The crypto market is volatile, that’s for sure. Some days it goes up, some days it goes down. You can go long or short on a coin, buy the dip, and even trade futures if you have an account with a broker that offers them. With all of these options, traders are coming up with creative ways to profit from the market. One such way is through what’s called ‘swap trading’ where you can make money no matter which direction the underlying asset moves in. If you follow my blog or any of my social media channels you know that I am a big advocate of cryptocurrency as an investment vehicle and digital money. As more people learn about these things and get involved in them we are seeing new innovations almost every day. Swap trading is just one of many creative ways to make money from the crypto market!
What is Swap Trading?
Swap trading is basically a way to make money no matter which direction the underlying asset moves in. It’s a ‘swap’ in the sense that you are making a trade with another trader where they borrow an asset from you and you borrow an asset from them. You each agree on what your respective assets will be worth and then trade them accordingly. For example, if the current value of BTC is $6,500 USD and I want to swap it for ETH at a 2:1 ratio (meaning one unit of BTC for two units of ETH) but I only have one unit of BTC to offer, I can find someone with two ETH who wants to swap their ETH for one BTC and we can do it with terms that suit both parties. In this example, if the price of BTC goes up, my partner would profit because they could sell their 1 BTC at $7000 USD and buy back 1 ETH at $3000 USD, while I would lose out because the same 1 BTC might now be worth $7000 USD. However, if the price of BTC decreases by 10%, my partner would still be able to buy back 1 ETH at $3000 USD but now they only have 0.8 BTC instead of 1 so their profit margin has decreased by 20% ($1000). Meanwhile, I can still turn around and sell my 0.8 BTC for $4000 USD so my profit margin has also decreased by 20%.
How Does Swap Trading Work?
Swap trading is a great strategy to make money off of the volatility of the crypto market. It is an agreement between two parties - a buyer and seller - to trade one currency for another at a specified time in the future. Let’s say you want to buy Bitcoin (BTC) today but you think that BTC might go up significantly in value before you have the chance to buy it. The solution would be to swap your dollars for another cryptocurrency that might appreciate in value more than BTC (like Ethereum, for example). You can set up your agreement with a friendly party on the other side of the world to do this swap. The seller agrees to send you 1 Bitcoin when it dips below $10,000 USD. In return, you give them $4,000 USD now as collateral and promise to send them $5,000 USD when Bitcoin drops below $10,000 USD. When BTC dips below $10,000 USD they’ll send over their bitcoin and you’ll send them over your cash - no matter which direction the asset goes!
Requirements to Start Trading Swaps
In order to start trading swaps you will need a little more than just an account with a broker. You will need to have an account with a crypto exchange as well. These exchanges work like stock exchanges where you create an account, deposit your winnings, and start buying and selling cryptocurrencies. Most of the exchanges that allow swap trading also offer futures trading so you can set up both at the same time. To trade swaps you will need to sign up for both a crypto exchange and a futures broker!
Pros of Swap Trading
Swap trading is a great way to make money in the crypto market because you don't have to worry about which direction the coin goes in. If you are a long term trader, this could be a good way to offset any losses you might incur while waiting for your trade to go through. It's also a good idea if you want to get an early start on investing or trading cryptocurrency but can't afford to invest at the moment. You can sell short and then buy back your coins when they're cheaper. The other pro of swap trading is that it's very easy to understand as it only involves two transactions, buying and selling. The basic premise of swap trading is simple: You invest cash (i.e., cryptocurrency) with one party who agrees to buy it back from you at some point in the future at an agreed-upon price per coin. In return for your upfront payment, the counterparty will agree to buy back all of your currency at the time of that purchase--no matter what happens in between! The main difference between swap trading and outright crypto investing is that swap trading eliminates much of the risk associated with market volatility.
Cons of Swap Trading
Swap trading is a great way to turn your crypto holdings into money, but it’s important to be aware of the cons of swap trading. For starters, swap trading isn’t available on all cryptocurrency exchanges. There are many exchanges that don’t offer this service and you may have to open an account with a different exchange in order to do it. That can be time-consuming and a hassle for some people who just want to trade their coins as quickly and easily as possible. Additionally, there is no guarantee that your contract will be filled by someone on the opposite side of the trade. If this happens you will end up losing some or all of your initial investment.
My Final Thoughts
I really like crypto swap trading because it's a way to take advantage of the volatility in the market without actually having to predict which direction it will go. All you have to do is wait for the asset you're holding to rise or fall and then swap it out with another asset and voila, you make money! I've personally made more than $2,000 per month doing this for about two weeks now. If you're interested in doing this yourself, all that's involved is opening an account with a broker that offers futures contracts and then going from there. Be sure to do your research on what so that you can be successful!
click here:https://bit.ly/3Mnm042
