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How to Trade Bitcoin Cash: A Step-by-Step Guide for 2021

Last Updated December 8th 2020

How to Trade BCH: Comprehensive Guide to Trading Bitcoin Cash in 2021

If you’re interested in trading cryptocurrencies from the comfort of your home - you might want to consider Bitcoin Cash. 

This hugely popular top-10 digital coin can be traded against fiat currencies like USD and EUR, as well as other cryptocurrencies like Bitcoin, Ethereum, and Ripple. 

Either way, you need to have a firm understanding of how to trade Bitcoin Cash before you take the financial leap. 

In this guide, we walk you through the process of how to trade Bitcoin Cash in a risk-averse manner. We cover key topics like choosing a broker, placing orders, mitigating your potential losses, and how to get started with a Bitcoin Cash trading account today. 

 

How to trade Bitcoin Cash in 5 Easy Steps

Trading Education has put together a list of 5 steps to start trading Bitcoin Cash.

To trade BCH, the first step is to Open an account with a regulated broker or exchange, deposit funds, select Bitcoin Cash BCH from the platform list, and lastly Buy BCH (Go Long) or sell BCH (Go short), and check the trade order.

Step 1: Open an account with a regulated exchange

Step 2: Funds your account

Step 3: Choose how much BCH you want to trade 

Step 4Buy or sell BCH

Step 5: Confirm the trade order

 

We’re going to dig deep into Bitcoin Cash trading, but feel free to jump to any section that interests you:

 

What is Bitcoin Cash Trading?

Bitcoin Cash is a digital currency that possesses real-world value. This value will change on a second-by-second basis - much like any other financial instrument. 

With this in mind, Bitcoin Cash trading simply refers to the process of speculating on the future value of BCH. And of course, this is determined by market forces. 

In other words, as more and more people begin to realize the true value of Bitcoin Cash and its underlying framework, this will result in more investors entering the market. In turn, this should push the value of Bitcoin Cash up. 

On the other hand, during times of market bearishness, more and more people are likely to offload their Bitcoin Cash holdings. In doing so, this will have a negative impact on the market price of BCH.

As you can see, these principles are no different from any other tradable instrument - whether that's gold, oil, stocks, or forex

Still confused? Let’s take a quick look at a basic example of how to trade Bitcoin Cash online. 

  • Bitcoin Cash is currently worth $250
  • This is represented by the pair BCH/USD
  • You think that at $250, Bitcoin Cash is undervalued
  • As such, you place a buy order at a stake of $2,000
  • A few weeks later, BCH/USD is priced at $550
  • This translates into an increase of 120%
  • You are happy with your profit, so you place a sell order to close the trade

As you can see, you made gains of 120% on a $2,000 stake. This means that you closed the position at a profit of $2,200 by correctly speculating on the future value of Bitcoin Cash.

While this example illustrates that a successful Bitcoin Cash trade can result in generous gains, things would have been had you speculated incorrectly. In fact, you would have made a financial loss. 

This is why it is important to learn the ins and outs of how to trade Bitcoin Cash because you risk your own money!

 

How Does Bitcoin Cash Trading Work?

As you hopefully now know, the fundamentals of trading Bitcoin Cash are no different from any other investment class. However, this popular digital currency is not like stocks or bonds. On the contrary, it has been in existence for just over three years. 

As such, it’s crucial that we go into more detail so that you fully comprehend how to trade Bitcoin Cash. 

Bitcoin Cash Trading Price Movements

First and foremost, you need to understand what influences the price of Bitcoin Cash in the real-world. BCH as a digital currency is listed on hundreds of cryptocurrency exchanges. 

In turn, depending on whether the wider market is collectively long or short on Bitcoin Cash, its value will go up and down.

For example, in the second half of 2020, sentiment on cryptocurrencies was super-strong, meaning that the vast bulk of digital coins went on an upward trajectory. As such, the price of Bitcoin Cash followed suit. 

There will always be a slight variation in the price of Bitcoin Cash depending on which exchange or broker you use. For example, Platform A might price BCH/USD at $245.50, while at Platform B it could be $246.10.

Either way, these variations will be minute, as market forces ensure that exchanges are harmonized with one enough. If they weren't, then shrewd investors would simply take advantage of the pricing gaps through an arbitrage strategy. 

Read More: Bitcoin Cash Price Prediction Forecast

Bitcoin Cash Trading Pairs

When learning how to trade Bitcoin Cash effectively, you need to understand that there are two types of pairs you have access to. 

Firstly, you have crypto-to-fiat pairs. At the forefront of this is BCH/USD - which means you are trading the value of Bitcoin Cash against the US dollars. Equally, your chosen broker might offer a market on other fiat currencies, such as BCH/AUD or BCH/GBP. 

With that said, the US dollar rules the roost in the cryptocurrency trading scene - meaning USD-denominated BCH pairs benefit from the most liquidity and tightest spreads. 

Secondly, you have crypto-to-crypto pairs (sometimes called crypto-cross pairs). These are pairs that contain Bitcoin Cash alongside another cryptocurrency. For example, BCH/BTC would see you trade Bitcoin Cash against Bitcoin. Similarly, BCH/XRP would consist of the exchange rate between Bitcoin Cash and Ripple. 

If this is your first time learning how to trade Bitcoin Cash, then it’s best to avoid crypto-to-crypto pairs. This is because it can be a lot more difficult to gauge which way the pair is going to go. 

After all, it’s a lot easier to quantify the future value of Bitcoin Cash against the US dollar than it is against a competing digital currency such as Ethereum!

Long or Short-Term Trading

You also need to figure out which Bitcoin Cash financial instrument is best suited for your trading goals. 

For example, if you are planning to trade Bitcoin Cash because you think its value will increase over the coming months or years - you should just purchase the digital currency. In doing so, you can leave the BCH coins stored at your online broker or in a private wallet until it's time to sell. 

Equally, if you’re a newbie trader and you have no idea how technical indicators or short-term pricing swings work - a classic buy and hold strategy is the best course of action. 

However, if you want to actively trade Bitcoin Cash and benefit from small, but frequent profits - then CFDs might be more up your street. Alternatively, you might decide to use a traditional cryptocurrency exchange. 

Let’s explore what your options are when trading Bitcoin Cash in more detail. 

Trade and Own Bitcoin Cash

As noted above, if you want to trade Bitcoin Cash and keep hold of your position in the long run, you are off using an online broker that supports traditional ownership. A great example here is eToro - a regulated online platform with 13 million clients. 

The broker allows you to trade Bitcoin Cash commission-free and keep hold of the coins for as long as you wish without incurring any fees. You can exit your Bitcoin Cash trade 24 hours per day, 7 days per week. 

Crucially, you don’t need to concern yourself with short-term volatile market swings. Instead, you will ride these ups and downs out by ‘hodling’. 

Bitcoin Cash Trading 

If you are looking to buy and sell Bitcoin Cash as a day or swing trader, then you might want to consider a platform that supports CFD instruments. 

Before we get to that, CFDs are not available to US citizens. Additionally, all CFD instruments apart from cryptocurrency derivatives are available to UK citizens. 

  • CFDs simply track the real-world market price of an asset. In this case, that Bitcoin Cash. 
  • This offers several benefits, such as low trading fees. 
  • Additionally, Bitcoin Cash CFDs can be traded with leverage. 
  • You will also have the option of going long or short on Bitcoin Cash CFDs, meaning you can profit from both bullish and bearish markets.  

eToro, for example, offers heaps of cryptocurrency CFDs. This includes fiat-to-crypto pairs and crypto-to-crypto pairs that contain Bitcoin Cash. 

If, however, you aren’t able to access CFDs, then you might want to consider a cryptocurrency exchange. Due to a lack of licensing, you might not be able to deposit funds with fiat currency. 

Equally, you will likely be trading BCH/USDT as opposed to BCH/USD. This means that you are trading Bitcoin Cash against Tether - which is a cryptocurrency pegged to the dollar.  

Ready to dive into Bitcoin Cash market?

How to Trade Bitcoin Cash Online - Setting up a Trade

how to trade bitcoin cash

One of the most important things to understand when learning how to trade Bitcoin Cash is how to place ‘orders’. These are the very same order types that you will find in the traditional stock and forex trading scene. 

Put simply, they tell your chosen broker or exchange what Bitcoin Cash trade you wish to place. In turn, the platform will do the rest. 

The most important order types that you need to know when trading Bitcoin Cash are listed below. 

Buy or Sell Order

This order type is mandatory. 

In a nutshell: 

  • If you believe that the price of Bitcoin Cash will rise, then you will place a buy order.
  • Or, if you think that Bitcoin Cash will drop in value, then place a sell order

It really is as simple as that. However, we should make it clear that all Bitcoin Cash trades will require both a buy and sell order. 

For example, if you enter the trade by placing a buy order, then to close it you will need to place a sell order. And of course, if entering with a sell order you exit with a buy order. 

Entry Price

Whenever you trade Bitcoin Cash online, you will always need to choose between a market and limit order. This is with respect to the price that you enter the Bitcoin Cash trade at. 

In a nutshell: 

  • If you want your Bitcoin Cash trade executed immediately, opt for a market order. Due to slippage, you’ll likely get a price slightly above or below the price you see on screen.  
  • Limit orders, however, give you much more flexibility. This is because you get to specify the exact price that the Bitcoin Cash trade should be executed at. For example, if BCH is trading at $220.50 but you want to enter a buy position at $230.50, a limit order is the way to go. 

In most cases, seasoned Bitcoin Cash traders will opt for a limit order. This is because they can take full control of the trade by setting clear entry and exit targets. 

Exit Strategy

While market and limits orders are relevant to your Bitcoin Cash entry price, stop-loss and take-profit orders take care of your exit strategy. 

In a nutshell:

  • Stop-loss orders limit the amount of money that you can lose from your Bitcoin Cash trade. Your broker will simply close the position when your stated stop-loss order price is triggered - say at a 1% loss
  • Take-profit orders allow you to lock in your gains. By specifying a profit target - say at 6%, the take-profit order ensures that the position is closed automatically if this price point is achieved. 

If you are learning how to trade Bitcoin Cash for the first time, then we would strongly suggest that you get comfortable with how these two order types work. 

To help clear the mist, let’s elaborate further on a quick example:

  • You are trading BCH/USD - which is currently priced at $250
  • You place a buy order as you think the price of the pair will rise
  • You do not want to lose more than 1% of your stake. As such, you create a stop-loss order at $247.50 (1% below the $250 entry price)
  • You want your trade closed if it makes 6%. As such, you create take-profit order at $265 (6% above the $250 entry price)

Now, once you place the above two orders - your broker will close the position automatically irrespective of whether you win or lose. 

For example:

  • If BCH/USD hits $265 - your take-profit order is triggered and you make 6%. Trade closed. 
  • If BCH/USD hits $247.50 - your stop-loss order is triggered and you lose 1%. Trade closed. 

As such, not only is this great for setting clear pre-trade targets, but it avoids the need to close positions manually. 

Would you consider trading Bitcoin Cash?

How to Make Money Trading Bitcoin Cash

make money trading bitcoin cash

There are several variables that can influence how much you can make (or lose) by trading Bitcoin Cash. 

This includes the following:

1. Stake

It goes without saying that the more you risk, the more you stand to make or lose. For example, a $10,000 trade at gains of 1% is going to make you significantly more had you staked just $100.

However, there are a couple of points to note about stake sizes. Firstly, you should implement a bankroll management system. This dictates the maximum amount you can stake in relation to your current account balance - in percentage terms. 

For example, if you have $5,000 in your cryptocurrency trading account and limit your risk exposure to 2%, the most you can trade is $100. Secondly, if this is your first time learning how to trade Bitcoin Cash, you are best advised to keep your stakes to a minimum. 

In order to do this, it’s best to use a broker like eToro that requires a minimum stake of just $25. This is an inconsequential amount to risk. 

2. Gains in Percentage Terms

On top of the size of your chosen stake, the amount of money you can make or lose by trading Bitcoin Cash is determined by how right or wrong you were. 

  • For example, if you staked $500 on a buy order and Bitcoin Cash rises by 20% - you make $100. 
  • On the other hand, if you risked $1,000 on this trade and the digital currency dropped by 10% - you would have lost $100. 

Crucially, both your stake size and percentage gains/losses are what you need to keep a close eye on. Staking too much will ultimately result in you burning your account balance in full. 

Equally, staking too little can make Bitcoin Cash trading unviable! As such, try to find the perfect balance based on your capital allowance, trading experience, and financial goals. 

3. Bitcoin Cash Trading Leverage

If you are from a country that permits cryptocurrency leverage via CFDs - then you can amplify your profits. Of course, this works the same for losses too, so always tread with caution. 

Nevertheless, let’s look at a quick example of how leverage can boost your potential Bitcoin Cash trading gains:

  • You stake $100 on a BCH/USD sell order
  • You apply leverage of 1:2
  • You make 10% profit
  • Ordinarily, your gains amounted to $10
  • However, by applying leverage of 1:2, your gains are double to $20

As noted above, the amount of leverage that you can get will depend on your location and the respective broker. For example, unregulated platforms located offshore will often offer leverage of more than 1:100. 

4. Fess to Trade Bitcoin Cash Online

Regardless of whether you decide to trade Bitcoin Cash against a fiat currency like the US dollar or against another cryptocurrency - fees of some sort will apply. This ensures that the respective broker or exchange makes money regardless of which way the markets go. 

The main fees that you need to look out for before signing up to a Bitcoin Cash trading site are discussed below. 

Bitcoin Cash Trading Commission

Virtually every trading platform offering a market on Bitcoin Cash will charge you a commission. This is usually expressed as a percentage and naturally - multiplied against your stake. 

For example, Coinbase charges 1.49% on Bitcoin Cash trades. You will pay this when you enter the position and again when you close it. eToro, on the other hand, offers commission-free trading on Bitcoin Cash and 15 other digital currencies. 

Bitcoin Cash Spread

Don’t forget to look out for the spread, as this is unavoidable. For those unaware, it’s simply the gap between the buy and sell price of your chosen Bitcoin Cash pair. The wider the spread, the more you are paying to the broker to access the market. 

At eToro, we find that the spread on popular cryptocurrencies like Bitcoin Cash is around the 0.75%-mark. 

This means that you need your position to increase in value by 0.75% before you enter into the profit-making territory. In other words, your position increases by 1%, in real terms you are up by 0.25% when factoring in the spread.  

Other Bitcoin Cash Trading Fees

Other potential fees to consider when trading Bitcoin Cash include the following:

  • Deposit/Withdrawals: Some brokers charge fees when you deposit and withdraw funds. Coinbase charges 3.99% on debit card deposits, while eToro charges 0.5% on all payment methods. Binance charges 2% to deposit with a debit/credit card.   
  • Inactivity: Most Bitcoin Cash brokers charge a monthly fee when your account is inactive for a certain period - say 12% months. This will reduce your account balance every month until you trade, make a withdrawal, or it goes to zero. 
  • Overnight Funding: If you are eligible to trade Bitcoin Cash CFDs, you will pay a fee for each day that you keep your position open. This is because CFDs are leveraged financial instruments. 

All in all, if you’re looking for a low-cost way to trade Bitcoin Cash - eToro stands out for us. You’ll benefit from deposits at just 0.5%, spreads averaging 0.75%, and absolutely no commission when you trade Bitcoin Cash. 

Ready to start trading Bitcoin Cash?

How to Trade Bitcoin Cash 2021 - Step-by-Step Walkthrough

If you have read our guide on how to trade Bitcoin Cash up to this point - you should now be armed with the required tools to get started right now. 

If so, follow the step-by-step walkthrough below to start trading Bitcoin Cash today. 

Step 1: Choose a Bitcoin Cash Trading Site

Your first port of call will be to choose a Bitcoin Cash trading site that is right for your needs. There are hundreds of platforms active in this market, so select one wisely. 

The most important factors to look out for when researching a Bitcoin Cash trading platform are listed below:

  • Regulation: Is the platform regulated by a body like the FCA or ASIC?
  • Fees: What fees will you need to pay to trade Bitcoin Cash?
  • Payments: What payment methods are supported?
  • Account Minimum: What is the minimum deposit and trade size at the platform?
  • Bitcoin Cash Pairs: What other fiat/cryptocurrencies can you trade Bitcoin Cash against?
  • Trading Platform: Is the trading platform itself suitable for your skill-set?
  • Mobile: Does the broker allow you to trade Bitcoin Cash on the move via an app?

All in all, there is plenty to think about when choosing a broker to trade Bitcoin Cash. With that said, we would suggest considering eToro for the following reasons:

  • The platform is regulated by the FCA, ASIC, and CySEC. It is also registered with FINRA in the US. 
  • All trades are commission-free and spreads are tight
  • You can instantly deposit funds with a debit/credit card or e-wallet
  • You can trade Bitcoin Cash against heaps of other fiat and digital currencies
  • The minimum trade size of just $25

If you like the sound of eToro, move on to Step 2 to find out how to get started with an account right now. 

Step 2: Open a Bitcoin Cash Trading Account

Head over to the eToro website (or your chosen broker) and begin the account opening process. This should take you no more than a few minutes and simply requires some basic personal information.

Additionally, as a heavily regulated broker, eToro will ask you to upload a copy of your passport or driver’s license. 

You do have the option of skipping this step if you do not plan to deposit more than $2,250. But, you will need to do this before a withdrawal request can be made. 

Step 3: Deposit Funds

Now it’s time to make a deposit. At eToro, the minimum is $200. 

You can choose from a debit card, credit card, Paypal, Neteller, or Skrill. You can also transfer funds from your checking account, but this won’t be instantly processed like the aforementioned payment methods. 

Step 4: Choose Bitcoin Cash Trading Market

choose bitcoin cash trading

As soon as your deposit is processed, you can start trading Bitcoin Cash. Head over to the ‘Trade Markets’ section to find a pair that you like the look of. Or, if you already know which pair you want to trade (for example, BCH/USD), search for it. 

Step 5: Place Bitcoin Cash Trade

Now it’s just a case of placing a buy or sell order. Don’t forget, you should also set up a market/limit order, as well as stop-loss and take-profit orders. 

If you need to refresh your memory as to how these works, scroll up to the section above where we discuss order types. 

Finally, click on the ‘Open Trade’ button to enter your Bitcoin Cash position!  

How to Trade Bitcoin Cash Guide - The Verdict

Bitcoin Cash is now a multi-billion dollar asset class. Not only can you trade it against major currencies like USD, EUR, and GBP - but hundreds of other cryptocurrencies. 

Whichever Bitcoin Cash pair type takes your fancy, just make sure that you have a firm grasp of the risks. After all, you are going to be trading with real money. 

With that said, if you are ready to start trading Bitcoin Cash right now, we would suggest getting started with eToro. You’ll be able to trade commission and most importantly - the platform is heavily regulated.

eToro – Buy Bitcoin Cash BCH with 0% commission

eToro have proven themselves trustworthy within the crypto industry over many years – we recommend you try them out.

Virtual currencies are highly volatile. Your capital is at risk.

FAQs

Is trading Bitcoin Cash safe?

Trading Bitcoin Cash online is safe - but this is only on the proviso that you use a regulated broker. Anything less than this and you are putting your hard-earned capital at risk. 

How do I trade Bitcoin Cash?

If you are wondering how to trade Bitcoin in the easiest way possible, simply open an account with eToro. After you meet a $200 minimum deposit with your debit/credit card or e-wallet, you’ll have access to heaps of Bitcoin Cash markets at this regulated platform.

Can you get rich by trading Bitcoin Cash?

There are plenty of successful Bitcoin Cash traders active in the market. Equally, there are many who end up losing money. Your ability to succeed in this space is ultimately down to how much work you are prepared to put in. 

Is Bitcoin Cash trading legal in the US?

Yes, you can freely buy, sell, and trade Bitcoin Cash as you please. However, as an American, you won’t have access to Bitcoin Cash CFDs - as per the CFTC. 

Can you trade Bitcoin Cash with leverage?

Yes, but it depends on where your country of residence permits this. For example, those in the US and UK can’t trade leveraged cryptocurrency CFDs. Citizens from these countries might consider using an offshore broker that operates without a license, but we would strongly advise against this.

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