If you trade altcoins, you might be losing money on every transaction…and not even know it. This one simple tip can usually get you a few more coins on every purchase.

That can add up. 

Watch this video to learn the tip.

The Biggest Mistake New Altcoin Traders Make

New traders usually know about Bitcoin, so that's the coin that they purchase.

The trouble with buying Bitcoin is that when there are a lot of transactions on the network, the cost of moving Bitcoin between wallets can be huge. Transaction times can also be slow.

For example, let's say that you purchase your cryptocurrency through Coinbase. But Coinbase doesn't have the Aeon (AEON) cryptocurrency available for purchase.

That's not a recommendation for Aeon, I'm just using it as an example of a smaller altcoin. 

Most new traders would buy Bitcoin on Coinbase, then transfer the Bitcoin to an exchange that has Aeon available. Once the Bitcoin is transferred, they would simply exchange the Bitcoin for Aeon.

But if you did that, you could lose out on quite a bit of money. If Aeon ever goes up in price, you would not make as much money because you didn't get as many coins as you could have on your initial purchase.

Here's why…

Transferring Bitcoin between wallets or exchanges costs more when there are a lot of people using the Bitcoin network.

This is one of the big downsides of Bitcoin, it does not scale. 

As this is being written, Bitcoin has an average transaction fee of $14.35. It's been much higher in the past, so this is actually a mid-range transaction fee. Here's a historical chart from BitInfoCharts.

The price of Aeon is currently $1,98. So if you didn't have to pay the high Bitcoin transaction fee, you would have an extra 7.24 Aeon coins on every purchase.

That can add up, especially if Aeon becomes very valuable later on. What if Aeon goes to $50? If that happened, you would have lost out on an extra $362 in profit, per transaction you did with Bitcoin.

Bitcoin average transaction fees have been as high as $62.77! 

So what's the answer?

It's simple, just use Litecoin to transfer between wallets and exchanges.

In comparison, the average transaction fee is currently only $0.071 right now. 

Seven cents!

Litecoin is available on all exchanges and transactions are fast. So it's actually easier to move LTC, compared to BTC.

How to Buy Altcoins with Litecoin

The process to buy altcoins with Litecoin is very similar to using Bitcoin, but with one extra step.

First buy Litecoin on an exchange like Coinbase.

Then send it to your wallet on the exchange that has the altcoin you want to buy. Once it gets there, exchange it for BTC, if there's no LTC market for the altcoin you want.

Finally use the Bitcoin to purchase the altcoins.

What About Trading Fees?

Sure, there will be one extra step to exchange Litecoin for Bitcoin, then exchange that for the altcoin you want.

But the trading fees to convert Litecoin to Bitcoin will usually be minimal. If you're on an exchange that charges high trading fees, dump them and look for a better exchange.

Conclusion

Litecoin is a mature, fast and low cost alternative to Bitcoin, when moving cryptocurrency between wallets.

When you use LTC to move your money, it saves you a lot in transaction fees and will usually transfer faster. Use the money you save to buy more altcoins

The post Altcoin Trading Tip: Get More Coins Per Purchase appeared first on Trading Heroes.

As I write this, Bitcoin has just hit $18,000 for the first time. Crazy right?! This is when I believe that the word “bubble” starts to become very relevant.

The office manager at your job, your neighbor and your hair stylist are now going to start talking about Bitcoin, if they aren't already.

….wait for it….wait for it…

We saw this in the dot com boom, the real estate boom and every other bubble in human history. If you don’t believe me, read the book Extraordinary Popular Delusions and the Madness of Crowds, which can be found here.

But isn’t this new blockchain technology here to stay?

Certainly.

However, just like the tech companies of the dot com bomb, a large majority of cryptocurrencies out there will not survive. A lot of them have no product and are just jumping on the bandwagon to make a quick buck on an ICO.

So how can you protect yourself and still try to maximize your profits?

I believe that one of the keys is to wait for the Baseball Cap chart pattern.

In this post, I’ll show you why it works, when it will probably stop working and I’ll share with you my own personal experience that has led me to use this pattern.

The Baseball Cap Chart Pattern Explained

It’s called a Baseball Cap because it looks sort of like the top of a hat and a bill.

Like this example in Litecoin.

The pattern happens because of the nature of the cryptocurrency market right now. Here's a video that I did that explains the technical chart pattern.

Cryptocurrencies are not something that the general public understands very well yet.

Almost everyone understands how real estate and stocks work. But how can you create a new currency out of thin air?

…is a common question.

So the prices of cryptocurrencies are much more susceptible to pump and dumps.

When an uneducated public learns about a new feature that was added to a cryptocurrency, a rush of new buyers can come in and inflate the price very quickly. Once they find out that the currency wasn't as good as they thought, or they get bored, they will dump it and move on to the next “hot tip.”

A rapid rise can also be caused by a newly educated public that just figured out legitimate reasons why they should be buying a certain cryptocurrency.

But how can you tell the difference between the two?

Research and the Baseball Cap pattern are your best weapons in this emerging market. They won’t always be right, but they will greatly increase your odds of picking the currencies that will keep appreciating.

After all, that’s why they call it trading…and not easymoneymaking.

Before you go buying any ol’ crypto with this pattern, you first have to understand that this will only work with cryptocurrencies that actually have a solid use case and real world value.

So you need to do your research before you even look at a chart. Understand why the cryptocurrency is useful and if it solves a big problem.

It’s like buying a tech stock.

This research will also help you hang on to a currency if the price blasts off. It can be easy to take your profit too early if you don’t have a good reason to keep holding the currency.

Once you have a few cryptocurrencies that you have researched and believe in, then it’s time to look at the charts.

Yes, it can be tempting to buy when a chart is going parabolic, like this…

After you have done all that research, you will probably think that the currency is going to the moon and it doesn’t matter where you buy.

Hold on there tiger.

You need to optimize your entry by waiting for the Baseball Cap.

What goes straight up, must come down.

So wait for the market to pull back and stabilize at a defined level. This is where the market is catching its breath and could go on another run.

If price continues to drop and does not stabilize, then you know that there is nobody there to “catch” the price and it is not time to get into the market yet.

How long should the market stabilize? Based on past results, two months or more is ideal, but the minimum seems to be one month.

Here's an example of a long base that happened in EOS.

Understanding this one simple pattern can save you a ton of money and protect you from a world of hurt.

Of course, there are no guarantees in trading and price could continue to drop from a base. But that sure beats buying at the top and getting rocked.

FOMO is a bitch, avoid it at all costs.

Baseball Cap Examples

Now let's take a look at two charts. One where the pattern worked and one where it didn't.

GameCredits

This is a cryptocurrency that I believe won't make it. They have created a currency that allows video game players to do things like earn money and buy upgrades inside games.

Basically a universal game credits system. Players could earn money in one game and use them to buy upgrades in another game.

There is probably a need for it. But my question is: Why not just use another cryptocurrency like Bitcoin or Ripple? That would be a much better incentive for game players because people could spend that money in the real world.

When your local coffee shop starts accepting Ripple, of course.

Thus, while many cryptocurrencies have been taking off, GameCredits has languished. It is sill forming the Baseball Cap chart pattern, but the research side of the equation does not warrant a buy, in my opinion.

That could change of course. But this is an example where looking at the pattern alone won't make you any money. The fundamental analysis has to be solid too.

Ripple

I actually started buying Ripple at a bad time. That was before I figured out this chart pattern. I was buying it on the first big push, at about $0.35.

After the first big drop, I got smart and looked for a basing level. That's when I was able to get some at about $0.24, a much better price.

We had to wait awhile for this pattern to play out, but it eventually did.

Ripple will probably be one of the cryptocurrencies that succeeds, in my opinion. Bloomberg just added it their terminal, along with Litecoin and Ethereum.

When the Baseball Cap Cryptocurrency Pattern Will Stop Working

I believe that there will be a point when this chart pattern will stop working.

Once cryptocurrencies become mainstream and more heavily traded like stocks, futures or Forex, then you will probably have to look to the more traditional technical chart patterns to make trading decisions, like support/resistance, head and shoulders, the pin bar and the outside bar.

In addition, if the cryptocurrency market ever goes through an extended bear market, then all bets are off and the Baseball Cap won't work. This pattern relies on the strong bullish bias of the cryptocurrency market right now. 

You have to remember that there is a huge pool of potential cryptocurrency buyers who don't know anything about the market right now. Once they learn about cryptocurrencies and there are no more new buyers left, then we will stop having these huge price run ups.

Excessive government regulation could also slow down the growth of cryptocurrencies and kill the bullish bias.

Until then, keep an eye out for this chart pattern because it can be very profitable. This video will show you some examples.

Again, remember that past performance does not guarantee future results and you need to do your fundamental research on a cryptocurrency before you even look at a chart.

Conclusion

I recently met a guy who has literally multiplied his retirement account by purchasing Ether. His strategy was to buy when he started to see price come down, because he believed that it will eventually go back up.

That’s really dangerous.

It works well in very bullish markets, but you will get slaughtered in even a moderate bear market.

This guy has since pulled out his original investment capital and now only has his gains in the market. He even admits that he was lucky.

The moral of the story is to keep your risk low and don’t go “all-in.” Watch for the Baseball Cap chart pattern because it can help you find a good place to buy.

Luck is not a strategy.

Do your homework, be patient and stay safe in this wild and crazy market. Things will only get more volatile from here.

The post How to Maximize Cryptocurrency Returns with the Baseball Cap Chart Pattern appeared first on Trading Heroes.

In order to lock in gains that you have made when actively trading cryptocurrencies, you basically have two options:

1. Transfer the money to your traditional bank account
2. Move your money to another cryptocurrency, like Bitcoin

Well, there are some major issues with each option.

So in this post, I'll show you why each of these options is a bad idea and how you can plan ahead of time, to be sure that you don't miss another cryptocurrency trading opportunity. 

Transfer the Money to Your Traditional Bank

Let's say that you just bought some newly-minted Bitcoin Cash and have some sweet gains, after price went parabolic.

You are worried about the price dropping as fast as it has risen…which is a very real possibility. So you want to cash out of your position, to lock in your gains.

However, you also see that ETHUSD is pulling back to support near $280. So you want to be able to take advantage of that opportunity to get in, when it hits that key level.

If you cash out of your BCHUSD position and transfer the money to your bank account, then it could be several days before you can execute another trade in ETHUSD. For example, if you buy your Bitcoin through Coinbase and move it to different exchanges to trade for other cryptocurrencies, then you would have to do the following:

BCH > BTC > Coinbase > Bank Account

On Coinbase, this could take as long as 4 days. Here's a screenshot from Coinbase Support.

Then getting your cash back into the exchange, when you want to buy BCHUSD again, will take another 2-4 days.

Well, as we have seen with many cryptocurrencies, eight days can mean making 100%…or totally missing the boat. These currencies move fast and if you miss out, they may be gone forever.

In addition, getting your bank account linked to various cryptocurrency exchanges can be a major headache.

…and that goes double if you live in the US.

The Bitfinex exchange recently announced that they are not allowing US clients to link their bank accounts to do direct US Dollar transfers to and from the exchange. The only way to trade on that exchange is to transfer in cryptocurrencies.

Here's part of the official announcement:

So transferring money to your bank account is not a viable option for traders looking to take full advantage of trading opportunities in the cryptocurrency markets.

What else can you do?

How about moving out of another cryptocurrency?

Let's take a look at that option…

Move Your Money to Another Cryptocurrency

Once you have some sweet gains and you want to take advantage of another opportunity, a second option is to transfer your holdings into another cryptocurrency. For example, you could transfer your money into Bitcoin, since that is usually the strongest currency, with the most liquidity.

However, now you are exposing yourself to a different type of risk. If you look at Bitcoin's history, it has had tremendous volatility and there have been several times when price has dropped significantly.

For example, here's a chart from 2016, where price dropped by almost 50%, before recovering.

Therefore, moving your gains to another cryptocurrency can result in you losing all of your gains…and then some. So what you can you do?

Here's how to can keep those gains, but still be ready to pull the trigger, when a good trade arises.

Transfer Into USD (or your local currency)

Some exchanges allow you to trade your cryptocurrency for your local currency, without doing a withdrawal to your bank, so that is the ideal situation. Bitfinex is an example of an exchange that does this.

You can trade several currencies on the platform, from your USD account on the exchange.

But not all exchanges have this capability. Here's what you can do if that is the case…

The Next Best Option for Active Cryptocurrency Traders

There is a cryptocurrency called Tether USD and it is pegged to the US Dollar. At first, traders might not give this currency a second look because there is no opportunity to make money trading it.

Here's a chart where you can see the Tether price versus the US Dollar. The green line shows the price of Tether and you can see that it moves in a very tight band between about $1.05 and $0.89.

Because of this price stability, it is a great place to keep your “cash” while you wait for the next trading opportunity.

So if you are going to actively trade cryptocurrencies, keep this in mind. Find exchanges where you can trade Tether USD (USDT) with your cryptocurrencies of choice.

If you don't see the currency you want to trade, you can always do:

USDT > BTC > the crypto currency you want

But it's much better if you can trade for USDT directly because you will save on transaction costs. Not all exchanges offer USDT, so be sure to check before you start trading. 

Here's a list of a few brokers that offer USDT. Just remember to move the USDT to a wallet that you control.

• Binance
• Poloniex
• CEX

Conclusion

So that is a great way to lock in your cryptocurrency trading gains before he market drops.

Cryptocurrency is a very new market and there is going to be a ton of volatility in the coming years.

The post How to Lock In Cryptocurrency Gains Without a Bank Transfer appeared first on Trading Heroes.

Ether is one of the hottest cryptocurrencies at the moment…and for good reason.

Aside from Bitcoin, Ethereum has the most promise to deliver short-term, real-world benefits.

But if you are still trying to figure out how to trade Ethereum, then this post will show you exactly what you need to know to get started.

We will also give you an understanding of how the Ethereum Network works, the risks involved, different trading strategies and how to place your first trade.

To learn more about cryptocurrencies in general, read this blog post before you continue.

Let's do this…

What is Ether?

I think that the Ethereum website says is best…

Ether is the crypto-fuel for the Ethereum Network.

In other words, Ether is the “money” that used for payment on the Ethereum Network. So you're not actually learning how to trade Ethereum, you are learning to trade Ether. What does this money buy, you ask?

It can pay for software services on the network, in addition to being a real-world currency.

Therefore, in order to understand the value of Ether and what can potentially make the price go up and down, we need to have a basic understanding of how it works.

What is Ethereum?

This is where things get exciting…

Ethereum is basically a software platform, like Microsoft Windows or macOS. But online. The goal of Ethereum is to allow people to build decentralized applications on top of the Ethereum platform.

So it would be like when Dropbox builds an app on top of macOS. Dropbox hosts your files, in exchange for a monthly hosting fee. On the Ethereum network, the fee for a similar storage service is paid in Ether, instead of US Dollars or British Pounds.

The difference between Ethereum and current web application solutions is that these apps (and the currency) are open to everyone, free from censorship and much more secure than existing solutions. This is because Ethereum apps are decentralized.

What makes these apps decentralized? 

The network is built on a database that is hosted on many computers around the world. Each computer has a copy of the database and multiple computers have to agree on a change to the database, before it is implemented.

Although everyone stores this data, you need to have a special password (or a private key) to unlock your data. The private key is as close to unhackable as you can get in the online world, so the data is probably even more secure than if you stored it on a cloud-based service.

This database is called a blockchain.

What is a Blockchain?

A blockchain is a different type of database.

It's actually more like an accounting ledger…that has levels of trust. Once a transaction is confirmed by the network, it gets added to this ledger. Then newer entries get added on top of that entry.

The best analogy that I've heard for a blockchain is a fly caught in amber.

When a fly gets caught in the amber, it is like an Ether transaction that gets recorded on the blockchain. As time passes, more layers of amber get added and it is impossible to change the position of the fly in the amber, or insert a different insect into that part of the amber. The deeper the fly is in that amber, the more confidence you have that it is a fly from a long time ago.

In the cryptocurrency world, that ledger entry on the blockchain can be seen for as long as the blockchain remains in existence. As time passes, more “layers” or transactions also get added to the blockchain and those older transactions become even more trusted.

So unlike traditional databases that can be erased or changed, older blockchain entries are a permanent record of transactions or events.

This is why people are investing in this technology.

Total Float and Coin Inflation

Trading is all about understanding supply and demand. Either on a chart or by analyzing fundamental reasons. So no trading guide would be complete without a look at Ether supply.

One key difference between Ether and Bitcoin is: Unlimited supply. 

There are never going to be more than 21 million Bitcoins. That is how the software was setup and that is what makes Bitcoins potentially so valuable.

Simple supply and demand.

On the other hand, the same amount of new Ethereum will continue to be produced every year..forever.

At first glance, that may seem like a bad thing. But if we think about it for a minute, that is actually a good thing.

It all comes back to the purpose of Ethereum. That's why it's important to understand at least a little bit about how each cryptocurrency works. 

The purpose of Ethereum is to build a network of decentralized computer programs. However, there will be a certain amount of cryptocurrency that will be lost every year.

Cryptocurrency can be lost when computers crash, people lose their paper wallets or forget their account passwords.

That is another thing that will make Bitcoin even more valuable in the future. This is great for a cryptocurrency like Bitcoin, whose sole function is to serve as a way to store monetary value.

Not so great for running applications on networks like Ethereum however. If the money on the network gets more and more expensive, then it will become harder to host and use the applications on the network and eventually the network will fail.

That is why the same amount of Ether is produced every year. Eventually, the amount produced every year will become a smaller percentage of the total outstanding Ether. At some point, an equilibrium should be reached between the amount of Ether being lost and the amount being produced.

Therefore, from a fundamental analysis standpoint, you need to understand what types of applications are being built on the network and how much demand there is for them. The quality of the applications will be one factor that determines the value of the Ether.

Tokens Built on Top of Ethereum and Crapcoins

Now here's where things get a little weird. The applications that can be built on top of Ethereum can also create their own currencies. These are called tokens and will become an increasingly big part of the cryptocurrency trading landscape.

This is a current screenshot from CoinMarketCap.com. four out of five of the top five currencies, by market capitalization, are built on the Ethereum platform. The other big platform is Omni, which is built on top of the Bitcoin blockchain.

The great thing about tokens is that anyone can create one.

But that is also a bad thing.

Some startups will bolt-on a token to their existing app and use that as a way to raise cash, instead of going to investors. That's great if the token serves a genuine purpose.

However, in the coming months, you are going to see a ton of crapcoin launches (initial coin offering or ICO) that have nothing to do with value and everything to do with making a quick buck. One example, in my opinion, is the upcoming Kik ICO.

I don't see any reason for a messaging app to have its own currency. Where are you going to use that currency outside of the app? Nowhere, it's a dumb idea. But they will raise a ton of money and investors will probably lose their investment.

You see these ICO ads more frequently nowadays.

Be very wary. A lot of ICOs are just trying to take advantage of the hype and are just launching coins to make money. If not controlled, these crapcoins could damage the reputation of Ethereum and possibly affect the price.

Of course, some of these ICOs will succeed. But I think this will be a very, very small percentage.

The Asian Connection

Ethereum a big deal almost everywhere, but it's absolutely huge in Asia, especially China. So in order to understand how valuable Ether will become in the future, we need to keep an eye on the applications that are coming out of China.

Organizations like the ChinaLedger Alliance are pushing Ethereum technology forward, so that is a positive sign for Ether traders and investors.

How to Trade Ethereum / Ether

Alright, now that you have some background on how Ether works, let's get to the trading bit.

Buying Ether has become fairly easy. Here is how to do it.

Step 1: Sign Up for an Account on an Exchange

There are several good exchanges out there, so do your research. The exchange you use will depend on where you live, governing laws and personal preference.

Luckily, many exchanges allow you to purchase Ether directly. Other smaller cryptocurrencies require you buy Bitcoin first, then exchange it for your target cryptocurrency.

Here is a list of the more reputable exchanges out there. If you want to get $10 in Bitcoin (which can be traded for Ether), just by signing up for Coinbase, then click this link. I don't know how long that offer will last, so if that link doesn't work, you missed out.

• Poloniex
• Coinbase
• CEX

You may have to provide some proof of identification when you sign up on some of these exchanges. This is to prevent money laundering, so just to it.

There are also exchanges that don't require you to sign up for an account.

• Changelly
• ShapeShift

These are more for if you have other currencies that you want to convert to Ether. In that case, these exchanges make it super easy to do the conversion.

No password to remember and you don't have to provide any personal information. It feels pretty sketchy when you first do it, but I have never had a problem with it.

Step 2: Fund Your Account by Buying Ether with Fiat Currency

Next, fund your account with a credit card or bank transfer. Usually, the credit card option is faster so I would recommend using that.

Getting money into your account with a bank transfer can take as long as a week. The upside with a bank transfer is that your deposit limits will usually be higher.

Ether Trading Strategies

There are two basic trading strategies, when it comes to trading Ether.

• Buy and hold
• Active trading

Here's how to do both…

Buy and Hold

Since there is a lot of upside potential in cryptocurrencies, there are many traders that are taking a buy and hold approach. So if that is your strategy, you would just buy some Ether and store it in a safe place.

This is called putting it into cold storage.

What is a safe place?

Well, there are two options, paper wallets or hardware wallets. I would not recommend storing Ether in mobile apps, computer wallets, exchanges or online wallets for any length of time. Those options are great for short-term transactions, but are not safe for long-term storage.

Ether Paper Wallets

Benefits:

• Cannot be hacked online
• Can be stored in a safe off-site location like a safety deposit box
• Don't have to worry about computer failures

Downsides:

• Can be accidently thrown out or destroyed
• Once you lose the paper wallet, your money cannot be retrieved
• Someone can possibly steal your password while the wallet is being created

To create your first paper wallet, follow these steps: 

1. Buy a “dumb” laser printer like this. You want a laser printer that has a very small memory capacity and USB connectivity. Hackers can potentially steal your wallet password from the memory of a printer or intercept it from a WiFi transmission. So buying the simplest printer you can find is the best security precaution. You also don't want to buy an inkjet printer because the ink will smear, if it gets wet.
2. Speaking of water, buy waterproof paper like this. Make sure that it is specifically designed for laser printers. Losing hundreds, or even thousands of dollars in Ether, just because your paper wallet got wet, is just plain stupid. That type of waterproof paper is also tear-proof. So it can survive almost anything, short of a fire.
3.  Use a wallet generator to create your first wallet. This is one, but there are others out there. You may need to be online to start the process. But once you have the first wallet address, disconnect from the internet, then generate a new address before you print out the wallet. This is a safety precaution because there is always the potential that the website might transmit the wallet information back to a hacker.
4. Then print out the wallet, making sure that you generate a new wallet every time. It takes a couple of tries to figure out how to get the front and back to line up. But once you get it, you can start churning out wallets. You can also print out your wallets to PDF and store them on an encrypted flash drive. But remember that the more backups you have, the more ways someone can steal your Ether.
5. Finally, fold up the paper wallet so the private key is hidden. This is the password that will allow you to spend the money in the wallet, so protect this at all costs.
6. Optional: If you want to get fancy, you can order tamper evident seals so you know if someone has been peeking at your private key.

When you are done, it should look the picture at the beginning of this section.

Once your currency is on paper, store it away in a safe place. When you are ready to cash in the currency, use an online wallet or mobile wallet app to get the coins from the paper to your exchange of choice, or your bank. Some exchanges may give you the ability to go straight from the paper wallet to the exchange's online wallet.

To get the detailed Ether paper wallet guide, read this.

Hardware Wallets

Another good option for buy and hold investors is the hardware wallet. Trezor is the most popular one right now.

The website says that it is a Bitcoin wallet, but it stores Ether too.

Benefits:

• Compact, all your Ether in one place
• Cannot be hacked online
• Hard to hack offline
• Easy to use
• Backup your wallets and restore them later, even if your device is lost or stolen
• Water resistant and durable
• Can store multiple cryptocurrencies at the same time

Downsides: 

• Susceptible to the vulnerabilities of any electronic device
• Since all of your Ether is in one place, if someone has your PIN, it is easy to steal
• If someone gets your recovery card, they can reset your PIN

The ideal buy and hold solution would probably be a combination of paper wallets and a hardware wallet. But it's just a personal preference.

Learn more about the Trezor here.

Speculation / Active Trading

Pending Orders

Active trading is a little tough because not all exchanges give you the ability to set pending orders and stop losses, like with Forex brokers. But exchanges like Poloniex do allow you to set stop-limit orders.

However, if your exchange does not allow this, you have to setup alerts, so you are aware of market movements and can place trades manually. Exchanges like Coinbase don't allow pending orders.

To setup alerts, you can use TradingView. Alerts are only available in the Pro plan, but if you are an active trader, it is well worth it.

Start by searching for the ETHUSD currency pair in the search box. Add it to your watchlist and click on it. The chart will come up.

Then right click on the chart where you want to add an alert. In this example, let's say that we want to add an alert near the last high, around $400, because we want to sell our long position.

This is what it would look like. You could also add another alert to let you know when prices are low and it might be a good time to buy.

Locking in Profits

Another potential risk with Ether trading is that not all exchanges allow you to store money in your local fiat currency. Or you may need to jump through a few hoops to be able to do that. So if you sold some Ether that you own, you may have transfer the money back into your bank account in order to lock in your profits.

Then you would have to send the money back to the exchange to buy again.

The problem is that each time you transfer money to and from your bank, that can take up to a week!

Terrible for active traders.

So what can you do about this? Well, that's where our friend Tether comes into play.

As I wrote about here, Tether is not a cryptocurrency that you invest in or trade to make money.

Why?

Because it is pegged to the US Dollar. So one Tether will always be worth about $1 USD.

…a little hard to make money that way.

But Tether is fantastic for locking in your gains on an Ether trade. Simply trade your ETH for USDT and you have locked in your profits (or stopped the bleeding).

Then when you are ready to buy Ether again, simply trade it back on the exchange. No extended waiting times.

Now let's dig a little deeper into Ether trading and look at technical and fundamental analysis.

Technical Analysis of Ether

Ether trading is still in its infancy, so we don't have many reference points to do proper technical analysis. As I wrote about here, we have only seen the first big wave of cryptocurrency speculation, so I believe that there is still a lot of potential for the currency to go up.

It's just a matter of when.

So before you break out your Gann Fan, Fibonacci retracement tool, or star charts…remember that we are trading a very immature market. I believe that there is a lot of potential in this technology, but we also need to limit our risk. It could blow up tomorrow, or best case scenario, there will be a lot of volatility in the currency price.

Therefore, simple support and resistance should be good enough to trade Ether. Buy low, sell high. 

When we look at the chart, $140 seems like the best support level, right now. As you can see, price has already bounced off this level.

Could the price go lower than $140? Of course.

But based on our very, very limited data set, that seems like the best technical level to watch right now. The first target would of course be a move up to the previous high of around $400.

Also notice the flash crash that happened in June. You should setup an alert, in case that ever happens again.

Fundamental Analysis of Ether

The success of Ethereum will depend on the quality of the apps that are launched on the platform, the decisions that the development team makes and the public perception of the tokens that are launched on the platform.

So keep an eye on all of these things. Some useful resources to track are:

• Ethereum Twitter account
• Ethereum Blog
• /ethereum Subreddit

Conclusion

So that is everything you need to know about how to trade Ethereum…I mean Ether.

Again, I can't stress this enough…there will be a ton of volatility in Ether, so be sure to pick a strategy that matches your personality and get into trades for as cheap as possible. Cryptocurrency trading is NOT for the faint of heart.

Ether has retraced over 70% from its highs, so keep that in mind before you decide to get involved. 

If I missed something or you have a question, let me know in the comments below…

Whew, this guide took awhile to write. So if you found it helpful, feel free to send me a tip in Ether, to this address:

0xeb3adffa7a0ad3ba1f612ea29fd9c12dd8623c8b

Thanks and happy trading!

Disclaimer: Some links on this page are affiliate links. We do make a commission if you purchase through these links, but it does not cost you anything extra and we only promote products and services that we wholeheartedly believe in. TradingHeroes.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.

The post How to Trade Ethereum: The Beginner’s Guide to Ether Trading appeared first on Trading Heroes.

As traders, our job is to take advantage of opportunities in the markets. Sometimes, these opportunities come in the form of entirely new markets.

I've been interested in cryptocurrencies for a few years now, but I've been very reluctant to trade them, much less write about trading them. I felt that there was just too much risk.

Especially for the average trader.

…and quite frankly, I didn't understand them well enough myself.

The first time that I saw them as viable for trading was when I went to this conference. I saw Chris Dunn talk about trading Bitcoin, but I was still skeptical that it would stay around for the long-term.

…until recently.

I credit my friend for talking to me about it on Twitter and opening my eyes to the potential in trading this emerging market. I'm not sure if he wants to be named, but you know who you are. I sincerely appreciate the education and helping me see the light!

This is a perfect example of the benefit of staying in touch with other traders on platforms like Twitter.

Anyway, as I have done more research and have actually started trading them, I have found that there are tremendous opportunties. With some coins, it's potentially like being able to get pre-IPO shares of Microsoft.

But there are also big risks.

Remember, the dot-com bust?

There will probably be losses of that magnitude too. That's just how these new technologies work.

So in this post, I want to share with you my knowledge of the cryptocurrency markets and give you a total beginner's guide to trading them. Be sure to bookmark this page because I'll continually update the information, as things change.

For you crypto veterans, this will be very simplified, but my goal is to make this information as easy to understand as possible so new traders can make an informed decision about the opportunities. Once people get the general concepts, then they can geek out about the details.

This is the future of FX trading. So in addition to USD/CHF, CAD/JPY and EUR/GBP, we also need to be aware of XLM/USD, ETH/BTC and XRP/LTC…

What is a Cryptocurrency?

Let's start at the beginning.

You may have heard many things about what a cryptocurrency is, but you may still be searching for an understandable definition. I hear ya, I was in the same boat for a long time.

Instead of getting too technical, here's the easiest way to think about cryptocurrencies:

A cryptocurrency is basically money on software platforms.

It's important to keep in mind that the teams/companies that are behind these cryptocurrencies are not only creating a new form of currency, but a new software platform. To demonstrate how this works, let's take a look at other software platforms that you are probably already familiar with.

Examining how these platforms work will help you understand cryptocurrencies. 

Here are a few software platforms that many people use:

• Windows: A software platform for personal computers
• Dropbox: A software platform for storing and sharing documents
• Fedwire: A software platform that sends money between financial institutions

On each of these platforms, a type of money is used, in exchange for using the platform:

• Windows: You pay US Dollars (or your local fiat currency) to buy a license for Windows to use on your computer. If you buy a computer that already has Windows on it, the license fee is included in the purchase price.
• Dropbox: You pay US Dollars (or your local fiat currency) to buy a subscription to use the software for a month or a year, depending on which plan you buy.
• Fedwire: You pay a transaction fee to use the system and you send fiat currency itself.

Each of these systems also have a database connected to it:

• Windows: Database is stored on your local computer
• Dropbox: Database is stored on the Dropbox servers
• Fedwire: Database is stored on the Fedwire servers

Cryptocurrencies essentially replace the US Dollars (or your local fiat currency) that you use to purchase these software services. The “database” that cryptocurrencies give you access to is based on blockchain technology. 

More on blockchain technology in the next section of this guide.

But wait, what are the software services that you are getting? Isn't a cryptocurrency like Bitcoin just a currency, like US Dollars?

Not quite.

The goal of cryptocurrencies is usually to improve on some type of existing software system or network. When you send money via PayPal, Fedwire or Western Union, you are basically sending fiat money electronically, similar to Bitcoin.

However, that's where the similarity ends.

Platforms like PayPal have severe limitations on what you can and cannot do. For example, you cannot send/receive money from certain countries (like Nigeria).

Cryptocurrencies like Bitcoin want to make financial transactions more open and accessible to everyone around the world.

Other cryptocurrencies solve other problems, which we will explore later in this guide.

Is Cryptocurrency Real Money?

Yes.

Since this is a new concept to most people, it will take some time to become widely accepted. This is where Bitcoin has been instrumental in paving the way for this new technology.

Websites like Newegg take Bitcoin, along with the other traditional payment methods. Here's what the checkout screen looked like after I added a drone to my cart.

Risks of Cryptocurrency Trading/Investing

Now that you understand the basics, what are the risks of trading these cryptocurrencies? There are quite a few, but here are the top three.

1. Some Technologies Will Fail

Remember that cryptocurrencies are basically software, created by people or companies. So just like Webvan or Pets.com in the dot-com bust, some of these technologies will fail.

…and they will fail spectacularly.

Right now, there is a lot of buzz around certain cryptocurrencies increasing several thousand percent, in a few months. This has a lot to do with ignorance and hype.

Just like when people found out that this new thing called the “internet” would change the world of business.

Did it change the world?

Of course.

But was there a lot of dumb money that overhyped the first wave of internet companies?

Totally.

So just remember, trading cryptocurrencies is kind of like trading a software stock. Some of the software will change the world.

Others will explode in a giant ball of fire.

There are also a lot of scam coins out there, so be careful. Like penny stocks that are just a company on paper, almost anyone can create a new cryptocurrency.

Learn how to separate the scams from the deeply underpriced currencies. Then use proper risk management and play the odds.

2. It Requires Technical Savvy

Let's face it, cryptocurrencies were created by super nerds. Like with Linux, there is still quite a bit of technical know-how that is required.

You don't need to know how to code, but if you are “not good with computers” you may want to stay away from cryptocurrency trading, at least until they start building more user friendly interfaces.

Don't get me wrong, I'm not calling anyone dumb. I'm just saying that if you don't possess a certain skillset, then you shouldn't get involved in that area. This could cause you to lose a lot of money, very quickly.

For example, I don't know how to sew, so I don't make my own clothes. If I did try to make my own clothes, everyone who meets me would think I'm a weirdo for wearing fucked up pants.

You get the picture.

So if you aren't so tech savvy, but still want to get involved, find someone you trust to trade for you.

3. There's a Lot of Broker and Technology Risk

Since this is emerging technology, there are still a lot of unknowns with trading at scale and how brokers and the software will react to certain surprise events. If you think that Forex brokers are risky, then you should consider cryptocurrency brokers at least twice as risky.

Not just because they could be shady, but there a still so many unknowns with the technology.

However, I would still trust the bigger cryptocurrency exchanges over a lot of offshore binary options brokers

So the lesson is: Don't keep too much of your coinage at the exchanges.

Move them off to your own wallet as soon as possible.

I'll get to wallets later in this guide.

What is a Blockchain?

Simply put, a blockchain is a database.

However, there is one huge difference between how you probably currently think of a database and how a blockchain database works.

In most cases, a traditional database sits on one computer or in one location.

Even if a company has redundant servers around the world, the data might only be backed up between 3 to 5 locations. On top of that, these companies collectively spend billions of dollars a year on cyber security, to protect this data.

With a blockchain database, the data can be backed up on potentially thousands of computers all over the world, for a much, much lower cost. The information in these databases is heavily encrypted and sometimes files are broken up into pieces, so even if one piece is exposed, it will not expose the entire file.

If the information on one server does become compromised by hackers, the other copies of the databases have to “agree” that the compromised data was a legitimate change to the data. If the other copies do not agree, then the change is rejected and it is changed back to match the others.

Obviously, this is an oversimplified explanation of the technology, but I hope that you are starting to see the benefits.

Instead of just one point of failure, like on a single server, you now have multiple copies of the same database all over the world that is almost impossible to crack and will “fix” itself in the case of a hack. This can also save a ton of money on cyber security software and services.

Example

Let's say that a hacker gets into your bank's computer tomorrow and transfers all of your money to his account, then deletes any trace of the transaction. With today's technology, you would probably be screwed.

But with a blockchain currency like Bitcoin, if one server was hacked and a fake transaction was inserted into the database, then it wouldn't match the transaction record on the hundreds other copies of the database. This transaction would be seen as a fake and rejected.

Your money would be safe. 

This is one of the many reasons why blockchain technology is so exciting.

The Characteristics of a Currency to be Aware of

Although cryptocurrencies are all based on blockchain technology, they are not all created equal. Here are some differences that you need to understand to make informed trading decisions:

• Transaction processing speed
• Total supply currently available
• Will there ultimately be a limit on the total number of currency available?
• Will there be an unlimited supply of currency?
• Is there a real-world need for this software/currency?
• Real world adoption of the technology
• Any big investors in the project?
• Does the use of the software make sense?
• Do the founders have a reputable background?

These are just a few of the characteristics that you should look at. But once you start digging into these details, you will begin to see which projects could work for their intended purpose and which ones are probably scams.

This understanding will also allow you to assess the long-term viability of these different currencies and which ones will be more desirable in the future.

Example

Tether is a cryptocurrency that wants to be the proxy for fiat currencies. So there is a Tether USD version, EUR version, etc. But each one is pegged to the value of the currency, so you can never make any money trading it.

It is purely to provide stable and liquid transactions. So one USD Tether will always be worth about $1.

If you didn't know this and bought a bunch of it, thinking that it's cheap compared to Bitcoin, you will tie up your money in an asset that will never appreciate. Sure, you won't lose money either, but you would have lost out on other opportunties.

So understand the nuances of each crypto, it's very important.

What are the Different Cryptocurrency Use Cases?

Almost every currency software has a different intended purpose and individual implementation, with inherent strengths and weaknesses.

It's like Windows vs Mac.

…or iOS vs Android.

Here are a few examples of the different types of cryptocurrencies and what they are designed to do. This is not an exhaustive list, just a sample.

Note: I don't necessarily support these currencies, I'm just using them as examples of the different use case niches within cryptocurrencies. 

Worldwide Financial Transactions

• Bitcoin
• Litecoin
• Tether
• Ripple
• Stellar Lumens

Application Platforms

• Ethereum
• Storj
• Siacoin
• MaidSafe

Private Financial Transactions

• Monero
• Dash
• Zcash

Specialty Currencies

• GameCredits
• ReddCoin

Take a look at these different use cases and figure out which ones make the most sense to you. Then understand how each software implementation works and think about what will probably do well in the future.

To see our extensive list of cryptocurrency sectors, read this post.

How do You Buy Cryptocurrencies?

First have to go to an exchange or service that will allow you to purchase cryptocurrencies. Some of the bigger exchanges are:

• Coinbase
• Kraken
• Bitfinex
• Binance
• LocalBitcoins

Many of them will allow you to use a credit card or link a bank account. As much as possible, do not store your cryptocurrency at the exchanges because they can be hacked. See the cold storage section in this post for details on how to store you coins safely.

It's easy to get Bitcoin, Ether and Litecoin. But if you want the smaller altcoins, you will have to do an exchange.

How to Buy Altcoins

First buy Bitcoin or Ethereum because those are the coins that are most easily transacted against the smaller altcoins. When in doubt, buy Bitcoin. If you want $10 of Bitcoin for free, use this link (while supples last).

Then find out where the altcoin that you want is traded. Go to Coinmarketcap and click on the coin you want to buy.

Next, click on the Markets tab for that coin. For example, here's where you can get NEM. The Source column will show you the exchanges where this coin is being traded.

Notice how most of them are traded against Bitcoin or Ether. 

Open an account at the most reputable exchange on the list. Once you are in your account, find the “deposit” wallet address for the altcoin you want to buy.

Here's an example from Poloniex. Copy this wallet address.

Next, login to the account where you bought your Bitcoin or Ether. If you bought it from Coinbase, then you can go to: Accounts > Send and paste the deposit address into that field.

Enter the amount you want to send, then click the send button.

It may take some time for the transaction to go through, so be patient.

When you see the balance in your destination exchange account, you are now ready to buy altcoins. Here's what it would look like when you have a Litecoin balance at Poloniex. This can be found in Balances > Deposits and Withdrawals in Poloniex.

Now go to the Exchange area of the website. In Poloniex, it would look like this:

Then click on the BTC tab. These are the currencies that you can exchange for Bitcoin. Click on the altcoin that you want to trade. Here's and example from Civic (CVC).

Next, scroll down and look for the buy/sell box. Enter the amount of altcoin that you want to buy. If you want to trade all of your Bitcoin, click on the link at the top with your total balance.

Click the Buy button and you are all set. The trade might not happen right away, so check your Orders > My Open Orders page to see the status.

The exact process will be different at different exchanges, but the basic idea is the same for all exchange.

How do You Store Cryptocurrencies?

With fiat currency like US Dollars, you can store them at the bank or in your wallet. It's pretty straightforward.

But with digital currencies, there are a few wrinkles that you need to get your head around, but the idea is similar. Let's take a look at how cryptocurrency storage works.

You store your cryptocurrencies on the blockchain in a “wallet.” This is simply an address on the blockchain. It's like how the website address tradingheroes.com directs you to my website, on the internet.

Each wallet has a public address and a private address. The public address is the address that people send funds to. The private address is the “password” that you use to access and send your funds.

Never expose your private key until you are ready to spend your funds, otherwise you will probably lose all the money in your wallet.

Here's an example from a Bitcoin paper wallet:

Now that you understand the basics of cryptocurrency wallets, let's look at the different wallet options out there. Here are the different ways that you can store your loot:

• Online wallet: This is probably the easiest way to store your money. But it is also the least secure. So it's not a good long term storage solution, but it is fine for buying things and funding your trading accounts. Exchanges like Coinbase also have their own wallets built in.
• Mobile wallet: You can download a mobile app like Mycelium to store your spending money. It is more secure than an online wallet, but if your phone ever breaks or it gets hacked, everything in your wallet will be gone.
• Desktop wallet: Similar to a mobile app but just for desktop computers.
• Hardware device wallet: These are hardware devices that are built especially for storing cryptocurrency keys. They are safer than the options above, but they are still susceptible to the things that can damage all electronic devices.
• Paper wallet: You can also store your private key on paper, like in the picture above. This is the most hacker proof, but it is also the least convenient. If you are going to go this route, be sure to store them in a safe place (like a safety deposit box) and don't actually use paper. Use something like this to make sure that your money isn't lost to something as simple as a spilled beer.

Cryptocurrency Tracking Apps

Before I wrap it up, you will probably need an app to track cryptocurrency prices on your phone. So here are a couple of apps that might work for you.

• Blockfolio: A simple app that allows you to add a watchlist and add trades so you can track your portfolio, ala stock trading apps. The most useful thing about this app is that it displays all currencies on your watchlist in the currency of your choice. Some apps insist on displaying the value in Bitcoin, which is annoying.
• Coincap: This app allows you to display currencies by market capitalization, volume and other ranking factors. They also have cool charts. Very useful for seeing what is being actively traded. Also displays prices in your currency of choice.

These apps are not for storing or trading currency. They are just to check the markets.

What Can Affect the Price of a Cryptocurrency?

There are many things that can affect the price of a cryptocurrency…sometimes very quickly.

Here is what you need to be aware of when you trade cryptocurrencies.

Of course, there is no guarantee that these things will move the market. But based on what we have seen so far,

Exchange Listing

This is a big one.

When Coinbase added Litecoin to their already limited list of cryptocurrencies that can be bought, they made it easily accessible to the average person.

Their interface is the best I've seen so far. It makes it so easy for the non-technical person to buy Litecoin.

Soon after the Coinbase launch (marked with the arrow, in the chart below), the price of Litecoin started to skyrocket and it has never looked back.

Now, you might be thinking that this could simply be a coincidence.

…and it could.

But it is very, very likely that exposing Litecoin to Coinbase's user base helped boost the price.

So when a large exchange announces that they will start listing a cryptocurrency that you are trading, take notice.

Watch exchanges like Coinbase, Bitfinex, Poloniex or CEX.

It could give it the boost you have been looking for.

Software Upgrades

Over the past few years, there has been a lot of discussion in the Bitcoin community about upgrading the core software functions of Bitcoin. The primary discussion has been around the transaction speed of Bitcoin.

If you have ever funded your trading account with Bitcoin or tried to buy anything with Bitcoin, you will understand what I mean. For a digital currency, the transaction time is a little slow.

It can take about 30 minutes or more, to do a single transaction.

Upgrading this speed has been hotly debated and finally led to the creation of Bitcoin Cash. After the split of Bitcoin Cash, Bitcoin has taken off to new highs.

There will be countless other software changes across all cryptocurrencies, so make sure that you understand the implications of those changes. 

Public Hype

Just like fake tweets can affect the price of a stock, any type of hype can affect the value of a cryptocurrency.

Good or bad.

So before you dismiss something as just hype, remember that hype moves markets too. But if you do trade hype, be sure to close your trade out long before the hype has a chance to cool off.

Otherwise, it could be a very expensive lesson. 

Wallet Improvements

Since you are reading this post, you probably want to start actively trading cryptocurrencies. But there are many other people who are investors and want to buy and hold for the next few years.

This is where storage becomes an important part of the cryptocurrency valuation equation.

Unlike traditional fiat currency that can be stored in a bank, your trading account, or your mattress at home, cryptocurrencies need to have a compatible wallet (or cold storage solution) to be stored safely.

Remember that cryptocurrency is simply software. So the wallet software needs to be able to work with the cryptocurrency software.

It's like trying to use the Windows version of Microsoft Office on a Mac.

That simply won't work.

Therefore, if a cryptocurrency doesn't have a good wallet yet, that will prevent less technical investors from buying the currency.

But as soon as one is available, then it makes the currency much more accessible to the masses.

…and thus, more valuable.

If you find that a cryptocurrency does not have a good wallet solution yet, that could be one signal that it is undervalued.

Looking for opportunities to buy, immediately after the launch of the first high-quality wallet, could give you a nice short-term profit.  

Platform Applications

Some cryptocurrency platforms, like Ethereum, host other applications. These applications, in turn, can have their own currencies or tokens.

If one of these DApps or Decentralized Apps does very well, this can have a positive effect on the underlying platform currency.

The value of the tokens should theoretically be independent of the value of the platform.

However, not everyone understands this and the success of one DApp can drive the price of Ether…at least in the short term.

So if you are trading a platform cryptocurrency, watch promising apps on the platform closely. 

Government Regulation

Finally, government regulation can have a huge effect on the value of a cryptocurrency.

One example is in Venezuela, where the police have been arresting Bitcoin miners on made-up charges. This has forced miners to go underground or start mining Ether instead.

But this could happen in any country. Any decision by the NFA or SEC could affect the value of certain cryptocurrencies. The SEC has already banned certain Initial Coin Offerings (ICOs), due to the potential pump and dump situation that could happen with those coins.

Be aware of current trends in government regulation and steer clear of currencies that could get red flagged by government agencies. 

Conclusion

So that is the Trading Heroes Beginner's Guide to Trading Cryptocurrencies. I hope that it answered any questions that you may have had about trading currencies like Bitcoin or Ether.

There will be more detailed posts on specific currencies and how to do some of the things mentioned above.

If you have any more questions or comments, leave them below.

Happy Trading!

Disclaimer: Some links on this page are affiliate links. We do make a commission if you purchase through these links, but it does not cost you anything extra and we only promote products and services that we wholeheartedly believe in. TradingHeroes.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.

The post The Total Beginner’s Guide to Cryptocurrency Trading (Bitcoin, Ether and More) appeared first on Trading Heroes.