Trading Bitcoin on the exchange – how and where to trade Bitcoin cryptocurrency in 2021

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Cryptocurrencies, in particular bitcoin, are becoming more and more popular. The number of people who want to not only buy a coin (invest), but also trade is growing. Trading bitcoin on the exchange is an opportunity to make money on changes in the price of an asset by buying, selling or exchanging it. The advantage is that you can trade any day of the week, around the clock, 365 days a year – cryptocurrencies are a completely decentralized asset.

Trading bitcoins can be earned every day, unlike long-term investing (hodl). The volatility of Bitcoin and other cryptocurrencies is high, the change in the BTC exchange rate per day can reach 10-20%.

There are a lot of people who want to make money on bitcoin, but mainly individuals trade on exchanges. This situation should change: on December 10, 2017, bitcoin futures were added by the Chicago Board Options Exchange (CBOE), and the CME derivatives exchange – this will open up the opportunity for large capital to enter the cryptocurrency market. On September 23, 2019, the Bakkt platform is launching staged bitcoin futures trading for institutional investors.

Bitcoin exchanges

Russian-language exchanges for trading bitcoin:

1. Binance

Binance is a popular cryptocurrency exchange with the best liquidity. The company represents the spot, margin and futures markets. You can trade not only bitcoin, but also hundreds of altcoins: Ethereum, Litecoin, Dash, EOS, Monero, Stellar, Cardano, etc. The exchange was formed in 2017 and ranks first in terms of trading volume.

2. BitMEX

BitMEX is a platform for trading XBTUSD perpetual futures contracts with expiration dates (quarterly, weekly). Derivatives are available for the following cryptocurrencies: Bitcoin, Ethereum, Ripple, Litecoin, TRON, EOS, Cardano, Bitcoin Cash. The exchange implements bitcoin trading with leverage from 1x to 100x. For example, having 1 BTC on your account, you can make transactions with a turnover of 100 BTC using the maximum leverage. Trades can be opened to sell (short) or buy (long): hedge risks or speculate on the price. It doesn’t matter which way the market is going – you can make money if the BTC rate falls or rises. BitMEX is the largest margin trading platform for perpetual contracts. Balance replenishment is carried out with the Bitcoin cryptocurrency, which has the ticker XBT. The minimum deposit is only 0.0001 BTC. Withdrawals – once a day, applications must be submitted by 13.00 UTC. Account verification is not required. Trading in demo mode is available.

3. LocalBitcoins

LocalBitcoins is a popular p2p exchange. Trading is available in bitcoin for fiat. The trading platform has been operating since 2012, registered in Finland. A website with a translation into Russian is available. Transactions are made between users, the exchange is the guarantor of the process. The purchase of cryptocurrency is available without verification.

4. EXMO

EXMO has been operating since 2013 in the UK jurisdiction. The platform is developing rapidly: already in 2014 it had a client base of 100 thousand people; in 2016 – 400 thousand; in December 2017 – 700 thousand traders from all countries. Average trading turnover per month per month is over 100 thousand Bitcoin. In terms of the volume of daily trading, it is included in the top 20 ratings of cryptocurrency exchanges. The most popular exchange in the CIS; in Europe is in the top 10 (according to analytical resources). On the EXMO exchange site, there are 41 cryptocurrencies in listing: BCH, BTC, DASH, DOGE, ETC, ETH, KICK, LTC, USDT, Waves, XMR, XRP, ZEC and others; 149 currency pairs to trade. New cryptocurrencies are periodically added, plans are to introduce the PAMM account service and launch margin trading.

5. Bybit

✅  Exchange – Bybit.

✅  Place of registration – British Virgin Islands.

✅  Started in 2018.

✅  Types of trading – cryptocurrency derivatives.

✅  The number of available contracts is 4 (BTCUSD, ETHUSD, XRPUSD, EOSUSD).

✅  Commissions – from -0.025% for the maker, from 0.075% for the taker.

✅  Verification is not required.

✅  Fiat money is not available.

✅  Trading volume – from $ 900,000 / day.

✅  The exchange token is not available.

✅  Other features – margin trading with leverage up to 100x is available. There is an opportunity to receive bonuses – $ 10 for registering an account and $ 50 for the first replenishment of the account. You cannot withdraw the bonus, you can only use it in trading.

6. Currency

✅  Exchange – Currency

✅  Place of registration – the Republic of Belarus.

✅  Started in 2019.

✅  Trading type – spot, CFD.

✅  The number of trading instruments is over 1300.

✅  Commissions – 0.2%

✅  Verification – yes, + extended.

✅  Fiat money – in the form of equivalent currency tokens.

✅  Trading volume – from 7,000,000 dollars / day.

✅  The exchange token is not available.

✅  Other features – you can replenish the balance and withdraw money using bank cards, accounts or cryptocurrency. The minimum deposit is $ 100. Residents of the Republic of Belarus are required to pass a test on knowledge of blockchain and cryptocurrencies upon registration.

7. Livecoin

Livecoin is an exchange for trading bitcoins and altcoins. Works since spring 2015. The listing includes 320 cryptocurrencies and 691 currency pairs. Trading volume – more than $ 25,000,000 / day. The trading commission depends on the monthly turnover, starts at 0.18% and can be reduced to 0.02%. It is possible to replenish the account balance (USD, EUR, RUR) with fiat from the following payment systems: Perfect Money, AdvCash, Payeer, bank transfer, Capitalist, Qiwi. Each method has its own commission for deposit and withdrawal; when replenishing with cryptocurrencies – commission 0%. On the cryptocurrency exchange site, the following types of trading orders are: “Market” and “Limit”. It is possible to work with vouchers (special codes with which you can replenish your account or withdraw money from the exchange). This allows you to use almost any payment instrument for input / output, not limited to the funds of the exchange.

8. Deribit

✅  Exchange – Deribit.

✅  Place of registration – the Netherlands.

✅  Started in 2016.

✅  Types of trading – futures, options, perpetual contracts.

✅  The number of available contracts is 6 (perpetual contracts, options and futures for BTC and ETH).

✅  Commissions – from 0.02% for the maker, from 0.05% for the taker.

✅  Verification is not required.

✅  Fiat money is not available.

✅  Trading volume – from 1,000,000,000 dollars / day (futures), from 60,000,000 dollars / day (options).

✅  The exchange token is not available.

✅  Other features – the site provides the ability to trade with leverage up to 100x for futures and up to 10x for options. Professional software is used in trading (from Haas Online, etc.)

9. DSX

✅  Exchange – DSX.

✅  Place of registration – Great Britain.

✅  Started in 2014.

✅  Types of trading – spot.

✅  The number of available cryptocurrencies is 7.

✅  Commissions – up to 0.15% for the maker, up to 0.25% for the taker.

✅  Verification is required.

✅  Fiat money is supported.

✅  Trading volume – from $ 3,000,000 / day.

✅  The exchange token is not available.

✅  Other features – work with fiat accounts in currencies such as RUB, USD, EUR, GBP is available thanks to the connected ePayments payment system. Top-ups in cryptocurrency or bank transfer are also available.

10. CREX24

✅  Exchange – CREX24.

✅  Place of registration – Estonia.

✅  Started in 2017.

✅  Types of trading – spot.

✅  The number of available cryptocurrencies is 527, trading pairs – 781.

✅  Commissions – 0% for the maker, from 0.1% for the taker.

✅  Verification is optional.

✅  Fiat money is supported.

✅  The trading volume is about $ 3,000,000 / day.

✅  Exchange token – CREX.

✅  Other features – to replenish an account from a bank card or e-wallet, you will need to go through account verification. The level of trading commissions is calculated based on the trader’s turnover for the last 30 days.

11. KuСoin

✅  Exchange – KuCoin.

✅  Place of registration – Hong Kong.

✅  Started in 2017.

✅  Types of trading – spot, futures.

✅  The number of available cryptocurrencies is 209, trading pairs – 462.

✅  Commissions – 0.1%.

✅  Verification is not needed.

✅  Fiat money is not supported.

✅  The trading volume is about $ 90,000,000 / day.

✅  Exchange token – KCS.

✅  Other features – a wide selection of not only popular, but also quite little known, but promising tokens is offered. The exchange token allows you to reduce the cost of commission fees.

12. Huobi

✅  Exchange – Huobi Global.

✅  Place of registration – Singapore.

✅  Started in 2013.

✅  Types of trading – spot, futures.

✅  The number of available cryptocurrencies is 224, trading pairs – 538.

✅  Commissions – 0.2%.

✅  Verification is optional.

✅  Fiat money – OTC.

✅  Trading volume – over 250,000,000 dollars / day.

✅  Exchange token – HT.

✅  Other features – you can purchase VIP status for a certain amount of HT tokens. Thus, you can save on commissions. The service is relevant mainly for institutional investors.

13. PrimeXBT

✅  Exchange – PrimeXBT.

✅  Place of registration – Saint Vincent and the Grenadines.

✅  Started in 2018.

✅  Types of trading – cryptocurrencies, indices, commodities, Forex.

✅  The number of available assets is over 30.

✅  Commissions – 0.05%.

✅  Verification is not available.

✅  Fiat money is supported.

✅  Trading volume – more than $ 100,000,000 / day.

✅  The exchange token is not available.

✅  Other features – available margin leverage up to 100x, long and short positions, five different types of orders. It is possible to make instant deposits in BTC.

14. BitForex

✅  Exchange – BitForex.

✅  Place of registration – Singapore.

✅  Started in 2015.

✅  Types of trading – cryptocurrencies, perpetual contracts.

✅  The number of available assets is 145 currencies, 244 trading pairs.

✅  Commissions – 0.1% for cryptocurrencies, for perpetual contracts 0.04% for the maker and 0.06% for the taker.

✅  Verification is optional.

✅  Fiat money is supported.

✅  Trading volume – more than 60,000,000 dollars / day.

✅  Exchange token – BF.

✅  Other features – BF token is issued mainly through trade mining and invite mining technology. Thus, 44% of the maximum token emission will be released. The coin acts on the platform as proof of ownership.

Types of exchanges for bitcoin trading and selection criteria

Since the rise of the crypto market in 2017, the number of exchanges for trading bitcoin has been growing by leaps and bounds. All sites can be roughly divided into four types:

✅  Fiat money. Allows you to directly purchase cryptocurrency using government currency such as the dollar or ruble. They are popular mainly among those who are just starting to get acquainted with the crypto market and want to enter the crypt from ordinary money without much difficulty.

✅  Cryptocurrency. On such an exchange, you can buy bitcoin only for another cryptocurrency. This means that you first need to purchase digital money in a different way in order to use such a platform. This option is most suitable for experienced traders who often exchange one coin for another in order to make a profit or want to diversify their investment portfolio with altcoins.

✅  Peer-to-peer (p2p). Sites, the main function of which is to bring the buyer and seller together and monitor the fulfillment of the terms of their deal. The most famous example is the LocalBitcoins exchange, where a buyer can choose the most favorable bitcoin price and buy it using a convenient payment method (up to cash).

✅  Brokers. Brokerage offices are not the same as exchanges, since they do not provide a full-fledged opportunity to own a cryptocurrency, but this eliminates the hassle of setting up a wallet. They offer a CFD product that allows you to speculate on the price of bitcoin while taking less risk than on an exchange. Not all exchanges are regulated, and brokers are required to be licensed and follow a strict set of rules.

When choosing a bitcoin exchange, you should pay attention to several parameters. One of them is the country of registration. Laws vary from one state to another. You can be sure of the safety of your funds only if there is no risk of claims against the site from the authorities.

It is also important to consider what methods of buying bitcoin the platform offers (bank transfer, card, cash, e-wallets). We need to build on how important confidentiality is: for example, all transfers by bank cards are easily tracked.

The next item is commissions. It is necessary that they stay within reasonable limits and do not exceed the market average, otherwise they will eat up a significant part of the profit.

It is also important to look at the transparency and security of the crypto exchange, the ability to track the status of all your stocks if they are stored in cold wallets.

The process of trading bitcoin on the exchange

Most spot exchanges have a trading terminal that includes functionality for quickly creating orders (orders to buy or sell bitcoin). To trade, you need to select a currency pair and use one of the following methods:

✅  or create a market order for instant sell / buy at the current rate;

✅  or create a limit order specifying the desired price, then it will be automatically executed when the rate reaches the selected mark (if it does not reach, then after a while the order will be deleted).

After the currency is bought, you can either leave it on the exchange balance in anticipation of a favorable situation for further use, or immediately sell it at a profit, or withdraw it to your cryptocurrency wallet.

Orders: limit, market, stop-limit

The main types of orders used for Bitcoin trading:

✅  Market. It is characterized by instant execution at the available market rate.

✅  Limit. Selling or buying at a specific specified price or more favorable. There are two main purposes of limit orders: it is more profitable to sell / buy bitcoin than it would be possible at the current price level, by fixing a profit (this kind of limit order is called take profit), or to perform an operation in the absence of constant physical presence at the computer.

✅  Stop Limit. When the desired asset price is reached, a buy or sell limit order is automatically placed. The value level can be the same as the stop-limit order or be different.

These are only the main and most frequently used types of orders, in fact, their number is measured in dozens. There are different options on the exchanges.

Trading terminal (interface) and its areas

The area for trading bitcoin is called a terminal or interface. This is what this section looks like on the Binance exchange:

And so on the BitMEX exchange:

At other sites, the interface is about the same. It includes a number of key information and functional areas:

✅  It is always based on the rate chart for the selected currency pair, which is updated in real time. You can select the period for which the graph will be displayed (hour, day, etc.)

✅  Orders, glasses. Information blocks that allow assessing the trading activity on the crypto exchange. The list of orders is shown in the form of a table indicating the bitcoin buy / sell price, quantity and total amount of the transaction. All buy and sell orders created to date are placed in the order book.

✅  Order creation area. Includes a function to select the type of order, as well as fields for entering the amount and price (if the order is limit).

✅  Trade history. A table in which all recent deals are sorted and basic information about them is indicated.

Types of commissions on exchanges

Whichever platform a user chooses for trading bitcoin, there is no way to get away from paying commissions. You can only reduce their volume in one way or another (by increasing the trading volume, using exchange tokens, buying a VIP status, etc.).

The types of fees charged on most trading platforms:

  1. Trading commission. Fee for making a transaction to buy or sell cryptocurrency. On some sites, it is fixed, but on most, a number of parameters affect its size. The main one is trading volume. The more funds a person has exchanged on the exchange for a certain period of time, the more loyal his commissions will be. Example: Binance trading commissions by level:
  1. For input and output. In most cases, there is no commission for depositing an account, and for withdrawing it depends on the specific currency or withdrawal method. Some sites do not take fees for withdrawal, then it will be necessary to pay only the obligatory commission of the network, which is present in every bitcoin transaction. Example: commission for deposit and withdrawal on EXMO
  1. For the use of borrowed funds (margin loan). With margin trading, the user can take out a loan secured by the funds he has. Like a bank loan, a margin loan is issued at interest. This percentage is different for each site.
  2. Funding rate for futures trading (at what percentage the financial collateral is provided). Can be positive or negative. In the first case – longists pay shorts, in the second – vice versa. For example, the rate on BitMEX’s XBTUSD perpetual contract is 0.01%, and the funding interval is 10 hours: long positions pay short. If you close the position before this moment, you will not have to pay.

A few words about what the concepts of maker and taker mean and why almost everywhere their commissions differ. In short, the maker is the person who creates the order, and the taker is the person who responds to it. The maker creates exchange liquidity, so the commission on his part is less, and sometimes even the rebate is returned. The taker, on the other hand, reduces liquidity, so in all cases his commission fees will be slightly higher.

Trade types

There are several ways to use Bitcoin for trading operations.

Bitcoin spot trading

Spot trading is the obligation to buy or sell a cryptocurrency and transfer it immediately to another user at the current rate (also called spot).

Derivatives Trading: What is it?

A derivative is a financial instrument, the price of which is formed from the underlying asset. The underlying asset can be anything: bitcoin, altcoins, stocks, commodities, interest rates, etc. The contract has a fixed maturity date called the expiration date. The main goal of derivatives trading is to avoid the risk of price uncertainty in the future.

Bitcoin futures

Futures is a financial contract that determines the sale / purchase of bitcoin at a predetermined value and on a predetermined date. Both parties to the transaction are obliged upon the expiration of the contract to fulfill its conditions and transfer assets.

Options

Bitcoin options are traded in the same way as conventional financial options. Traders bet on the scenario up or down. For example – will bitcoin fall or rise, or will it reach a certain value on a specified date.

CFD trading

Bitcoin CFD (Contract for Difference) is an investment instrument along with futures that allows you to speculate on the price of BTC without buying actual coins.

CFDs differ from futures in three main ways:

✅  Do not have a specific expiration date. Stored as long as the terms of the contract allow. On liquidation, the difference in price is calculated and paid to the appropriate party.

✅  Have a lower barrier to entry. Institutional investors are more likely to choose futures.

✅  They have a higher spread – the difference between the instant buy and instant sell prices. This is an indicator of the broker’s profit. But CFDs charge less significant commissions.

Cryptocurrency margin trading

Bitcoin margin trading implies that the exchange lends a certain amount of fiat funds or cryptocurrency so that the trader has more leeway for action and can, in case of successful trades, make more profit. The so-called margin, the user’s own funds, is taken as collateral, and the exchange profits from the interest charged for using the loan.

Fundamental and technical analysis

Bitcoin technical analysis examines the history of a coin based on trading volumes and price charts, regardless of the news background or the current state of the project. Such an analysis is unlikely to help determine exactly whether the coin has prospects.

The main ideas used in technical analysis:

✅  History repeats itself. The psychology of traders is always the same, as is the response to certain incentives.

✅  “What” is more important than “why”. In other words, the price is more important than the reason why it became that way.

✅  The price movement is not accidental. There are long term and short term trends.

✅  The market’s pricing policy is based on all previous and subsequent details – current, past and future demand is especially important.

Fundamental analysis is a method used by investors to estimate the “real” value of an asset, which is then compared to the speculative price traded on the market. This allows you to assess the potential for future growth or decline in the exchange rate. Fundamental analysis is based on the assumption that, due to the peculiarities of financial markets, the short-term price may differ significantly from the real one, but over time they should strive to converge.

Popular trading strategies

In 2019, bitcoin trading is mainly carried out according to four global strategies.

Hodling (HODL)

A strategy that revolves around keeping Bitcoin long in the hope that the coin will appreciate in value over the long term and return to its 2017 high.

However, as you know, BTC is highly volatile, which means that such actions can lead to losses. For this reason, it is not recommended to take this path without strict control and risk management.

Hedging

People who already own BTC often consider hedging their risk if they think there will be a short-term decline in the market rate soon. Hedging is the practice of opening strategically important transactions, the purpose of which is to reduce or completely eliminate the risk for open positions.

The trader opens a short position, which implies selling the coin at the current rate. If the market price does fall, then it will be possible to redeem the cryptocurrency at a lower price and profit from the difference.

Different instruments are used for hedging, but most often – CFDs described earlier, a contract for difference.

Trading with the trend

A trending market is a market that consistently makes highs or lows. The option is applicable to different timeframes, since the trader holds the position as long as he sees fit and as long as the trend will continue in his opinion. It can be hours or months.

Breakout trading

Breakout trading involves entering the market as early as possible in a trend when the bitcoin price can break out of the previous price level. The main idea of ​​this strategy is that immediately after breaking through the level, high volatility begins, with which you can get significant profit.

To determine where support and resistance levels begin, Bitcoin traders use technical indicators (MACD, RSI) and changes in volume levels.

The best trading strategy is one that suits your individual goals, risk appetite, and the size of the investment available.

Trading bots

Bitcoin trading is time consuming and labor intensive. To relieve themselves a little, many traders use trading bots – special programs configured to automatically create buy / sell orders under certain conditions. If you configure the bot correctly, then you can make a profit even without being at the computer and in a dream.

Bots analyze various market parameters and, based on them, buy or sell cryptocurrency. The programs are used not only in bitcoin trading, but also on world stock exchanges. Many cryptocurrency exchanges today allow the use of cryptobots and even offer their own software solutions for this purpose.

Examples of bots and trading platforms for automating the bitcoin trading process:

  1. Revenuebot.
  2. 3Commas.

Account protection on the exchange

Of the many bitcoin exchanges, you can count units that have never been hacked. Of course, for the most part, the level of security depends on the exchange itself, but there are several rules with which you can independently increase the safety of your account:

  1. Always keep track of the site url. Hackers actively use phishing domain names that are very similar to the domain names of popular cryptocurrency platforms. A simple check of the website domain in the browser address bar will already help to avoid a number of unpleasant situations.
  2. Connect two-factor authentication. This is a special access system that requires two “keys” to enter your account. You need a mobile device with an application installed on it, for example, Google Authenticator – a win-win, works well and quickly. It is important not to give your device with the installed application to anyone.
  3. Monitor the security of your email. Email is often the target of cybercriminals. If you hack it, you can get access to many accounts, including those on the crypto exchange. If you suspect that the mail has been hacked, you should contact the administration of the exchange as soon as possible and ask to block the withdrawal of funds.

And, of course, you should always use only original desktop and mobile applications (App Store, Google Play), no matter what benefits third-party developers promise.

Trading bitcoin on the exchange: the basics

Trading bitcoins on the exchange implies making a profit that can be obtained when the rate changes. Buy cheaper and sell more expensive – the resulting difference will be earnings.

Now, only the laziest ones do not make money on cryptocurrencies. All this time, the coins were growing, even the entry point did not play a big role. For example, those who entered bitcoins a month ago are already in a good plus.

Article: “How to make money on cryptocurrency”.

In order not to wait for the asset to grow in the future, you need to trade. To do this, it is enough to select an entry and exit point. It seems that everything is simple, but for this you need to analyze the chart of the trading pair, study the news, the depth of market in order to represent the movement of the rate for the future. For example, recent news on Ripple has tripled its value.

You can analyze charts in ways that are used in the Forex market. You can put technical indicators on the chart to help you determine the right direction and points of entry and exit. There are trend indicators and oscillators. For example, the indicator “Moving Average” (MA) – shows the value of the average price over a period of time. A buy signal: the price chart crosses the moving average from the bottom up, and a sell signal when the price chart crosses the moving average chart from top to bottom.

The basic concept in technical analysis is support and resistance lines (areas) drawn through price highs or lows. If they are parallel, they form a trend channel (trend). These places have the largest number of buy or sell orders. The price can bounce off (bounce) from these areas several times. It is important to pay attention to the Fibonacci lines, which will help determine the strongest support and resistance levels.

Charts on many exchanges are presented in the form of “Japanese candlesticks” – this is one of the most accurate methods of analysis. Candlesticks can be “bullish” or “bearish” – they differ in color. Each has a “body” that shows the opening and closing prices; lower and upper shadows – the maximum and minimum price values:

For example, the Morning Star candlestick pattern is a signal for growth; “Evening Star” – a signal that the course will go down.

We recommend that you study the analysis of Japanese candlesticks in detail, since reading skills will help you most accurately choose an entry or exit point, then cryptocurrency trading will be more successful.

When the entry point is determined, to trade bitcoin, you need to select a currency pair, for example BTC / USD, and create a buy order. Basically, the order is limit or market. Market means the purchase of cryptocurrency at an affordable price at a given point in time. Limit – you can independently specify the cost at which you want to receive bitcoins.

When creating a limit order, you need to indicate the real price. Cryptocurrencies are growing very rapidly and it may happen that an order at a low price will never be executed. For example, if you specify the value of the desired purchase of $ 10 thousand for 1 BTC in a limit order, and the cost at the moment is 15 thousand, then there are very good chances that the order will not work and will need to be canceled. And this is wasted time and money.

Therefore, you can use a market order to buy, and then set a limit order with the desired higher price to sell. Usually during the day they use the market buy, and at night they set the limit from the support area, which was formed in a few days.

Review: “Bitcoin Exchanger”.

How to trade bitcoins on the exchange: instructions

We will show you how to trade bitcoins on the exchange using the EXMO platform as an example. After registering on the exmo.me website, you need to top up your balance and start trading.

In the “Trades” tab, you must select a currency pair: for example, BTC / USD:

Analyze the bitcoin / dollar rate and choose an entry point. Place an order to buy at the market price:

Or “By limit”, indicating the desired value and quantity. For example, buy bitcoin for $ 19,000:

Orders can be viewed in the “Trade History”, a limit trade order can be canceled at any time. If the Bitcoin cryptocurrency rate drops to the specified value, the order will be executed. It may take some time or it may never happen if the cost goes up far.

Further, the purchased cryptocurrency for storage can be transferred to a local wallet. Or sell bitcoins on the exchange by creating a limit order at a price higher than the purchase. The difference will be the profit from Bitcoin trading.

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