Traded Some BCH and Now I'm Baked

"Buy Low, Sell High" that is one of the things that I always hear in a conversation about trading, be it stocks or cryptocurrency. Almost everyone I have spoken to regarding trading, they all agree to that statement, maybe it's a motto or something but I think that it is the basic principle in trading.

When I entered the realm of cryptocurrency, trading is a hot topic that I reluctantly accepted. Although I know that the real money is in there, I tried to walk around it and kept my distance from it. And a huge huge distance it was. I tried to avoid any materials regarding crypto trading but the more I learn and the more exposed I am in cryptocurrencies, the more inevitable trading seemed to be. So like any other curious cat, I somehow found myself sniffing and gently playing with it. And last night, I did it.

I went into the trading arena without any organized strategy. I went in blind as I accepted the risks with closed eyes. With only the "buy low, sell high" principle in mind, I went to test if that basic strategy could yield me some profit. And this is how it all went down.

Preparation

First, I needed some funds. I have decided to use $20 worth of BCH at first. And this is just to test the waters, to be familiarize with the battleground. With that amount, of course, I did not expect to gain a lot because I was not prepare to lose so much. But if you want to go big at the beginning. Why not? I'll tell you why not. It's stupid. But if you happen to have tons of cash lying around, again, why not? But for the experimentation purposes, $20 in BCH is what I was willing to charge to experience.

I transferred some funds from my bitcoin.com wallet to my Binance account. Although the transfer is not as direct as bitcoin.com to bitcoin.com wallets, the process is fairly simple, you can read my previous article about it in : Pull Out the Forks and Knives: We're Staking.

After transferring some funds I went into the trading screen. This can be done by clicking "Trades" on the menu right at the bottom of the Binance mobile app.

When you get to the Trades page it will look something like this:

The top part which says BCH/USDT is the pairing you are going to use for trading. In this particular image it means that I am trading BCH against USDT. I decided to trade against Tether or USDT because it is a stable coin, and its value is the closest one to a US dollar. I thought that I should do this first to cushion the blow of the volatility of the coins. Their prices are quite unpredictable so it may be hard to grasp the exchange rates between different coins.

You can change that pairing by clicking it and choosing another pairing on the list, or by typing a certain coin on the search bar :

Why BCH to USDT?

To visualize it a little better, let us use BNB and BCH for example. In this case let us treat BNB and BCH are both equal to $100 at the beginning of the trade. If I traded my 1 BCH to BNB my BNB asset will be $99.9 after the transaction fee is deducted, which is 0.10% of the transaction amount. Now take note that the $99.9 amount is in BNB. What if after I made the trade, the exchange rate for both BNB and BCH was changed. Let's say BNB is now $50 a piece, and BCH is $200 a piece. I am already a total loser with that scenario right? From $100 I am now down to $49.9. But it could also be the other way around, and it's a total win. But I did not want to add more unpredictability to an already volatile environment. You wouldn't want to splash more gasoline into an already burning building would you?

So I see it this way, I traded my BCH first to USDT so my $100 will just be $99.9 no matter how the other coins changed. In that way, the value of my asset will somehow be secured, and I will have a concrete starting point, because it is easier to play around when it is a fiat's equivalent.

Anyway, if you are still with me, back to the image 2 above. Since my plan was to trade BCH to USDT I selected the "SELL" tab, that simply means I am selling my BCH balance to USDT. Second option is the "Limit". There are several options available for this one, there's Limit, Stop Limit, Market and OCO. How the options are different to each other will be explained at a later date I guess. I used the Limit option because this one, it allows me to select in what exchange rate am I willing to sell my BCH. The trade will not go through if the amount (exchange rate) I set is not met. For this transaction I set the rate as $1210, meaning, if the price of BCH hits $1210, the trade will be processed and my BCH will be converted to USDT. As long as the price of BCH doesn't cross the $1210 threshold I will still have my bitcoin cash and the "sell order" will be pending.

The next item on the image is "Amount BCH". This is where you declare how much of your BCH fund you want to sell for USDT. You can manually set the digits or you can use the percentage below it and it will automatically supply the field with 25%, 50%, 75% or 100% of your total funds.

Once the items are supplied and you are satisfied with the terms, you may now click the "SELL BCH" button. That will create a sell order and will be executed when the asset price crosses the amount limit indicated.

The order will now be reflected just below the page where all the OPEN orders are. At any time after the order is placed, you may cancel the order and you will get your BCH back. You may do it as long as the trade hasn't gone through or "filled". Once it is filled you cannot cancel or take it back.

This sell order I placed was filled in no time. So the next step I thought I was gonna do was to "buy low". So I created a "buy order" this time. Steps are pretty much the same, I selected "buy" tab instead of the "sell". I chose limit option and I indicated the rate that I will be willing to pay to get some BCH. So the principle was "Buy low, sell high", in this example I sold at $1210 (sell high) so I set up the buy order at $1200. It was not that big of a gap, and again, I was just testing the waters. I saved and the buy order was created. I've waited for several minutes but the rate of BCH did not go back down to $1200, instead it went well over $1400 last night. And guessed what, my order of course was not filled or processed, with that, I was left with $19.++ in USDT.

Since I was doing that just to play and be familiarize with the trading screen, I placed a buy order for another coin, it was BAKE. The buy order was filled and I got some BAKE. After getting them, I am now trying to "sell high" so I placed a sell order for BAKE/USDT with $7.200 rate. And until now, it's an order because BAKE went down down down.

Conclusion

So did I gained anything from the experiment? First, the knowledge on how to place orders on Binance. I also learned how to trade one coin for another. But did I earn some profit with the "buy low, sell high". Well I found out that TIME is a huge part of that equation. For me to earn a profit from those things I did, I need to wait until the set amounts of my orders are hit, but until then I only have some USDT and some BAKE on my wallet. If I am going to convert those to BCH with the rate of BCH now, I will suffer a huge loss, so I'll just have to wait for my orders to be filled or I could trade them for another coin and so on.

For someone looking to earn money quick, the steps I did and the strategy applied above is not the way to do it. I repeat, it is not the way to earn quick cash.

Hey there!
Thank you for joining me once again in my humble journey into the world of cryptocurrency. And just like before I still have an unimaginable amount of things to learn. And that's okay, learning never stops.

I appreciate you taking your time visiting this page, and as always,

Cheers!!!

Lead image : https://smartbettingguide.com/bitcoin-cash-sports-betting-sportsbook/