How much can a novice investor earn from trading? Part fourteen. Trading (continued)

We continue the series of publications about trading in order to understand in practice how much a novice investor can earn using only the forecasts published on our website. To understand how useful they are, we decided to conduct an experiment and simulate a situation in which a person who only knows about trading that he needs to “buy cheaper and sell more expensive” tries to earn additional income in his free time from work by investing part of his funds in cryptocurrency trading

In part thirteen of our publications on trading, we tried to trade against the trend, drawing an analogy with scalping on the stock exchange. 

Before this, we always described intraday trading. As a rule, it took place in short time periods and was unprofitable. Today we will describe medium-term trading based on the publication ForkNews forecast dated 08/17/2018. 

It says that after a rollback to the green zone, the price may break through the resistance level of 6427.16 USD and test the zero fibonacci level of 6615.00 USD, which will become a reversal for a further decline in the pair to the support area of ​​6090.00 USD. 

The idea for trading was the following:

If the forecast is fully realized, then it makes sense to sell 0.1 BTC on the approach to the resistance level of 6615.00 USD. And when the price meets support at the level of 6090.00 USD, buy additionally with the aim of growing to the level of 6777.00 USD. (forecast from 08/18/2018).

If the price does not meet support at 6090.00 USD and there is no growth to the level of 6777.00, then we will remain out of the market and postpone purchases until the bottom is updated for Bitcoin. 

The idea itself is not bad for margin trading, when we enter into any position, long or short, regardless of whether we have a quoted asset. To do this, it is enough to have the required amount of the underlying asset of the currency pair on the trading account. But in our case, the EXMO exchange does not support margin trading, and we cannot sell 0.1BTC if we only have dollars on deposit. Therefore, our plan will consist of pre-buying BTC at market value and selling when it reaches the level of 6615.00 USD. 

Given that the difference in the price of the same asset on different exchange platforms can differ significantly, we need to “include” this difference between the readings of BitStamp and EXMO in the sale price of the asset. What does it mean? We need to sell BTC not at 6615.00 USD, but in the range of plus/minus one hundred dollars.  

Thus, we bought 0.1002004009 BTC at the current market rate, which at that time on the EXMO exchange was 6433.00 USD. We spent 644.59 USD and, taking into account the commission, the amount of 0.1 BTC was credited to our account. 

We place an order to sell 0.1 BTC at the rate where the price should reverse. Это уровень 6615.00 USD.. In a sell order, we can set the rate to 6515.00 (with a margin of 100 USD), calmly close the terminal and go have a coffee. It is advisable to monitor medium-term trading once or twice a day if the price moves according to the established forecast. If something goes wrong, then you can do it more often. The main thing is to stick to the intended trading plan and intervene in the trading process only to minimize losses. 

The next day, when we entered the EXMO trading platform, we saw that our order was executed in parts and the total amount of 650.20 USD was credited to the account (Exchange commission 1.30 USD).

Now we must use this amount to buy BTC when its rate reaches 6090.00 USD and the indicator shows a buy signal. This may not happen until the beginning or middle of next week. You need to wait patiently, watching the dynamics of the asset. This is the difference between medium-term trading and day trading.