How to Trade Filecoin: A Step-by-Step Guide

Comprehensive Guide to Trading Filecoin in 2021

Last Updated October 20th 2021
27 Min Read

Looking for an entry point into the exciting world of Filecoin trading? We'll help you through it.

Filecoin trading is pretty straightforward once you get the hang of it. 

If you are new to trading, you may not have heard of the journey that Filecoin (FIL) has undertaken in recent years. This includes an initial coin offering (ICO) back in 2017, whereby the project raised over $200 million in just 30 minutes. Filecoin also launched its much-anticipated mainnet in October 2020.  

Fast forward to April 2021, and Filecoin has accomplished gains of over 250% in a month alone. Currently ranked in the top 30 digital coins for market capitalization - many believe this is just the start for the crypto asset. 

If you are looking to invest in a new opportunity, now could be the best time to learn how to trade Filecoin.

Our How to Trade Filecoin Guide will consist of everything you need to know about the popular crypto coin. This includes the foundations of trading Filecoin, different styles of selling and buying, and how to choose a reliable crypto broker to access your preferred FIL pair. 

Contents:

Trading this new digital currency is no easy feat - which is why we have put together an in-depth guide on How to Trade Filecoin. Within it, we explain the ins and outs of how this investment scene works, what risks and rewards you need to consider, and how you can start trading Filecoin today. 

How to Trade Filecoin in 5 Steps

To trade Filecoin, the first step is to open an accout with a regulated exchange, depost funds, select Filecoin from the platform list, and lastly Buy FIL (go Long) or sell FIL (go short).

Step 1: Open an account with a regulated exchange 

Step 2: Funds your account with a debit/credit card, e-wallet, or bank transfer

Step 3: Choose how much Filecoin you want to trade 

Step 4Buy Filecoin (go long) or sell Filecoin (go short)

Step 5: Confirm the trade

trade filecoin

What is Filecoin Trading?

filecoin

Filecoin is a decentralized storage protocol initially built to act as the “incentive layer for the peer-to-peer storing and sharing network Interplanetary File System (IPFS)”. This protocol enables anyone to rent or sell their excess storage space on the open network in return for tokens in its native currency - Filecoin. 

In the beginning of 2021, we have seen the price of FIL surge by over 400%. This increase could partially be down to influential Chinese companies such as Xinyuan investing millions into Filecoin miners. 

Just like all other cryptocurrencies, the price of Filecoin will go up and down each and every second. When trading Filecoin, your goal is therefore to analyze these fluctuations and learn to time the market as accurately as possible. 

For example, if there is a higher demand for Filecoin, then the price will increase. Likewise, if there is a decrease in price, then this could indicate that traders are trying to cash out their Filecoin positions. 

This task might seem difficult at first, but you can gain indispensable trading knowledge by investing your time. 

Here is a more realistic example to give you a better understanding:

  • Let's assume the current value of Filecoin is $140
  • You will see this displayed as FIL/USD on the cryptocurrency exchange of your choosing. 
  • You think that Filecoin is undervalued, so you place a buy order worth $500.
  • Three months pass and the coin value is now at $180.
  • That’s a 28.5% increase in value. 
  • You could then place a sell order to exit your trade at a profit. 

This example shows us that over just a few months, the price of Filecoin increased from $140 to $180. This increase resulted in a gain of $142.50 on a stake of $500. By forming the theory that Filecoin was undervalued, a profit was achievable.  

However, this is not always the way; the cryptocurrency market is highly volatile, and the wrong speculation can result in a loss on your trade. 

That is why when researching how to trade Filecoin; you take the time to educate yourself on the central data involved within the cryptocurrency markets. 

trade filecoin

How Does Filecoin Trading Work?

If you have prior experience in trading more traditional markets, such as stocks or commodities - then the buying or selling of Filecoin may come more naturally to you. However, if you are a newbie, then there are a few essential differences between trading cryptocurrencies with that of more conventional assets.

One of the foremost being that digital assets have only been in circulation for just over 12 years. What this means is that the determinants of price shifts can also differ in some ways. 

For example, as well as supply and demand, you also have to contemplate blockchain developments and the required regulations within each market.

As such, in this segment of our How to Trade Filecoin Guide, we will cover what we believe are the critical factors involved when trading this popular digital currency. 

Filecoin Trading Price Movements

To successfully trade Filecoin, you need to have a solid understanding of what navigates the digital asset's price. You can review these price shifts on a selection of different cryptocurrency exchanges at this time. 

  • Suppose more traders are placing buy orders (also known as going 'long'), then you would notice a general increase in the price and demand of Filecoin. 
  • However, if there were a surge of traders placing sell orders (known as going 'short'), there would be a decrease in the price of Filecoin. 

The value of Filecoin may deviate with each cryptocurrency platform you visit. For example, the price could be $149.41 at one broker, whereas another might quote $149.57. This shift should only vary slightly and shouldn't affect any of your future Filecoin trades. 

Filecoin Trading Pairs

As some may already know, Filecoin can be traded against fiat as well as a range of cryptocurrencies. Similar to forex, you can identify these Filecoin markets by the 'trading pairs' they display. 

A phrase you will see or hear a fair amount in the Filecoin trading world will be 'crypto-to-fiat’. Let us elaborate on this term below: 

  • If you were to see the crypto pair FIL/USD, this would indicate that Filecoin is being traded against the US dollar. 
  • In this instance, FIL would be the crypto side of the pair, and USD would be the fiat. 

Take note, the US dollar is the most used fiat currency used in the crypto trading arena. With that said,m there are some online brokers that allow access to a broader range of fiat pairs. For example, FIL/EUR (euro), FIL/GBP (British pound), FIL/AUD (Australian dollar), and in a rarer case, FIL/CNY (Chinese yuan). 

Trading Filecoin against fiat currencies can also possess the benefits of higher liquidity and tighter spreads. We will explain these terms in-depth later on in our How to Trade Filecoin Guide.

The next option when trading Filecoin is via a crypto-cross pair. This would be when Filecoin is being traded against another cryptocurrency. To give you an example: FIL/BTC (Bitcoin) or another may be FIL/XRP (Ripple). 

When trading cryptocurrencies, it is imperative to understand what coins compete well against one another and what specific market you need to target. This knowledge can take a while to pick up and makes it less ideal for novice traders.

In summary, regardless of which crypto pair you decide to start with, you have to ensure you have at least a basic comprehension of your preferred digital asset and their respective markets. 

Long or Short-Term Filecoin Trading

When you start reviewing how to trade Filecoin, you should first work out which trading goals you believe to suit your investment goals best. 

You have two possible options - you can go for a shorter-term plan and decide to trade digital assets in more frequent bursts. Or, you can go for the longer-term goal and invest in Filecoin for an extended period.

For example, if you feel confident that Filecoin will continue to grow and become even more profitable -  you could consider investing in FIL for the foreseeable future. In this instance, you would buy your coins and proceed to store them in a crypto wallet. 

  • Using this investment plan, you would hold on to your Filecoin for months or even years - until you feel it is an appealing time to cash out and receive your profits. 
  • Investors within the cryptocurrency community will refer to this approach as 'HODLing' - indicating that they are using the investment strategy to 'buy and hold.' 

On the other side of the board, you have the short-term method. However, this requires a keen understanding of technical analysis and fundamental research. You will also need to learn the different technical indicators used to predict future price shifts. 

With the volatility of the Filecoin market - this skill-set can take years to master. This is why new traders sometimes find it an uphill battle and switch to the 'buy and hold strategy.'  

Despite all of that, if your needs fit better with making gains more regularly, then the short-term tactics available to you will be more suitable. If this is indeed the case, then you should opt for more liquid pairs, such as FIL/USD or FIL/ETH. 

Trade and Own Filecoin

As we covered in the previous section of this How to Trade Filecoin Guide, it is best to utilize the buy-and-hold strategy if your goal is a long-term investment.  When you go to purchase Filecoin, it is a good idea to do this straight from your online broker rather than a cryptocurrency exchange. 

At this time, there is a wide selection of brokers that will offer Filecoin via an instant purchase. Although, it is always essential to choose a regulated broker - which we will go in-depth about further in the guide. 

Longer-term investments can be a good match for both new and experienced traders - as it means you do not need to involve yourself in the day-to-day fluctuations of Filecoin. 

Filecoin Trading

You may find that people who prefer to trade Filecoin in a short-term manner will use strategies like 'swing trading' or 'day trading.'

In order to utilize these methods, you are best advised to find an online broker that provides Filecoin CFDs (Contracts for Differences). 

Here is a condensed explanation of what CFDs are:

  • CFDs are financial tools traders use to speculate on the short-term movements of a chosen asset. In this case - Filecoin. 
  • CFD trading does come with the advantages of lower fees and leverage. 
  • When using CFDs, you can wager on both the rising and falling prices of Filecoin. As we covered earlier, this would be by going long or short. 
  • When you trade CFDs, you do not own the underlying asset as you are merely speculating on its future price.

It is crucial to keep in mind that the US does not permit the use of CFD trading due to security laws enforced by domestic regulators. You should not have any difficulty accessing CFDs on traditional assets in the UK. 

However, the UK has since announced that cryptocurrency CFDs are no longer legal (for retail investors). If you do choose that despite this, you want to enter into a leveraged Filecoin market - it is possible through a third-party cryptocurrency exchange

We must note that there is a substantial chance that these exchanges are not regulated. On top of this, you will not be able to fund your trading account using any fiat currencies—for example, USD, euros, or British pounds. 

Instead, you would be actively trading a crypto pair identified as FIL/USDT as opposed to the standard FIL/USD. To clarify, USDT is an online crypto-asset called Tether -  and the coin holds the monetary value of one US dollar.

Don't Miss: Filecoin Price Predictions

How to Trade Filecoin Online - Setting up a Trade

When examining how to trade Filecoin, it is beneficial to familiarize yourself with the different orders used in the trading space. To elaborate, you will use these orders to instruct your broker on how you plan to execute each trade. 

Below, we have listed the most frequent orders used when trading Filecoin:

Buy or Sell Order

The first thing you will need to decide is whether you are looking to place a buy or sell order. As you can imagine, these are required regardless of what coin you are trading. 

To explain further:

  • If you suspect that the price of Filecoin may decrease, you will place a sell order via your broker. 
  • On the other hand, if you think the price of Filecoin is to increase, you will set a buy order with your broker. 

Each Filecoin trade you create will need both a buy and sell order. For example, if you open a Filecoin position by going long, you would need to set up a sell order to exit your trade. Similarly, if you were to opt for a short trade, you would place a buy order to leave the position. 

Entry Price

Buy and sell orders are just the starting point when trading Filecoin. The most successful traders will have a more systematic entry strategy for each position they place. 

You will need to specify to your broker which type of order you would like to use to enter the market. There are two possible options; a limit or market order.

Let us explain what each of these orders involves: 

Market Order

A market order will instruct your broker to enter the Filecoin market at the next available price. To give you an example, suppose Filecoin is valued at $145 - you decide you want to lock in this price immediately. 

You would place a market order via your chosen broker, and they would execute your request instantly. At times you may notice a slight discrepancy between the price you choose and the amount the broker actually carries out. This difference is due to crypto prices fluctuating so rapidly - known as ‘slippage’.

Limit Order

You would use a limit order when you want to enter the Filecoin trading market at a specific price. For example, let's say that Filecoin is valued at $150. However, you only want to access the market when the coin reaches a price of $153. This is where a limit order is beneficial. 

To make sure you do not miss your opportunity, you would create a $153 limit order with your online broker. Until Filecoin hits this price, your order will remain pending. Alternatively, you can manually cancel your trade.  

You may notice that limit orders give you more control over your positions - which is why seasoned traders usually favor them. 

Exit Strategy

Together with entry strategies, it is also essential to determine how you plan to exit the trade. Like your limit and market order, you have two popular options you can use in this situation. 

These are the 'take-profit and 'stop-loss' price orders. 

Allow us to break down what each of these means. 

  • A take-profit order specifies the exact price you want to close your position to lock in any profits made. For example, if your Filecoin trading profit target is 3%, you will set a take-profit order at 3% above or below your desired entry price. When the value of Filecoin hits your profit level, it will automatically trigger and close your position.
  • Stop-loss orders allow traders to cap any potential losses. For example, suppose you are not looking to risk any more than 1% on your Filecoin trade. In that case, you would place a stop-loss order at 1% above or below your limit price. When the price of Filecoin reaches your stop-loss order, your trade will instantly close. 

We have included a more detailed example below:

  • Let's say you want to open a FIL/USD position with a limit order price of $156
  • You feel that the cost of Filecoin may increase shortly - so you place a buy order. 
  • You want your trade to close at the profit level of 3%.  
  • So you arrange a take-profit order of $160.68
  • Simultaneously, you do not want to risk any more than 1% of your trade. 
  • Therefore, you place a stop-loss order of $154.44

There are two ways this trade can play out:

  • The value of FIL/USD rises to $160.68, and your broker executes the take-profit order. Your achieved earnings will be 3%, and the position will be closed. 
  • The value of Filecoin falls to $154.44, and your broker performs the stop-loss order. Your losses will be capped at 1%, and the trade will be closed. 

In summary, you can install a take-profit and stop-loss order on both sides of your entry price. As a result, your broker will close the position regardless of which direction Filecoin eventually takes in the markets. 

All you need to do is determine your profit levels and then calculate them based on your entry price. 

trade filecoin

How to Make Money Trading Filecoin

The trading orders that we highlighted above can assist you in making consistent profits. However, they are not the only thing you need to take into consideration during the Filecoin trading process. 

This section will cover other factors that play a crucial role and how you can use them to boost your Filecoin profits even further!

Filecoin Stake

When you review how to trade Filecoin, you will need to choose how much you are looking to stake on the digital coin. In the trading community, the stake is the amount you are willing to chance on each trade. 

The higher the stake, the bigger chances of profits, though this can also mean more significant losses.  

Here is a prime example of how the stake can determine your gains: 

  • If you were to stake $700 on Filecoin and secure a profit of 7% - you would have made $49.
  • However, if you were to up the risk on the same trade and place $1,200 - your earnings would then amount to $84. 

Although it may seem simple to begin with, choosing the right stake is not as straightforward as it looks. We often see traders project emotions into their trading decisions, resulting in them getting carried away. 

That is why it is customary for traders to use a bankroll management strategy to lessen any risks. To clarify, you would decide how much you can afford to lose on each Filecoin position. 

A large percentage of traders prefer to only stake a maximum of 2% of their trading capital at a time. 

  • For example, if your account balance were $1,000 - you would allocate a maximum stake of $20 on each Filecoin position. 
  • If your trading capital were at the higher end, say $8,000, then based on the 2% strategy - the maximum stake would be $160.

Remember that many brokers allow you to trade Filecoin for much smaller stakes - so there is nothing to worry about if this seems slightly higher than you were planning. 

Filecoin Trading Leverage

Before we begin to explain how leverage works, we should again note that the US does not permit CFDs. If Filecoin CFDs are legal in your country, you can apply leverage to help grow your profits. 

However, if you were to judge the expected value of Filecoin inaccurately - then leveraging could also enhance your losses. 

Here is an example to give you a clearer idea:

  • Let say you were looking to go long on FIL/USD - so you place your buy order worth $500.
  • You then apply the leverage of 1:3.
  • Over the day, the value of FIL increases by 3%.
  • Without leverage - your profits on this position would be $15.
  • However, with the use of leverage - your earnings on the same trade are now $45.

As you can see, leverage can notably heighten the gains on your Filecoin trade. Because of this, you will notice brokers that offer leverages of 1:100 - sometimes even higher.  

Although, we must inform you that due to the uncertainties involved in these trades, high-leverage brokerage sites are more than likely unregulated. 

If you choose to trade your capital on riskier platforms - then you may be trusting a broker that does not have the safety of your funds as a top priority. 

Fees to Trade Filecoin Online

Regardless of your goals for Filecoin, whether it be short-term or long-term trading - you will be subject to market fees at some point. 

The fees and commissions that brokers charge will vary from one trading platform to another. Prior to signing up for an online broker, be sure to make yourself aware of the cost involved. 

Here are some of the charges you may face when trading Filecoin: 

Filecoin Trading Commission

Many brokers will charge you a trading commission with every buy or sell order you place. This fee is often calculated through percentages and based on how high or low your stake is.  

  • For example, several crypto brokers will charge a 1.49% fee to trade Filecoin. 
  • Meaning if you were to place a $550 stake on Filecoin, you would be required to pay a commission of $8.19.
  • Then when it is time to sell the trade, you would need to pay 1.49% again - at the current value of your position.

To summarize, you will need to pay a trading commission when you enter or exit the market. That being said, some brokers - such as eToro, will allow you to trade digital currencies with 0% commissions. Then the only thing left to consider is the spread - which we will cover in more detail below. 

Filecoin Spread

The spread can often be referred to as an indirect fee charged by an online broker. It is the difference between the bid and ask price of each digital asset. That is to say, the wider the gap, the more you are indirectly paying to your brokerage platform. 

Therefore, by opting for more miniature spreads, you can maintain more of your own profits. 

  • To give you an example, let’s say your broker was to charge a spread of 1.6% on FIL/USD.
  • Then you are starting your trade with a loss of 1.6%
  • This means you would need to make A 1.6% profit to come up even on the position. 

Anything that is made after this time would then be counted as net profit. 

Other Filecoin Trading Fees

Together with the charges mentioned above, you may encounter a couple of other fees when trading Filecoin. 

These include:

  • Deposits / Withdrawals: On some brokerage platforms, you will have to pay a transaction fee to deposit or withdraw your funds. For example, at Kraken, there will be a minimum requirement on each cryptocurrency as well as a further flat fee to move the funds. You may find brokers with deposit fees of 3% and over - which is why it is always helpful to check the transaction fees of each site. 
  • Inactivity Fee: This fee really is what it says it is and can be standard with most brokerage sites. Suppose you did not manage the minimum trading activity on your account, usually a period of 12 months or more. Then the broker would take this fee straight from your account balance each month. This would only stop when the funds from your balance run out, you withdrew your capital, or started trading again. 
  • Overnight Fee: If you live in an area where CFDs are accepted, you may come across an overnight funding charge. You will need to pay this fee for every trade left open overnight - with some sites charging you more on the weekend.  

When you are researching how to trade Filecoin, it is crucial you compare what fees and commissions each broker will charge before you sign up. 

Read Also: Could Filecoin Be A Millionaire-Maker Coin?

How to Trade Filecoin 2021 - Step-by-Step Walkthrough

After reading our How to Trade Filecoin Guide, you should now have a more accurate understanding of what the crypto trading world entails. If you are eager to start trading Filecoin today, then that only leaves you the task of setting up your account. 

We have provided a step-by-step breakdown of the following steps you need to take. When you have completed these, you will be able to trade Filecoin instantly!

Step 1: Choose a Filecoin Trading Site

The first step you need to take is to find a reputable trading broker that fits your needs. With countless online platforms rivaling for your business, the process can appear to be highly daunting. 

We have included a list of the core factors you need to consider when selecting the right broker:

  • Regulation: Do the FCA, CySEC, ASIC, FINRA, or any other reputable financial body regulate your chosen Filecoin broker?
  • Fees: What fees, commissions, and spreads will you be required to pay on the brokerage site?
  • Payments: Which payment methods does the site accept - and do they fit your needs? 
  • Minimum Deposits: When you start trading Filecoin, is there a minimum deposit and stake demanded? 
  • Filecoin Pairs: Does the broker offer a multi-asset platform, so you have access to a wide range of Filecoin pairs?
  • Trading Platform: Do you find the trading platform user-friendly?
  • Mobile App: Does the crypto broker offer a mobile application? 

As you can see, numerous decisions need to be made before selecting your Filecoin broker. However, by referring back to our checklist, you will be able to make a better-informed choice of which broker best suits your needs. 

Step 2: Open a Filecoin Trading Account

Once you have decided which broker you want to trade Filecoin with, you can go ahead and open an account with them. All you need to do is register a few of your personal details - such as your name, address, email, and preferred contact method. 

You will need to provide a photo ID on a regulated brokerage website - such as a passport or national identity card. In some cases, you may need to provide a utility bill or bank statement to prove your residential address.  

Step 3: Deposit Funds

One of the most significant benefits of choosing a regulated Filecoin broker is that you can use fiat currency to finance your trading account. 

The most reliable crypto brokers will offer you several different payment methods. These will include credit/debit cards, bank transfers, and popular e-wallets such as Skrill and Paypal. 

Step 4: Choose Filecoin Trading Market

As we covered previously, Filecoin can be traded against both fiat and other cryptocurrencies. It is your decision what particular market you want to trade. 

However, if you already have one in mind - you can search for it on the brokerage site and get started straight away. 

Step 5: Place Filecoin Trade

When you have chosen your broker and decided on which market you want to trade in - then it is time to set up your trading orders.

When you have analyzed the pricing markets, you can place your first Filecoin trade. Remember, this can be either a buy or sell order, depending on if you think the value of Filecoin is due to increase or decrease.

How to Trade Filecoin Guide - The Verdict

To summarize, learning how to trade Filecoin can take a lot of time and research. However, as the digital coin price continues to surge, it can be a highly profitable skill to have in your trading arsenal. 

We, like many, are excited to see what Filecoin has in store next. Although, please remember that it is essential that you sign up with a regulated broker when trading Filecoin online. 

And please remember to use all of the information provided in this How to Trade Filecoin guide! This data will help you find a reliable broker that will work with you to reach your Filecoin trading goals. 

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FAQs

How safe is it to trade Filecoin online?

Trading Filecoin online is safe - provided you use a regulated broker to perform your trades. 

Where can I start trading Filecoin?

Trading Filecoin online is relatively straightforward.  All you have to do is find a broker and open an account with them. Then, you need to deposit some funds and enter your Filecoin trading position!

Can you get rich by trading Filecoin?

If you can speculate on the short-term price movements of Filecoin correctly - you will make a profit. On the contrary, if you misjudge the price - you will make a loss. Therefore, it is best to utilize a bankroll management strategy so you can practice more calculated risks. 

Can you trade Filecoin legally in the US?

Yes, you can trade Filecoin in the US. However, it is essential to remember that crypto CFDs are not permitted. 

Is it possible to trade Filecoin with leverage?

It is indeed possible to trade Filecoin with leverage. Having said that, it can depend on where you are based in the world as in some areas there are restrictions on using this margin trading strategy. For example, in the US and the UK, crypto leveraging is not authorized - therefore, you will not be able to find this option through a regulated broker.

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