Before that, I wrote about how to trade on the exchange, how to create order, to use the API, automated trading, and much more – all a series of articles you can find at the bottom of the comments. But suddenly I realized that it is not considered a fundamental question – namely, how to do so, that would be the amount of money on the balance sheet increased. It is time to close this important issue.
Say at once – in this article will not be a golden bullet, the magic button and the like – but I will discuss approaches with which different traders increase their income, the pros / cons of these strategies and will try to make any conclusions. The truth, as we know, is always somewhere in between the extremes. And one more caveat – I’ll talk about kriptovalyutnyh exchanges, although in many strategies and techniques applicable to stock exchanges.
So how can you make money on the stock exchange?
It is a way of betting begins almost every trader about trading books are written, they are devoted to seminars and webinars. But if you dig deeper, not so simple 🙂 And that’s why many traders leave the market after a month or two experiments, losing a certain amount of the deposit, but acquiring
a useless experience. And all because it all starts with the game on the increase, which will sooner or later show its fangs.
The simplest kind of earnings – at first glance. A trader buys a currency, for example, spends BTC to purchase ETH, and then waits for ETH growth rate that would sell it and get more BTC, than he had at the start. This type of game is called Long (long), but by the time the life of the order this name has nothing to do – such a deal can crank out like a month, and for a millisecond.
What faces the player to increase?
With the commission costs and the need to constantly turn up course
The trader pays a commission as when buying ETH, and when it is sold (for more details in thisarticle). Accordingly, he has to sell the subject of the two commissions, lifting course.
For example, if a trader has a 1 The BTC, rate is 0.1 BTC for the ETH 1, and exchange commission of 0.2%, then the trader will not buy the ETH 10, both expected and 9,98 ETH. Now, traders should sell them, and get more than spent – ie at least 1.001 BTC. But the sale of 9.98 ethers Commission is already removed from the received Bitcoin, so that both the Commission and the desired fat trader needs to lay in the price of the sale of esters. Therefore trader adds to the amount of consumed 1 BTC desired fat – 0.1% in this case, and the price of the obtained esters subtracts predetermined commission – 0.2%, after which exposes the ethers for sale at the rate of 0.1005016044. If the deal work, the trader will be 1.001, as expected.
The dry residue – the trader bought at the rate of 0.1, and sells at the rate of 0.100501604, although it would like to sell more cheaply. If the market goes up, the trader will be in positive territory, if they fall, it will freeze the money, maybe even forever. If the course still went up, following the purchase of the trader will have to perform at a higher rate, such as 0.1006, and after the purchase, the trader will be forced to sell already on 0.101104614, still raising the bar higher. In general, sooner or later a trader will buy at that price, on which no one would buy it, at least in the next few months until the market reaches it peak again.
Accordingly, when you play on the increase, which would not be at its peak, as the father of Feodor, the trader must carefully calibrate their purchases – buy with subsidence of the market, avoiding risky purchases on the rise, and so on. This is a separate art and talk about it in an article about the indicators, intuition comes from experience, and not always helpful.
With the fall of the market
It so happens that the market falls stupidly week after week. A trader wants to buy the air, but the course is rolling down the slope, and the bottom is not visible. Can be purchased at some stage, and wait for the final increase, but not the fact of having it, at least soon. In such cases, if the currency is free, a trader trades by other couples, closer approaching a peak.
Particularly clever traders (and their automated algorithms) artificially inflate the buying and selling rate for the formation of an uptrend, exposing the respective order. Players increase, seeing growth, begin to purchase the currency of another’s calculated prices, helping the trend to rise higher and higher. In fact, it is something like the Running of the Bulls – when the bulls are forced to run on a pre-exposed path with a known outcome. To avoid this situation, we must be able to focus on the stock exchange, and about to understand what is involved in the growth rate, and when a change to the recession.
For a fall (Bear)
Game for a fall – it is often called short (short) mastered not always right, and sometimes it takes some time, which would deal with this kind of earnings. Again, the word short does not mean, in this context, that the transaction happen quickly – it can take a fairly long period of time between the purchase and sale (or sale and purchase, see below).
What is the Short and margin trading as a whole?
I actually have a detailed article -Translation of margin trading on Poloniex, and in other articles of the cycle (especially in this ) there are details with examples, but in brief the situation is – you are trading other people’s money in the hope to repay the debt due to the devaluation.
For example, you believe that the ester exchange rate will go down. You take the lender esters 100 and sell them at the current price, receiving BTC. After some time, ethers rate does go down, and you bought at BTC buy the necessary amount of esters that would give the lender with interest. Due to the depreciation you spend less than BTC originally received, and this difference is your pocket.
The problem here is that you need to pay a deposit – and ensuring the return of the debt is adjusted automatically by the exchange. For example, if you have not calculated and the rate has gone up, the money in your balance is not enough to buy the right amount of ether, and Exchange automatically closes all of your transactions. All the losses that you carry are borne by you and, in the worst case, you lose your entire deposit.
Plus the fact that you can raise a lot of money with little. If you have the account 0.01 BTC and you crank the deal of the century, which will bring 40% of the profit, you get only 0.004 BTC profit. Using other people’s money, you can crank up the same deal, but on 1 BTC (taking other people’s money) and get 40% of them – that is, get 0.4 BTC minus commission and interest, with 0.01 BTC.
Marginally to trade and Long positions
In principle, no one stops to play on other people’s money to increase – the same poloniks this practice. Just margin trading is declared to the appearance of xBTCe – but not yet implemented. In general, risks and profits are the same – you can win more than allowed by the current balance, but you can pull all at zero, which is usually difficult to achieve in conventional trade.
Also on the stock exchanges can not play, but to give people the opportunity to earn due to turn your money on your terms.
This can happen in real life – you can offer your friend proven money trader, then he will be able to increase the amount of trading and consequently increase profits (and losses), and part of the share of revenue, comparable to the contribution to the trade, will be yours. In other words, if someone trades with your money, then it is for good, and sharing with you income. Who in this case carries risks – negotiated separately.
As there is an automated mechanism on the stock exchange – you set the money through a special interface and specify the percentage that want to receive. The money is automatically available to traders for margin trading, and their return is guaranteed by the exchange with interest. In other words, the exchange will not allow anyone to spend your money, and you always get everything back + percent. However, here as elsewhere the competition, and you have to put money on a small percentage, and make sure that whatever your interest rate was more favorable than the competition, and there are periods of recession / inactivity selected currency .. But still a good option if you do not You want to play, but do not mind firmly to enclose.
The scheme is based on the fact that in different markets different relationships currencies. Nothing complicated, with the exception of fees for input and output.
Let me explain with an example:
I have 2 BTC and 300,000 rubles. Current average rate of 1 BTC = 150 000 rubles. I replenish bitkoynovy account on Eksmo 1 BTC, and the ruble 150 000r, as well as fill up a similar bill on btc-e: 1 BTC 150 and 000. After that I start to monitor the situation. A few days later a course on Exmo remained the same – 1BTC = 150 000r, and BTC-e has grown: 1BTC = 152000R. On Eksmo I buy one 000r BTC 150 and BTC-e on sell for 1BTC 152 000r. After performing these operations, I have 2BTC and 302 000r.
It is understood that in the example, I did not consider commissions when entering the currency on the exchange and withdrawal of their future as well as commissions for transactions, but the general principle, I think, is clear.
In fact, the stock exchange is the place where the swirling money. And where there is money spinning, as cool and want to get some of the money themselves. It is possible to organize business related to the stock exchanges, such as:
brokerage services – you are trading on the stock exchange, and attract customers money to trade, share with them part of the profits.
Consultant Services – technical analysis charts, preparation of indicators, the growth prediction – if you reach a certain credibility in forecasting / analysis of market movements, or the formation of portfolio diversification / strategy, you or your site will be in high demand.
programming services – you can write programs and services to run on Exchange / exchanges, analysis, forecasting, statistics, etc.
intermediary services for input-output – many exchanges take a commission for input / output, and sometimes throwing money on the stock exchange has serious costs. If you already have money on this stock exchange or have the opportunity to start their cheap, you can sell the domestic currency exchange with a small mark-up, such as the BTC-e code or Exmo ex-code. A person in such a case would be enough to send you the money, get the code and get the currency for your balance immediately. And you get a margin.
If I forgot something, some kind of a good way to remind the comments, I seem to have listed everything that he remembered, but there are so many things …
But most importantly – it is necessary to move forward, to try the unknown, to absorb and apply the information, and sooner or later grows together.
I wish you all success and financial independence!