How to Profit From Cryptocurrency Market Volatility

The cryptocurrency market is one of the most volatile in the entire world. Not only is it trading 24/7 but it is also an incredibly young market. As such, it’s inherently volatile. Luckily, where there’s volatility, there’s room for more profits. [Disclaimer: This article is not financial advice.]

Profiting From Volatility

Volatility naturally comes with added risk. You need to gauge your strategy based on how much risk you are really ready to put on the line. One terrible decision can wipe out your months-long gains, so you need to be careful.

Riskiest Option: Margin Trading

Margin trading is, without a doubt, risky. Play with too much leverage and you could end up getting liquidated in a matter of minutes. However, margin trading remains incredibly popular because of greed — BitMEX alone has billions of dollars worth of Bitcoin being traded on margin, daily. When it comes to margin trading, you need to start small. One can open an account on an ultra-accessible exchange like StormGain, where you can sign-up with just an email address. With a multiplier of 100x offered, you can really go wild — if you wish to take the risk. However, it may be smart to start small until you familiarize yourself with the market’s volatility. Most importantly, don’t be afraid to back out and cut your losses when necessary. With StormGain’s simple interface, support for the top five leading cryptocurrencies, and high multipliers, it’s a good place to start ‘day trading’ and learn the ropes.

Less Risky Option: Buying Bottoms and Scalping 10% Gains

Some investors don’t conform to the HODL strategy. Instead, every time one of their altcoins pumps a bit, they sell for Bitcoin (BTC) to accumulate more. It’s a simple strategy — though it is easier said than done. A lot of traders make the mistake of getting too greedy. However, if you can force yourself to sell 10-20 percent gains every time, you will find that you will do much better in the long-run. Just be sure to sell for BTC, of course. The ultimate goal with this strategy is to boost your BTC stack.

Least Risky Option: Dollar-Cost-Averaging

If you’re not a trader, you can still profit in the long-run from the cryptocurrency market’s inherent volatility. The simple strategy involves averaging in your purchases on a schedule and/or buying the local bottoms. Instead of going ‘all in’ and then trying to time sells, it’s much easier to just time buys on a schedule or on significant dips. By averaging your costs downward, you can still profit in the long-run. Keep in mind, though, that this strategy is not the best one during a bear market — since there is no established bottom yet. Still, dollar-cost-averaging remains one of the fundamental rules of investing — and it’s even more useful when the market is incredibly volatile like cryptocurrencies are. This way, you won’t hate yourself every time you make a crypto-purchase.

Always Assess Risk

Before trying out any of these options, be sure to understand how much risk you can handle. Moreover, never put everything on the line. Your goal is to accumulate more, not lose it all on a bad move! Start small. Consider margin trading very tiny amounts of your trading portfolio and work from there. Watch the markets and follow professional traders. Most importantly of all, never gamble what you can’t afford to lose. Do you know of other ways you can profit off of cryptocurrency market’s volatility? Let us know your thoughts in the comments down below. 

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[Disclaimer: This article is not financial advice. StormGain is an exchange partner of BeInCrypto.]