Markets bitcoins and cryptocurrencies were suddenly sold out on December 17-18: the world's largest cryptocurrency lost about $ 400 and fell below an important psychological mark of $ 7000.
While Bitcoin has still grown significantly since the beginning of the year, it is still sliding down, the community is debating when the next bullish move will come and whether it will happen at all.
Bitcoin holders who firmly believe in cryptocurrency can simply wait for another bullish move to begin, and may even plan to buy more BTC during the current sale.
However, there are always traders who want to make a profit in the short term and make a profit from falling prices for bitcoins (the so-called short circuit). Below we examined the most popular ways to profit using cryptography.
1. Futures markets
A futures contract is an obligation to buy or sell an asset in the future at a fixed price, regardless of how the actual price and the price of the contract differ by the expiration date of such contract.
When trading futures, investors can open not only long positions, but also short ones: in the case of long positions, traders agree to buy an asset at a fixed price in the future, and in the case of short ones, they agree to sell the asset on the expiration date of the contract. When buying, in order to make a profit, traders must correctly predict the price decline and profit from the difference between the selling price and the current price.
Traditional bitcoin futures are usually traded by large institutional investors and are not readily available to individuals.
2. Trading binary options
Traders can also shorten Bitcoin and other crypto trading binary options: a very risky investment tool. You need to open a put order (sell order), which means that you can sell the cryptograph at the current price when the price drops later.
When trading binary options, investors only need to decide whether the price of the asset will rise or fall, therefore this type of option is called binary. The result of such trading can bring significant profits or an almost complete loss of an asset. Use carefully.
3. Margin trading (trading using borrowed funds)
Margin trading is a type of asset trading using funds provided by a third party. Compared to conventional trading accounts, marginal traders have access to more funds, allowing them to use these funds on their positions. Essentially, margin trading improves trading performance so traders can earn more profit from successful trades.
Margin trading begins after a trader fixes a percentage of the total value of his order. This initial investment is called marginal and is closely related to the concept of leverage. In other words, margin trading accounts are used to create transactions using borrowed funds, and leverage describes the ratio of borrowed funds to margin. For example, to open a transaction at 10 BTC with a leverage of 100: 1 (10x), the trader will need to fix 0,1 BTC of his capital.
Trading with leveraged funds is considered very profitable as it does not require large investments to open relatively large positions. Using 100x leverage, traders can get 100% profit from a 1% price change. However, losses are calculated in the same way, but you can prevent them by using risk control tools such as stop loss.
Margin trading can be used to open both long (purchase) and short (sale) positions. A long position assumes that the price of an asset will increase, while a short one reflects the opposite.