Bitcoin Cash Trading For Beginners: Basics, Types, And Strategies

Bitcoin Cash is a faster and more scalable version of Bitcoin. For over 6 years, this cryptocurrency has been providing fast and cheap transactions, which makes BCH a perfect option for making payments. Due to this advantage, Bitcoin Cash is chosen by traders to make more profit. In this article, we talk about BCH trading in more detail, including its main strategies and types. Keep reading to get more and figure out how to trade this coin effectively.

What Is BCH Trading And How Does It Work?

Bitcoin Cash trading is the process of purchasing and selling this coin at different periods. It is connected with the fact that BCH’s price changes can be beneficial, so trading refers to active market monitoring. The profit occurs when the trader buys coins at a low price and sells them at a greater cost when it grows.

Bitcoin Cash trading occurs seven days a week, including weekends, and takes place on cryptocurrency exchanges. To enter trades, investors use a range of orders, such as market and limited ones. Limit orders are executed at a predetermined price, while market kinds assume that assets are sold or purchased at the going rate. Traders thoroughly analyze the Bitcoin Cash market conditions to determine when it is the best moment to make a deal.

Bitcoin Cash Trading Strategies

Trading strategies are the methods coin holders use to purchase and sell BCH. These ways can be executed within different market conditions and traders’ preferences. Among such strategies are day trading, dollar-cost averaging (DCA), swing trading, HODLing, and breakout trading. We look at each of them in more detail below.

Day Trading

The buying and selling of Bitcoin Cash during the same day is the key element of the day trading strategy. Making the most of the quick price changes and reducing the risks associated with the abrupt swings occurring at night form the basis of the approach. Day trading requires constant market monitoring, so investors use charts and indicators (like the RSI) to forecast.

Swing Trading

Keeping Bitcoin Cash for a few days or even weeks is called swing trading. Coin owners get a significant profit from these middle-term price fluctuations, as they are larger than daily ones. The strategy is perfect for investors who want to earn money from BCH price fluctuations but don't have much time to monitor the market often.

HODLing

Storing Bitcoin Cash for a longer time than several weeks is known as HODLing. It is not about active trading, as its focus is on long-term returns rather than daily or weekly price changes. The approach is based on the idea that Bitcoin Cash's value will rise as the network expands.

Dollar-Cost Averaging (DCA)

The dollar-cost averaging strategy refers to investing a certain amount of money in Bitcoin Cash, despite the market price. For instance, you may invest $100 in BCH every month. This way, you avoid volatility and average the coin value. Using this method, you buy more coins when their price is reduced and fewer coins when it is higher. DCA is the best choice for traders who wish to earn from BCH changes without worrying about market volatility.

Breakout Trading

When the price of Bitcoin Cash crosses both the resistance (highest price) and support (lowest price) levels, it's time to act using a breakout trading strategy. Such a situation arises when the coin's price breaks out of the range it has been trading in. For example, the price of BCH may vary between $300 and $320 during several weeks. Trading Bitcoin Cash at this period allows traders to profit from the unstable price.

Bitcoin Cash Trading Types

Unlike strategies, trading types of Bitcoin Cash focus on the specifics of purchasing or selling the coin. For instance, some traders would like to make a quick profit, while others see BCH as a long-term investment. Let's learn the types in more detail.

Spot Trading

Buying and selling Bitcoin Cash at the market price with rapid profit is possible through spot trading. Another name for it is short-term trading. You buy BCH directly, and as soon as the transaction is over, you get coins. Then you can do with your assets as you like, such as holding, selling, or withdrawing. Spot trading is one of the options on the Coinbase and Binance crypto exchanges.

Margin/Leverage Trading

Trading on margin offers the chance to use leverage. You are taking out a loan from the exchange to use Bitcoin Cash for transactions. By employing this strategy, you can manage more BCH with the least amount of initial investment.

For instance, you might use five times your leverage to buy $500 worth of Bitcoin Cash if the currency is worth $320 and you only have $100. Even a 4% increase in the coin's market price would yield a 20% return on your initial investment due to the 5x leverage; if the price declines, you will have to liquidate and risk losing your money. Owing to these difficulties, only traders who can evaluate risks typically choose to trade using the margin type. Exchanges like Binance and Bybit offer this kind of trading.

Futures Trading

The situation when investors enter into a contract committing them to buy or sell BCH at a given price on a predetermined future date is known as futures trading. The process will be profitable if the trader pays the agreed-upon amount in terms that the coin market value on the specified day is higher than it was earlier. On the other hand, if the price of Bitcoin Cash falls, something will be lost. Due to it, futures traders should be aware of market trends. The method can be used on cryptocurrency exchanges like Bybit, FTX, and Binance.

Options Trading

Buying or selling Bitcoin Cash using options trading is similar to trading futures; it is also done on a predetermined future date. In contrast, options allow traders to complete a transaction before the selected date. For example, the trader uses an option in case it is anticipated that the value of BCH would rise or fall. Among exchanges that permit options trading are MEXC and OKX.

Short Selling

In case Bitcoin Cash’s price declines, short sales might be beneficial. The trader borrows BCH from a broker (a crypto exchange) and then sells it at market value. After returning the borrowed coins to the broker, he buys them at a lower cost and gets the difference as profit. However, there is a risk connected with short selling; a sharp price rise could result in losses. To trade this type of trading, you can use Binance or Bybit exchanges.

Arbitrage

In the context of Bitcoin Cash trading, arbitrage means making money on coin price differences on multiple exchanges. On one platform, traders buy it cheaper and sell it at a higher cost on another. This type of trading has no risk, but it is worth moving fast because price distinctions vanish rapidly. If you would like to try this trading option, select exchanges with an easy-to-use interface, such as Cryptomus or Kraken.

Automated Trading (Bots)

The software used by Bitcoin Cash trading bots allows transactions to be completed automatically in response to predetermined strategies and market conditions. These bots make choices faster and more accurately than the manual method since they are always monitoring the market data. To use the method effectively, you need to know how to use technology and make the right decisions. Such automated bots are available from services like Cryptohopper and Pionex.

How To Start Trading Bitcoin Cash?

Now let's look closer at trading Bitcoin Cash on cryptocurrency exchanges. Regardless of the strategy and type employed, the steps will be the same as the process is similar on all platforms. The following is the complete algorithm:

• Step 1: Choose a trading strategy and type. Decide about the type and strategy to use that best suits your needs while trading Bitcoin Cash; you can choose them from the methods we've provided above.

• Step 2: Select a crypto exchange. Now choose the Bitcoin Cash trading platform. Think about if you could use the chosen strategy there. The platform ought to have a broad range of functionalities and provide strong security measures. For example, traders can operate with confidence on the Cryptomus P2P exchange, as it assumes 2FA and AML to guard user cash and data. To make sure the platform is reliable, check out the security policy and user reviews on the website.

• Step 3: Create an account. To sign up on the chosen platform, enter your name and email address. Next, successfully finish the KYC process by preparing your passport or driver's license and taking selfies to prove your identity.

• Step 4: Fund your account. Deposit with fiat money or cryptocurrency into your exchange wallet. Debit or credit cards can be linked to some exchanges for this purpose.

• Step 5: Enter your trading pair. Confirm that the amount of money you deposited to the exchange you use matches the amount of Bitcoin Cash you want to purchase. Your trading pair will look as "USD/BCH" if you invested dollars, and as "LTC/BCH" if you deposited Litecoins.

• Step 6: Make a deal. Complete the transaction according to the chosen strategy; go to the relevant page, enter the required data (such as a market or limit order), and confirm your actions. Then you will be able to monitor and manage your deal.

Tips To Trade BCH And Make The Most Profit

To minimize losses and optimize gains, it is recommended to trade Bitcoin Cash cautiously. We've put together the following recommendations regarding it:

• Use a reliable crypto exchange. Large amounts of money are typically involved in cryptocurrency transactions; due to this, trade on a platform where you can be sure your BCH is secure. Your ultimate earnings may be affected by the amount of commissions and the value of the coins on the exchange, so be sure to consider these figures as well.

• Keep an eye on the market. Read the news on Bitcoin Cash and the market in general to stay up to date on developments in the cryptocurrency field. Take into account all the changes to forecast how BCH’s price can move.

• Use technical analysis. Learn how to read Bitcoin Cash price charts and technical indicators. It could help you make predictions about market trends.

• Manage the risks. Significant price reductions could occasionally occur, so make sure you only trade with money you can afford to lose. Try to spend as little borrowed money as you can to shield your assets from market volatility.

Try to abide by these rules when trading Bitcoin Cash to ensure secure and successful transactions. It's important to keep in mind that the cryptocurrency market, particularly as it grows, can be unexpected. In this manner, the Bitcoin Cash trading strategies and types you use in your trading procedures will certainly bring you profit.

Hopefully, this guide was useful to you, and now you know what approach to use when trading Bitcoin Cash. Do you have any experience trading cryptocurrencies? Share in the comments!