The contest article by Rina Kustina

When I started worrying about the bankruptcy of the largest bitcoin exchange in the world, FXOpen introduced a Crypto account with an opportunity to trade crypto currencies. That is a good step towards development of crypto currency trading as a whole. A large company provides a chance to trade crypto currencies without worrying about the collapse of the company, because it is absolutely sure of its credibility. It is a good way to secure investment in a company that can be relied on. But the thing that I like most about FXOpen is that it provides the maximum leverage of 1:3. Excellent!

Since I learnt about bitcoin in September 2013, I’ve taken great interest in crypto currency trading. At first I was confused about what I should do, because I traded without leverage. So I thought that bitcoin was suitable for long-term investment, because I heard a lot of information that bitcoin could become a very valuable asset in the future. Then I thought that the time to buy bitcoin had come. Despite many pros and cons regarding the safety of bitcoin, I knew that I had to take risk. These pros and cons do exist now; but it still remains a very reasonable thing.

At first I was confused, the movement of all crypto currencies is different from what I’ve expected. Just move sideways in the daily range, it might be better if I had to do scalping, but of course I had to have large funds. It was very difficult for me.

I was very surprised when I found the price dropped from $124/btc to $75/btc on September 2^nd. Wow, this was an event that was beyond my expectations. I was really scared, so I started surfing the Internet for any sort of information. I freaked out. But I did stupid things. That was a good moment to go long for a long-term investor. But I did not do that. And the next day, September 3^rd, I really regretted about it. The price had pulled back towards $116/btc.

But then I was surprised to see that the price had gone up to over $1,000/btc. It was the moment that I’d never forget. The price actually increased by more than 500%.

But guess what, I got the biggest profit from the other crypto currency – Litecoin. My profit exceeded 1,500%.

Here we arrive at a conclusion that potential gains would be greater in other crypto currency trading. But this is only a speculation. We know that bitcoin is the most popular crypto currency. And I’ve noticed that other crypto currencies follow bitcoin in their movement. However there are certain advantages, e.g. you do not need to have a huge capital to start trading, so the risk is smaller and profits are bigger.

Let’s compare:

In October 2013 I bought 10 litecoin at $2/ltc. I spent $20 to buy 10 litecoin. If I’d sold all litecoin at the highest price in November 2013 (at around $48/ltc),
The profit would have been ($48 – $2) * 10 = $460.
If litecoin is down to $ 0/ltc, the maximum risk is 100% of capital, i.e. $20.

So what if I buy bitcoin and $20 at one and the same time?
Suppose I buy bitcoin at $100/btc. So I only get 0.2 bitcoin. If I’d sold all bitcoin at the highest price in November 2013 (at around $1,090/btc),
The profit would have been ($1,090 – $100) * 0.2 = $198.
If litecoin is down to $ 0/ltc, the maximum risk is up to 100% of the capital, i.e. $20.

The risk is the same, but the profit from litecoin is greater than the profit from bitcoin.

Crypto currencies have become more volatile this year if compared to the last year. So, we can use technical analysis with more flexibility for a short-term trading.
If you are sure that the crypto currency will rise rapidly in the long term, then you can only go long. But if you are sure that the crypto currency will not increase in the long term, then you should open buy and sell orders. It is up to you. But remember, each trade is always associated with high risks.

In reality, almost all crypto currencies are in a correction phase in the long term. Let’s take btc/usd pair as an example. It's just a technical analysis based on my view.

BTC/USD monthly time frame.

The volume of the monthly candle has been getting smaller, it is an indication that btc/usd is now in a transition phase. There is a potential to move in consolidation/sideways monthly. The price may break out of the trend line.
There is still a potential for a continued bullish trend which can also go down to the strong support.
If you are a long term investor, then you can buy at the present time. You can also buy in the strong support area; I guess it is the lowest price that might be reached.

BTC/USD weekly time frame

Here we can see a triangle pattern; we still have to wait before taking an action. If prices break out of the dynamic resistance/bearish trend line, then there is a potential for a bullish impulse, and if prices break out of the static support/horizontal line, then there is a potential for a bearish impulse.

This is just an example of a long-term strategy based on the technical analysis. We could also use some combination of indicators; I created an example for an intraday trading.

Just use your strategy to achieve success in crypto currency. The potential to reach a success in crypto currency trading is greater than in trading regular currency pairs. Observe the range of all currency pairs’ movement within a month or a year and then compare it with the movement all crypto currency pairs.

This is a good opportunity to change your financial situation through crypto currency trading. FXOpen provides us with all-round support enabling to invest in the currency crypto in a safe and comfortable way.

The article is written by Rina Kustina and is participating in the Forex Article Contest. Good luck!

FXOpen offers the world's most popular cryptocurrency CFDs*, including Bitcoin and Ethereum. Floating spreads, 1:2 leverage — at your service. Open your trading account now or learn more about crypto CFD trading with FXOpen.

*Important: At FXOpen UK, Cryptocurrency trading via CFDs is only available to our Professional clients. They are not available for trading by Retail clients. To find out more information about how this may affect you, please get in touch with our team.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.