How to Make Money by Trading and Investing in Cryptocurrency

To be honest, it is difficult to find a more profitable direction on the Internet than investments in cryptocurrencies. Are you also interested in this topic? Let’s welcome everyone who wants to get into cryptocurrency and earn money. There has been a keen interest in the subject of digital money over the last several years. 

how to make money with cryptocurrency

At the beginning of 2016, Bitcoin was worth $820-960, and at the end of the year, it overcame the mark of $20,000. People began to buy the coin on a large scale in the hope of making a big profit from the investment. In 2018, Bitcoin collapsed sharply. 

Nowadays, many people doubt whether it’s worth investing in this cryptocurrency. But those crypto investors who really know the market continue to make good money. Do you want to know how to start? Then read this article in its entirety.

 PROS 

 CONS 

INVEST

  • Valuable trading  software
  • Anonymity
  • Autonomy
  • Volatility
  • Theft risks
  • Security concerns
  • Mismanagement concerns
TRADE

  • Convenient
  • Mobility
  • Fluctuating rates
  • Brands are finally accepting cryptocurrency
  • You can’t trade 24 hours a day
EARN

  • Easy to start
  • Delayed or completely waiving payments
  • Necessity of spending much time and attention
  • The minimum amount of money to be withdrawn for a long time
  • Hard to find a good project

3 Ways to Make Good Money with Cryptocurrency 

Some people tend to think that since cryptocurrency is something virtual, and there is a magical way to make a lot of money from it without making any effort. You will be disappointed if you follow this line of thinking. 

While cryptocurrencies generally open up some new revenue opportunities, including for making Bitcoin, the basics should be familiar to you – you need to invest time or funds to make money. Three basic ways to gain money using cryptocurrency are Investing, Trading, and Earning. 

Investing in Cryptocurrency 

There are several ways to invest in cryptocurrency – long-term investing, passive income, and arbitrage investments (extraction of cryptocurrency). All options are good in their own way, some require significant investments, others are available for users with minimal initial capital.

The disadvantages of cryptocurrency investments should also be mentioned. This money is not officially recognized by the many state structures. The lack of centralized control is an absolute plus, but it also means that all transactions with bitcoins and other coins are at your own risk.

Another drawback, which often turns into an advantage for a speculator, is the high volatility of the cryptocurrency. The course changes every day. Inexperienced investors often panic and begin to lose capital when even a small downward trend is observed.

 Strategy #1:  Long-Term Investing – Buy and HODL Cryptocurrency

The fundamental thought behind this kind of technique is to ride long haul bull inclines and kill the market ‘noise’ related to lower time periods. Short-term traders regularly get disappointed when the market shakes them out of their exchanges as it whipsaws on the smaller time allotments (for instance, the one-hour time span). 

The value activity, on a week by week diagram, is frequently not unstable over a specific timeframe. At the point, when a similar period is breaking down on smaller time periods, the image is typically significantly more worn out and flighty than on the week after week time allotment.

What makes a buy-and-hold strategy appealing to many traders and financial specialists? The most important thing for traders who intend to be in practice for months or even years is simply to start the business. Such investors often don’t wait for significant reverses against the latest bull market because they realize that they may miss the chance to get to the spot they want.

Reduced Costs for Transactions 

Traders who partake in long-term buying and holding trades typically do not overtrade. This can significantly reduce transaction costs. A broker that is in and out of business every day or week will contribute to the value of the cumulative sale. The distribution of some cryptocurrencies is much higher than, for example, the main currency pairs. It can make performing most short-term trades very expensive and inefficient in favor of a few long-term trades.

Time Efficiency

Cryptocurrency trading tips are perfect for investors and traders seeking to make potentially significant returns with low time invested. Long-term cryptocurrency traders interested in buy-and-hold investing don’t have to track the market close each day, and neither do they have to do technical research, or regularly glance at graphs.

It would be wise for these cryptocurrency traders/investors to stay on top of fundamental news, of course, and to keep a check on their positions now and then, but it is still much less time consuming than short-term trading.

 Strategy #2:  Passive Income from Dividend Payouts

Passive income is characterized as a regularly collected source of income that does not require maintenance. The traditional dividend payments from holding stocks are a source of passive revenue. 

Essentially, passive income is income generated from rental property or a partnership with a certain time limit. It can also come from another organization in which a person has no active participation. In the same way as its equivalent, deferred compensation is often taxable. Some analysts believe that ‘portfolio income’ is passive income, and therefore dividends and interest are static.

Not many traders know that some cryptocurrencies are also a source of dividends. How can you get extra passive income from cryptocurrencies in your wallet? Well, yes, there are some similarities to traditional financial market approaches. You draw from owning shares that pay dividends or buy a bond that charges periodically fixed interest. 

 Advantages 

  • Some cryptocurrencies pay dividends between 5% and 10% per annum
  • You can make greater profits if the coin price rises over time

 Disadvantages 

  • Big risks of losing money in case of large investments 
  • The need for constant diversification of your deposits

 Strategy #3:  Cryptocurrency Arbitrage

Cryptocurrency money arbitrage between various trades is the most transparent kind of exchange since it is fundamentally the same as Forex arbitrage and sports trades. The thought is primary: benefit from the distinctions in costs for a similar coin yet on various trades. 

For example, one cryptocurrency exchange sells coin for $8,000, the other for $10,500. Your job is to use this difference in exchange rates to your advantage and make money. But do not forget to take into account the commission of each of the trade markets! 

Distinguishing Arbitrage Features

To identify cryptographic money arbitrage features in comparison to trading, a couple of elements should be considered, for example: 

  • Liquidity: As in the distinction in the exchanging volumes on various trades, as the difference in market interest influences the costs. On progressively settled trades, prices vary, not like on small or new ones. 
  • Topography: Depending on the time-zone, it may be simpler or harder to sell during specific occasions of the day. 
  • Postings: Value contrast, when a crypto coin gets recorded on one of the significant trades like Binance.

How to Make Money Trading Cryptocurrency  

Cryptocurrency trading is one of the main ways to make money with cryptocurrency today. Trading in cryptocurrencies is not significantly different from trading in precious metals, currencies, and shares. 

The main task remains the same: buy as cheaply as possible, sell at a higher price, and make a profit. The main difference between cryptocurrency trading and the stock market is the high volatility of the exchange rate. 

Trading is putting money on a short-term stock. Traders buy and sell rapidly to achieve higher retail revenues. Missing the right time may lead to a loss. They look at the company’s current results to achieve higher prices and book profit in the short term. 

Investing, on the contrary, is staying away from the market trends and counting on the value. Investors play in a long-time game, keeping an eye on their stocks. Investing is waiting patiently for the stock to reach its potential.

 Here are the most common and profitable trading strategies: 

  • Intraday Trading 
  • Swing Trading 
  • Scalping 
  • Position Trading 
  • Trend Trading

We will touch upon each of the trading strategies in detail later in this article. 

The choice of strategy should not be made at random. Before earning on the difference of rates of cryptocurrencies and turn crypto into cash, it is necessary to analyze the possibilities: 

  • the size of the initial capital for the trades; 
  • psychological qualities – for example, whether you are capable of restraining yourself at a choice of long-term strategy of earnings for a long time; 
  • propensity to rash actions. 

It is not always possible to determine these nuances on your own, as it is challenging to evaluate your own abilities objectively. Therefore, before earning on the exchange cryptocurrency and getting cryptocurrency profit, always consult with experts to calculate the risks and approach trading wisely. 

 Advantages 

  • Low entrance fee 
  • Round-the-clock bidding 
  • Independence from politics and the global economy
  • High volatility

 Disadvantages 

  • Risk of losing the deposit if the approach is illiterate 
  • The need for in-depth knowledge of the Blockchain techniques 

Intraday Trading 

As a broker in the securities exchange, one can purchase or offer from the free market to accomplish momentary objectives. The market goes up or down; thus, so does the offer cost. Brokers who money in on this market, unpredictability, can make a profit. 

Be that as it may, misfortunes additionally occur while exchanging. Intraday exchanging basically alludes to purchasing and selling offers during the same day. You ought to comprehend intraday exchanging significance before you start trading. Presently, realize what intraday trading is. 

In spite of the fact that there are odds which point to making great benefits, Intraday exchanging is dangerous too. As a broker, you need to square off your situation before 3:10 pm, which implies in the event that you have purchased a specific amount of stock, you need to sell it, and on the off chance that you have sold a particular amount, you need to get it. On the off chance that you don’t do as such, your position will naturally set things straight. 

 Advantages 

  • Easy money management
  • It is easy to know the profitability of the strategy used
  • Minimal risk of losing the entire deposit
  • No commissions

 Disadvantages 

  • You need to monitor the market constantly
  • Requires patience and accurate planning of all actions

Swing Trading

swing trading strategy example

Swing trading is a type of trading that attempts, over a span of several days to several weeks, to catch stock gains (or any financial instrument). Swing traders primarily use technical indicators to identify trading opportunities. In addition to evaluating market trends and patterns, such traders may use fundamental analysis.

Swing dealers will regularly search for circumstances, on the day by day outlines, and may watch one hour or 15-minute diagrams to discover exact passage and stop misfortune focuses. 

 Advantages 

  • requires less time to exchange than day exchanging 
  • boosts momentary benefit potential by catching the central part of market swings 
  • dealers can depend only on specialized investigation, disentangling the exchanging procedure

 Disadvantages 

  • exchange positions are dependent upon medium-term and end of the week showcase hazards
  • unexpected market inversions can bring about generous misfortunes 
  • swing traders regularly miss longer-term inclines for momentary market moves

Scalping

scalping trading strategy example

Short-term strategies, or scalping strategies, are the most popular with most players in the cryptocurrency markets. Sometimes, they are based on the interpretation of current financial market news and policies but are usually limited by technical analysis methods. They are fast deals to buy and sell e-currency during a period of insignificant price changes, generally starting from one minute.Fixing the slightest fluctuations in asset prices, traders open dozens of positions a day. Many people who don’t know how to earn on cryptocurrency or where to start, choose this strategy. 

Within a given trading period, scalpers can make thousands of trades. Scalping techniques have three characteristics:

  • short positions, 
  • small profit margins  
  • high leverage

Scalpers try to target price differences and other “loopholes” in the short-term exchange, helping them to turn a large position rapidly for the profit.

Short-term strategies often referred to as scalping, allow traders to gain practical experience very quickly. Profitability from single operations at scalping strategies can be high, but on average, they show low results of earnings. 

Scalping is often used by large trading companies and investment departments of banks: with top-class professionals in the composition, vast amounts of money on the balance sheets and the use of automated trading, in which the slightest fluctuations in the rate and changes in trends instantly respond to special programs – robots, experts, who conclude transactions to buy/sell currencies.

 Advantages 

  • It’s possible to trade with a small deposit
  • There’s no complex analysis. Losses are offset by profitable transactions
  • You don’t have to wait, there’s always a way to trade

 Disadvantages 

  • Great nervous tension during the work, because you need to make quick decisions and constantly open new positions

Position Trading

position trading strategy example

Position traders are, by definition, trend devotees. Their center conviction is that once a trend begins, it is probably going to proceed. Just purchase and-hold long haul speculators, who are named aloof financial specialists, their situations apply to far more extended periods than scalping dealers (weeks to months).

Their exchange reasoning is intended for effectively catching the more significant part of a trend’s move, which would bring about a valuation for their speculation capital. In that capacity, it is the total inverse of day exchanging, which looks to exploit transient market changes. It additionally varies from swing transferring. However, both depend on the idea of following trends.

Position traders may utilize specialized investigation, essential examination, or a blend of both to settle on exchanging choices. They additionally depend on macroeconomic variables, general market patterns, and authentic examples to choose speculations that they believe will accomplish their ideal result. To be fruitful, a position trader needs to recognize the passage/leave levels and have an arrangement set up to control chance, for the most part, by stopping misfortune levels.

 Advantages 

  • Ability to wait calmly for the target price level to be reached
  • The ability to track what is happening in the market and make any changes if necessary

 Disadvantages 

  • You should have a deep knowledge of the market to plan a strategy

Trend Trading

trend trading strategy example

Trend trading is a strategy for exchanging intended to exploit upturns where the value will, in general, make new highs or downtrends where the value will, in general, make new lows. An upturn is a progression of higher swing highs and higher swing lows. A downtrend is a progression of lower swing highs and lower swing lows. 

Notwithstanding, taking a gander at trend highs and lows, these traders use different instruments like trend lines, moving midpoints, and specialized markers to help recognize the trend course and possibly give exchange signals. 

Dealers utilize both value activity and other specialized apparatuses to predict the course of a trend and where it might be moving. 

 Advantages 

  • Trading in the direction of the current trend allows a trader to clearly identify market entry and exit points, get the most out of the price movement and minimize trading risks
  • A huge number of trend trading strategies and trend indicators

 Disadvantages 

  • Trend reliability depends on the size of the timeframe – the older the timeframe, the more reliable it is, but, accordingly, its formation takes much longer time

How to Earn Cryptocurrency 

Many people now consider buying and selling cryptocurrency as a trip to the casino. Yes, the rapid ups and downs of Bitcoin and other electronic money can be a banal financial bubble. But beware, the carriage may turn into a pumpkin.

But what if trading smart guys are right – and cryptocurrency is really the future? And timely investments will bring fantastic earnings?

Let’s consider the possibility of earning cryptocurrency with the help of online technological resources. The main thing to remember, if you want to find ways to earn on cryptocurrency, is that it is necessary to risk only those funds, which if lost, which will not lead to the collapse of the family budget. 

Mining Cryptocurrency

making money mining crypto

This method is a way of earning money on cryptocurrency by extracting it. As already mentioned, cryptocurrency is the result of information exchange between millions of users. This requires a lot of computer power, which people call “mining farms”. The simplest farms are presented in the form of a set of powerful video cards connected to each other in a single system that works with the use of special software. 

 Advantages 

  • nice profit with the growth of the electronic currency chosen for mining

 Disadvantages 

  • substantial return on investment in components is required 
  • huge electricity bills 
  • constant monitoring of the system is needed 

This way of earning will be suitable for people who are well acquainted with the principles of modern technology and have an impressive initial capital for the purchase of expensive equipment.

Cloud Mining

cloud mining

Another way to make money on cryptocurrency is to buy the capacity of other users for mining. 

 Advantages 

  • does not require significant investments 
  • quick payback 

 Disadvantages 

  • a large commission to receive funds
  • the possibility of losing the investment as a result of closing the site

Work for Cryptocurrency

work for crypto

There are no specific statistics on companies that use cryptocurrency to pay employees. But, as a rule, such salaries are paid to representatives of ICO-projects, as well as blockchain and crypto companies. First, they are more loyal to innovation and can even welcome such a reward. Secondly, a company may simply not have sufficient fiat resources. Third, it is an additional way to promote the company – if, for example, the fees are paid in the tokens of the project. 

In the USA, the Bitwage payroll service has been in operation since 2014, allowing employers to make international payments in both national and virtual currencies: bitcoin, ethereum, litecoin, and DASH. The service supports 25 coins in total. Regular customers are Google, Facebook, GE, Philips, Airbnb, Uber, and even the US Navy. 

According to Bloomberg, European and American companies often use cryptocurrencies to pay employees from Latin America, as their national banks do not provide a convenient and reliable infrastructure for international transfers.

There are services that help find executors who are ready to work, for a fee, in cryptocurrency. The most popular services are Dream, Jobs by Cointelegraph, as well as BitGigs and Coinality freelance exchanges. You can search for work with remuneration in cryptocurrency on the Crypto Jobs List, Crypto Jobs, and Crypto Currency Jobs.

Faucets and Micro Tasks

Faucets are websites where you can get a minimal amount of cryptocurrency if you do some things. This is usually a captcha input and waiting for the timer, although the timer is not everywhere. After that, you will be given some digital money. Although most of the valves are of the same type, there are some differences that can be identified.

Size of Earnings

The most generous faucets are ready to give you a few Satoshi coins, up to 100 or more. From one visit to such a website, you will be able to get rich on ten or more coins, sometimes on 400-500. Is that a lot? To answer this question, it is worth specifying that 1 Bitcoin refers to 1 Satoshi as 100,000,000 relates to 1. 

The price of 1 BTC was $10,500 USD. It is easy to calculate that when you receive a crane of 10,000 Satoshi, you will be more productive by only 1.05 dollars. And then only with a “generous” faucet, you can get 1,000 coins, it’s only 0.11 cents. As long as you earn one dollar, you will have to run around the Internet looking for faucets for new cryptocurrencies in 2020.

Micro Tasks

Clicks for Satoshi: very simple and very long micro tasks. The easiest but longest way to get e-currency. The user comes to a special site where advertisers leave tasks like clicking on banners and jumps to pages. For such simple actions, you can get a small amount of Satoshi.

 Advantages 

  • earnings without investments 
  • it is possible to spend the spare time with benefit (but more often without it)

 Disadvantages 

  • small profit
  • one coin can takes years to earn 
  • a lot of free time is required

This method is suitable for people who have a completely open schedule. For example, for women on maternity leave or security guards working in irresponsible facilities on night shifts.

Affiliate Marketing

3Commas Affiliate Marketing

Above all else, there are two unique ways to deal with crypto affiliate projects, and you have to comprehend the contrast between the two. 

Some crypto subsidiary affiliate plans handle cryptographic money installments from your acquisitions. However, you must make the installments in standard cash. Others offer items and administrations (frequently, yet, not continually identifying with cryptographic forms of money) and pay their subsidiaries in digital currency as well. 

Regarding how you join and work with a crypto affiliate system, this is pretty much equivalent to when managing a standard affiliate program-based plan. 

You discover a digital money subsidiary system you need to join, connect with them, and afterward access the referral joins you have to use to showcase and advance your contributions. At the point when your possibilities make the necessary move, this is reflected in the proportionate commission being paid to your subsidiary record. 

Is there a critical contrast between crypto affiliate projects and customary associate projects? The partner plan will be taking installments from possibilities in digital currency and might be paying out to you similarly.

Summary 

The likelihood of both earning on cryptocurrency and suffering due to the extreme risks is quite high. The outcome depends on the volume of knowledge, level of skill in financial markets, the chosen strategy of earning, the volatility of the rate, etc. Sometimes, the decisive factor is simply luck. As already mentioned, once the bitcoin exchange rate has increased tenfold in a short period of time, it will allow a limited group of people to improve their own well-being significantly. 

Today, the question «How much can I get paid in cryptocurrency and get rich?» has ceased to be a legitimate question for private individuals trading in the market, as the cost of business components and competition in this area has increased dramatically, with medium to large companies entering the mining market. Therefore, more and more people are starting to trade on cryptocurrency exchanges. 

So, if you have chosen to try trading as a way to gain money on cryptocurrency, we recommend that you register on 3commas terminal, the online service supports all the popular cryptocurrency exchanges, which is simple and friendly both for pro and novices. Click here and get your 7-day trial on 3Commas!

Cryptocurrency

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