Making a Living Day Trading Cryptocurrency

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The day I first heard about Bitcoin on Reddit, a friend had also called me to tell me about it. Being 22 years old in New York City is a financial struggle. I sold it all and ditched my plans for a mining rig. My financial situation needed to be stabilized before I could invest in assets based on my philosophical beliefs. Bitcoin stayed in the news over the years. The price went up and down, silk road happened, the legality of it was called into question, exchanges were hacked, and people gained and lost millions of dollars.

Ethereum hit the scene with the promise of using the blockchain for more than just currencies. You could build decentralized apps on top of Ethereum and even new currencies. I wondered if I could take advantage of those swings by buying best trading platform for bitcoin reddit the price was low, selling when it was high, and buying back in when the price dipped best trading platform for bitcoin reddit.

In the same period I shut down my company, Bitfountainafter running it for 5 years. Bootstrapping my own company gave me an unprecedented amount of freedom. I lived in 4 countries, traveled to many more, and only worked a few hours per day.

However, since the company had run its course, I needed a new source of income. I applied for only one job as a software engineer. It was the kind of job people love - high salary, all the Silicon Valley benefits, friendly team, well funded company, challenging engineering problems.

After three rounds of interview they decided not to move forward with me. I did want it. But I also feared losing my freedom. Gone would be the days where I could spontaneously book a flight to India with no return date. Going through the interview process made the possibility of losing my freedom real.

I went into panic mode searching for a way I could make money on my own. At this point I still owned Ethereum and the price was best trading platform for bitcoin reddit swinging back and forth. I signed up for two exchanges: I needed Poloniex as well because there were many cryptocurrencies being traded there Altcoins - cryptocurrerncies that are not BTC. Those are the first two exchanges that I used. Now I use others since each exchange has pros and cons. A live crypto exchange is intimidating at first glance.

There are charts and numbers changing at the speed of sight. I felt overwhelmed but sat through the confusion to try and make sense of what I was looking at. Soon I could see where to place orders to buy and sell, and the charts started to best trading platform for bitcoin reddit sense too.

As the month went on I spent hours trading. I made enough to pay my rent, so the possibility of making a living from this was validated. I wanted to formalize my trading knowledge so I could do more than buy low and sell high. There had to be a real strategy to this stuff.

I read as many books as I could on trading stocks and foreign exchange markets. I made a lot of mistakes. But eventually I found my rhythm and strategies. For myself, and most crypto traders, the goal is to increase the amount of Bitcoin we own. For example, right now the price of 1 ETH Ethereum is 0. Another thing I need to make clear is the type of trading I do - day trading.

All best trading platform for bitcoin reddit my profits are converted back into BTC at the end of each trading day. Again, even though I buy and sell several Altcoins, at the end of the day my net worth is in Bitcoin. There are three reasons for best trading platform for bitcoin reddit. I earn more USD when the price of Bitcoin goes up against the dollar. Why was it important to clear this up? Several things were on my best trading platform for bitcoin reddit the first time I had to do this.

What if I sell my BTC now and the price shoots up tomorrow? Yes, but your bills will be paid. Sell now so you can pay your rent. You can always hold out for more, but at best trading platform for bitcoin reddit same time you are risking a loss. After a few months I got better at trading. I was earning more Bitcoin than I needed to cover my monthly expenses.

At the end of the month I sold only what I needed, and kept the rest of my net worth in Bitcoin. Around this time in my trading career it was getting to the point where I could have bought a Tesla or put a down payment on a house by selling my Bitcoin. Do you sell your Bitcoin to realize your profit in USD? I can live a nice middle class lifestyle in Los Angeles. Or I can drive a flashy car while I rent a crappy apartment in Los Angeles.

It all comes down to your values. In fact, if i see a chart like this I almost always best trading platform for bitcoin reddit it:. The wild bull runs are hard to find, hard to time properly, and easy to go in the opposite direction where you lose a lot. Those gains are only exciting if you understand how far they can get you. Of course the numbers above assume you trade days per year.

Not many people are willing to forego vacation and weekends to work as a full time crypto trader, even with numbers like that. Not only that but I also let my emotions control my trades. For example, I once purchased Stratis after the price dropped massively. My assumption was that on such a sharp decrease in price, it had to rebound eventually. The price kept diving.

I was constantly tuned into that chart waiting for an opportunity to sell back to Bitcoin. Now I have my strategy that I stick to without letting my emotions interfere.

I have a set of coins that I like trading so I only look at those charts. I have patterns and indicators that I look for on those charts so I can quickly flip through them. Within minutes I best trading platform for bitcoin reddit set my orders, set alerts on my desired entry and exit prices, and walk away from the computer. As the market cap of crypto increases, be sure that the IRS is going to find out how to get their slice.

And they will look into the past. I am not a tax advisor. This is a best trading platform for bitcoin reddit overview of what I keep in mind as I trade. My accountant handles my taxes, and I advise you to get an accountant to do the same. Keep in mind that this is US-centric. You need to double check if this is the case in your country.

The taxable event is when you sell your cryptocurrency for fiat. How much tax you pay depends on how long you were holding the cryptocurrency. Buy crypto with fiat - no tax. Sell crypto for fiat - pay ordinary income tax. Buy crypto with crypto - unclear, but does not seem to be a taxable event.

This is where things get foggy. Consult best trading platform for bitcoin reddit advisor, but as far as I know this is a like-kind exchange which is not taxable but must be reported to the IRS. The exchange you use will output best trading platform for bitcoin reddit of these transactions so you can hand them to your accountant. The IRS has clarified that a crypto to crypto exchange is not a like-kind exchange.

The profit made from each transaction is taxed. If you are holding a currency for more than a year it is classified as long term capital gains. This is another reason why I like keeping my net worth in Bitcoin. At least not right now. Passive income is great. After you make an initial investment, you mostly sit back and watch the money roll in. Most cryptocurrencies are mined. You invest in a very strong computer and the electricity to run it, and you are rewarded with crypto for contributing to the network as a node that confirms blockchain transactions.

This is an alternative to mining that does not require vast amounts of electricity. The idea is that you stake the cryptocurrency that you own over a wifi connection.

That crypto that you stake is used to validate transactions on the blockchain, and you are rewarded more cryptocurrency for putting the currency you own in the pool.

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Generally there are two ways of doing this:. It does however have many hidden risks which you should be aware of, this guide will explain some of these. This guide will focus on risks, see this guide for a tutorial on using eToro. We encourage you to read this entire guide before trying eToro to understand the potential risks; but if after reading this you still want to try it out, here's a link we'll get some money if you sign up via this. When you first use an exchange, you'll find lots of guides and tutorials on how you should be storing your Bitcoin.

The general consensus is that once you buy it, you shouldn't keep it on the exchange - it should be moved to a wallet. The most common reason is that the exchange might run away with your money, but there's a second less dramatic one; that by moving your Bitcoin to a wallet, it makes it harder to sell it.

This might seem counter-intuitive, but context is important here. The user interface on eToro is much more user-friendly than most exchanges or CFD brokers, and there are many online reviews stating this causing beginner traders to see eToro as a good platform to try out.

When these beginners first trade they're inevitably going to open positions that don't go well and lose them money. In cryptocurrencies they are not. For this to happen to a beginner, the fear of losing more money will often give them a very strong urge to sell. On eToro it's possible to do this in just a few seconds, to close your position and walk away. But a beginner trader would then experience the fear of missing out, and so buy back in again - often at a higher price.

This statement is highly speculative, but next time this happens, if you look at the eToro Bitcoin user feed, you'll see many people in this scenario. If you'd stored your Bitcoin on a wallet, the time between moving it back to the exchange would have given you a better time frame to make your decision off.

That said, if you're a more experienced trader you'll likely be aware of this scenario so it won't be an issue for you. If you were to go on an exchange right now to buy Bitcoin, the price would be determined by the person willing to sell their Bitcoin for the lowest amount.

On this exchange you'd normally pay a fee of around 0. On eToro you pay a fixed fee of 0. This is only 0. This problem by itself makes profitable trades harder, but given the extra functionality you get, some justify this as an acceptable cost. Where this isn't ok is how their system for opening orders works.

We'll explain a situation we experienced ourselves. Regardless; the trade we just made should not have been possible. Allowing a trade to be opened with a difference between the opening value and stop loss of such a low amount is an incredibly dangerous feature.

But if you're dealing with small amounts of a few hundred dollars this will both eat away at your profits and encourage you to deposit and withdraw larger amounts of money to increase profit margins. This is something that we find very concerning as this encourages new traders to invest larger amounts of money than they should given the associated risks of trading cryptocurrencies.

With all the above said, you might think that we don't like eToro, that you should avoid it. But this isn't the case. Being aware of all the above issues, we're able to avoid the issues caused by them; we tend to avoid Bitcoin Cash trades for example! Cryptocurrency trading is still very new to platforms which previously only dealt with CFDs, so quirks like this are expected. Our hope is that over time eToro will decrease their spreads for cryptocurrencies and add functionality to avoid the pitfalls we've described above.

If you want to try out eToro and help us out, here's a link we'll get some money if you sign up via this. This site cannot substitute for professional investment or financial advice, or independent factual verification. This guide is provided for general informational purposes only. The group of individuals writing these guides are cryptocurrency enthusiasts and investors, not financial advisors. Trading or mining any form of cryptocurrency is very high risk, so never invest money you can't afford to lose - you should be prepared to sustain a total loss of all invested money.

This website is monetised through affiliate links. Where used, we will disclose this and make no attempt to hide it. We don't endorse any affiliate services we use - and will not be liable for any damage, expense or other loss you may suffer from using any of these. Don't rush into anything, do your own research. As we write new content, we will update this disclaimer to encompass it.

We first discovered Bitcoin in late , and wanted to get everyone around us involved. But no one seemed to know what it was! We made this website to try and fix this, to get everyone up-to-speed!

Click here for more information on these. All information on this website is for general informational purposes only, it is not intended to provide legal or financial advice. The Risks of Trading Bitcoin on eToro. Generally there are two ways of doing this: Cryptocurrency exchanges allow you to buy and sell real coins e.

See this guide for some examples. Most brokers don't allow you to buy Bitcoin directly. Instead they allow you to invest in it via CFD Contract for Difference , which means you're not buying the coin itself - the exchange buys it on your behalf, and you have to pay a daily fee to hold it.

Some brokers like eToro and IQ Option are starting to take the middle ground, where you can invest in Bitcoin and not pay a daily holding fee. Conclusion With all the above said, you might think that we don't like eToro, that you should avoid it. March 30th, How to Trade Bitcoin on eToro. Written by the Anything Crypto team We first discovered Bitcoin in late , and wanted to get everyone around us involved.

Never invest money you can't afford to lose.