As the world’s economies are in disarray due to the virus and a general recession that was on its way anyway, many people are looking for ways to avoid losing money. Some are even seeing this instability as an opportunity to profit since the rapid ups and downs can be a good time to get active in the market.
And so it seems natural that some people are turning to cryptocurrencies to see if they present viable options and good opportunities. However, trading Bitcoin and other coins can be risky. Luckily, there is a cryptocurrency alternative to some of the more volatile coins like Tether and others. What is Tether? This is a stablecoin that is a cryptocurrency that is tethered to the US dollar. This makes it an ideal cryptocurrency to day trade especially for a beginner getting into it.
In this article, we will go over some of the things you need to know about day trading stablecoins so you can see if it is the right move for you.
Find the right exchange
As of right now, there is no exchange dedicated to just stablecoins. You’ll need to use an exchange for a range of cryptocurrencies that also features the stablecoins you may be interested in. An exchange is simply a platform that allows you to buy cryptocurrency from a bank account and then sell them or keep them in a digital wallet.
There is no shortage of exchanges to choose from, but you need to do some due diligence beforehand. Make sure you use a well established exchange that uses very good encryption for the safety of its users.
Often when we hear about cryptocurrency scams or it being stolen, it is while it is on the exchange because that is not on the blockchain. A good exchange will be very difficult for hackers to get into and your transactions will be safe.
Take advantage of instability
One of the reasons stablecoins are so popular right now during this economic crisis is because they have a built in stability due to the fact that they are tied to fiat currency. Hence the name.
However, they do still trade above and below the value of the currency which gives you a good opportunity to profit. The process is called minting a coin and it involves waiting to buy a coin at an equal value to the dollar. Then waiting for a rise in the value and selling it quickly. The same as you would an ordinary stock.
Shop the exchanges
One way that a stablecoin diverges from regular day trading is that you can find an exchange that has a different value for the coin and take advantage of it. For instance, when you are buying, look for an exchange with the lowest buy in price. Buy up as much as you can and then look around for the exchange that is selling at a slightly higher rate and sell it on that platform. You don’t have to keep your coins on the platform where you bought them. This can see you make a quick profit with almost no effort.