). Bitfinex uses the maker-taker system and has very low fees. You cannot open buy and sell position simultaneously on the same market (for instance, to hedge a short ETHBTC position) - opposite orders get filled from one another. The way to do this hedge is to open positions on CoinBTC and CoinUSD markets. You can use any coin or fiat that you have in your trading account as a collateral to borrow any currency you need. If you have a margin position on a market that involves USD but you want your profit in a coin, you can use the CLAIM button.
Verification: None with BTC deposits.
Markets: BTCUSD LTCUSD, LTCBTC ETHUSD, ETHBTC
Kraken applies the maker-taker fee system which means you get lower fees when you mostly do limit orders and wait for them to be executed as opposed to market-price instant orders. On bitcoinWisdom you only see their EUR charts since the other markets are not liquid enough yet. Nonetheless, they are there.
The USD market has grown since Jan 2016 after Kraken acquired Coinsetter.
In January 2017 Kraken added Monero trading.
Verification: None for crypto deposits
- BTC and ETH for fiat (USD, EUR, CAD, GBP and JPY)
- LTC for fiat (USD, EUR)
- XMR for USD, EUR and XBT
- crypto pairs
- BTCLTC, BTCNMC, BTCDoge, BTCStellar, BTCRipple
- For verified users Kraken offers dark pool. For higher fee your trades will only be visible to you. More here.
Verification: None for crypto deposits.
- BTCUSD, BTCEUR, BTCRUR
- LTCUSD, LTCEUR, LTCRUR
- …and others
Bitstamp is a large exchange, very liquid. Their tradeview is probably as good as it can get. It only has BTCUSD market, your deposits in other currencies are converted to USD. Fee is 0.25% (it only gets lower for monthly volume of 20K USD and more). As of January ‘16 debit card and prepaid card deposits are possible.
Verification: Both fiat and BTC deposits require ID and residency verification.
What type of orders you need
Limit orders. You decide at which price you want to buy, set a limit order and wait until the market gets there. You decide at which price you want to sell, set a limit order and wait until the market gets there.
On Bitstamp you can also set if executed limit order:
If this limit order to buy at $350 gets completed, then set an order to sell the same amount at $355.
Trading bitcoin from the US
If you are from the US you won’t be able to trade on margin and to trade futures on most exchanges due to financial regulations. There should be no problem with spot trading, the issue is really only with leverage and derivatives.
If you still want to trade bitcoin futures or use margin, here are your options:
Bitmex can be accessed via Tor which will make your true location invisible for free (you don’t need to buy a VPN or a proxy). The only information you provide about yourself is email, name and country of residence and that only at sign up. USA is officially not supported but for whatever you type in there is no verification. Bitmex has an elaborate offshore setup and does not operate with fiat, regulations are light there. Once you sign up with Tor and claim you are not from the US you can use the exchange from US IP address (after all, you might be a tourist).
OkCoin.com. No documents are wanted on sign up and people routinely use fake identities there. Be warned though - the exchange is not available from US IP so you need to mask your location. And more importantly, support might request your paperwork on withdrawal. If you are on fake ID you will not see your bitcoins again.
Deribit is a new exchange from Lithuania. It is primary oriented on bitcoin options but to attract traders (and to allow for hedging) they also have weekly futures which is a popular bitcoin trading product. The CEO John Jansen said in an interview on WhalePool that so far you only need an email to sign up, no real life data. It will come if the exchange becomes popular but they launched in autumn 2016 so it might take a while.
Shorting is notoriously known as dangerous. In the basic sense though it is the only way to trade bitcoin and hold bitcoin at the same time.
You can do the most elementary short at any exchange and many people do it without knowing they are shorting.
You bought 2 bitcoin at $410 when price was relatively stable
One week from that the price suddenly spiked to $430 in the way you know is not meant to last. After $430 it started dropping.
You sold your 2 BTC at some point around the top, say, $425. That gives you fiat profit $15 on each coin.
You left that fiat on your account and set limit order to buy bitcoin back at $410 a piece, only that now it will make more than 2 bitcoin because you have $30 profit.
One week later, the order was finally executed and you can withdraw your coins.
This is shorting because you work with a spike in BTC price and use the volatility to generate more bitcoin.
This kind of shorting is less insane in the way that you are not borrowing to do that. You are working with your own bitcoin only which is also the only thing to risk here - and “loss” still means fiat profit here.
Generally speaking though, bitcoin price moves a lot, taking the fiat instead of waiting to buy back is just impatience. Remember, you are not paying interest for holding this short position - it is your money, you didn’t borrow anything. If the price rises in the meantime it doesn’t matter either. The “short position” is only open in your mind. In the eyes of the exchange, you just sold bitcoin for fiat.
bitcoin and technical analysis
So you maybe noticed there are quite some places offering bitcoin technical analysis. A lot of portals do this in form of news, you can get paid signal reports too.
Should you use technical analysis for bitcoin at all?
There is a rule of thumb that most traders who say they only trust their gut are the ones who lose. But then, 99% of day traders lose. Anyway, usually (not regarding bitcoin only) you trust your gut either when you are a beginner who doesn’t know how to use any tools or when you are a top expert who has BTC trade and forex in their blood. You will know which one you are.
On the other hand, you will often see TA (technical analysis) reports going like it’s peaceful now and the indicators show that nothing will happen in the coming week. Six hours later a couple thousand guys in China decide to buy some bitcoin and the rally is on again.
So the best thing you can do is to get a bitcoin ticker for your desktop and simply keep your eye on the price all day.
Some exchanges will send you a text for price spikes (Bitstamp does it if you set it up).
MACD and BBANDS
As for the TA indicators that you get on bitcoinWisdom, the truth is it won’t hurt you to know them. Most people look at MACD which stands for moving average convergence divergence.
A good video by ibankbitcoins:
Moving average is simply an average price over certain number of time windows, repeatedly calculated as the time goes so that it makes a curve.
An average of couple of most recent time windows captures how the price evolves at the moment, an average of many more time windows captures a more general trend.
What MACD indicator shows:
when the price starts rising faster than it should if it was to stick to the more long-term trend
when it starts to fall faster than if it was to stick to the more general trend
On bitcoinWisdom you can select MACD under Settings > Indicators. It appears under the main chart. The green bars is when the rise is faster than the long term trend would go, red bars for the opposite movement:
Traders use the MACD indicator as a signal to buy cheap at the start of the rally in order to sell dear later.
Similar thing with MA (moving average) as main indicator: The blue line is the short-term MA, orange one is a long-term MA. At one moment the blue line gets above the orange one and indeed a rise follows:
Stochastic is another indicator that uses moving average. Stochastic oscillator has two curves - a line measuring the current market momentum and a moving average of this line. On the chart for stochastic you will see some horizontal lines drawn. When the values drop below 20 the price is too low for the current value of bitcoin. When it jumps up to 100 and then starts heading down the price is peaking too much up and should fall. The crossover also plays a part. (Read it better on Investopedia)
Why this matters? See the image below. It is the typical bitcoin thing, a sudden pump. In the upper part of image you see moving averages of different time lengths and their crossover. You see that the crossover came a bit late. In the bottom part there is the stochastic oscillator. You see there was a buy signal soon enough.
On bitcoinWisdom they are in Main Indicator > BBANDS.
Bollinger bands are used to measure volatility and strength of a trend.
In a healthy trend the price stays between the middle and outer band (that is, between the middle and upper lines).
If the trend is very volatile the price jumps below the middle band.
But as you probably know bitcoin is very volatile. Of all indicators, moving averages will probably be of best use to you.
More about bitcoin trading
TIP: Always make notes about all your trades. A good paper notebook with hardcover is best for that. Trust me, one gets lost very easily in how much one bought for which price. Note where you bought how much at which price and write down the order number. If you plan selling later, you will know “which coins” to sell how dear.
Bitfinex BUY 1 x $378.88 CGHTD56 fee $0.4
Learn more about bitcoin trading
There are technical analysis talks over at WorldCryptoNetwork Youtube channel
CoinMama - Bitcoin and ETH with credit/debit card
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Hardware Wallets for Bitcoin and Altcoins
Bitcoin & Altcoin Trading Charts
- Tools and Downloads
- All ”Dummy Numbers” Posts
- Promotions and Coupons
- All about Bitcoin lending
- All about Bitcoin VCC's
- Buying Bitcoin with Skrill
- Bitcoin Cold Storage 2016
- Bitfinex Referral Code 5egV78YtlC
- Coinmama Referral Code fny3000
Good to Read
- Finance & Technology: VPRO Backlight on Youtube (full documentaries)
- Macro & Bigger Picture: Stratechery
- Wall Street Technologist
- Austerity Sucks
- For Coders: Crypto Trading Tools
- Bitcoin Markets Wiki
- Baby Pips Forex and Charting School
- Technical Analysis for Dummies [PDF]
- StockCharts Chart School
Basics to Start Bitcoin Trading
- What is AML/KYC
- How high are fair flat fees
- What are Maker-Taker fees
- How to get trading charts
- How to trade on mobile
- Best practice
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