How To Make Money In Crypto Trading: Live Markets VS. Options Trading
Option trading: A particular market
So you want to get rich, and you want to do it quick. Reading the news, you notice discussions about cryptocurrencies and how Bitcoin fostered more than a few overnight millionaires with the 2017 bull market. Then, recent articles mention prices have been going up, again, and we might see an encore of those months.
Your first impulse is to invest in Bitcoin or some other cryptocurrency. After all, it’s looking like not doing so might be the same as throwing money away. But then you think it over and try to consider it, wondering if crypto trading is really such a good idea. Considering if there’s really money to be made with it.
There’s money to be made investing in cryptocurrencies, that’s a fact. It is also a fact that there’s money to be made investing in the stock market or playing the forex market.
Many people lose all their money with the latter too, so it’s no surprise that people also lose money investing in cryptocurrencies.
All investments are risky. Making money investing in cryptocurrency depends on a few things. Luck is one of them, of course, but getting rich by sheer, dumb luck by investing is really unlikely.
However, if you have knowledge on what you should invest on and what’s likely to do well, then you’ll be more likely to get lucky.
In the end, it all depends on what you invest on, and when you do so.
Leading Crypto or Any?
While general knowledge has it that new investors should always go for cheaper, more stable tokens to minimize their risk as they learn to read the market, the crypto option market goes the opposite way: When going for options, it’s better to get the expensive, potentially volatile ones.
This is because the volatility and uncertainty can play on your favor. If you get an option to purchase BTC at today’s going price in two months and the price goes up, you end up winning.
If it goes down, you refuse the option and lose your initial payment but take a much smaller hit. If you were trading penny stock-level tokens, the potential earnings or losses would in most cases be too small to justify the extra steps.
As such, the best pairs for options are the biggest tokens in the market: BTC, ETH, LTC – tokens that are known for fetching higher values but that are also known for being highly volatile.
However, it must be mentioned that the market for crypto options trading isn’t yet huge – so it might be difficult to find a specific pair at the price or amount you want.
Therefore, if you’re looking into trading, there’s a chance you’ll have to go the traditional way.
What you can do
While more common in the stock market, option trading has lately become relatively popular in the cryptocurrency community.
Unlike outright crypto trading, options trading doesn’t imply ownership in crypto – but instead the opportunity to purchase or sell crypto at a given date at a price set when the option is bought.
It is, therefore, a much safer way of investing, particularly in markets as volatile as cryptocurrencies. By investing in options, you can spend a small amount of money for a guaranteed price on the token of your choice, as long as you’re willing to wait a set time before the transaction takes place.
If the price of the token goes down in the meantime, you can just withdraw from the option – losing only the premium you paid to secure it
Traditional cryptoexchanges have an advantage over options trading in that a deal is sealed immediately – meaning if you’re in the middle of a bull market you’ll see earnings right away. You have to pay the full amount right away too. This is live markets where many types of trading will flourish – for example, margins trading or simple buy low, sell high tactics won’t work when trading options.