Cryptocurrency trading is booming; Binance, one of the leading cryptocurrencies exchanges, reached 3 million users after just 6 months of operating from July 14, 2017. Binance also have to stop accepting new users due to the sudden increase. In fact, two other big exchanges have announced the postponement of adding new users, specifically Bittrex and Bitfinex.
While there are other cryptocurrency brokers such as the IQ Option CFD platform that remain open to new users, they are also facing strain from such an increased demand.
What this means for cryptocurrency traders is that there is a very big increase in volatility as well as a bigger community to share information and strategies with. You should take advantage of the increase in volatility as well as the increase in community activity if you want to be a profitable cryptocurrency trader.
Here are 5 top controversial techniques that not a lot of traders are doing and can improve your profitability while trading.
- Enter a free Trading group for learning.
Trading groups are traders who group together and discuss which cryptocurrency to buy at the same time in the same exchange. It sounds very good and profitable in theory. However, in execution, usually only those who entered the cryptocurrency first will profit since they will not announce what the coin is until the specific time. Usually the founders will buy some shares first and then sell them when the members of the trading group will buy shares. This makes the founders and some lucky traders richer but members poorer.
Why join such a fraudulent group? So that you can gauge the market sentiment. If your exchange offers you the ability to short, then you can short the cryptocurrency once the administrators of the group tell what the coin is. This is not a 100% guaranteed trick, but you should be able to get a quick buck if you are fast enough. Make sure that you enter a free trading signal group, since most often than not these are very fraudulent, and you can trade against their recommendations.
- Follow the herd by following the leaders.
There are cryptocurrency celebrities that can be found in social media or in YouTube. Some are good providers of resources, analysis, and information while others are like trading groups. What you should do is to do your own analysis. For instance, the good and honest YouTube leaders are very transparent and even share their portfolio online (Bitcoin Benny is one example) while others just hype one coin without having read the white paper of the coin.
By following the leader, you should be able to enter a trend relatively soon. Once you can see some price reversals, you can close your trades with some profit.
- Buy the rumor and sell the news.
This is very true in cryptocurrency since news are already things of the past while rumors are predictions for the future. This is why most of the successful traders are active participants in forums and bulletin boards, like Reddit and blogs. They buy when they hear rumors, after doing their own research, and then sell before the news of a partnership or business participation are announced.
You can also consider using exotic instruments such as cryptocurrency options as these have unique payout ratios. They allow you to effectively manage your risk with a limited option premium. Hence, when you are buying the rumors in order to make your gains, you can protect your downside with the option.
- Follow the trading plan strictly.
You always get to see headlines about how bitcoin is similar to the Tulip mania, or that Bitcoin itself is a scam. You know that this are lies, but you cannot help but feel nervous.
That is why you should follow your trading plan to the letter. If you have not made a trading plan yet, then you should stop trading right this instant and put your trading plan into words and diagrams.
- Always learn something new every day.
Cryptocurrencies are tied together with technology and technology will always be improving. While you may know how to place proper support and resistance levels on a chart, the market can prove you wrong if there is a newer and better coin offered in the market which you only learned about too late.
Remember to take advantage of the growing population and volatility of the cryptocurrency market, and you are on your way to profitability. Always remember to follow your trading plan, do your own research and to always be open to ideas.