Crypto trading and gambling using cryptos have long been considered to be two sides of the same coin. Rather, a Bitcoin. Witty puns aside, the two areas of the digital currency market are frequently intersecting. In fact, the legislators in the UK have suggested that crypto trading should be seen as a type of gambling.
In this article, we are going to explore the intrinsic links between the two and how basic trading skills, such as risk management and profit maximization, can influence your gambling adventure.
Understanding Crypto Trading Strategies
The purpose of crypto trading strategies is to equip you with the tools needed to mitigate the financial risk that crypto trading entails. We all know making rash decisions can influence long-term success in trading, which is why you should always have a contingency plan and a strategy in place. Here are some of the most frequently used crypto trading strategies.
Day Trading
Day trading, or intraday trading, involves buying and selling of cryptocurrencies or ETFs. So, you are effectively entering and exiting a position in the market on the same day. The point of day trading is to capitalize on crypto volatility and those small changes in the daily price of crypto. However, it can take a lot of time and effort, and it’s a risky strategy, but if you are looking for small gains on a daily level, this can be the strategy for you.
Swing Trading
Swing traders take about a week or a month to trade. They employ technical analysis tools to keep track of trends, their reversals, and the market swings, namely, the pricing going from low to high and vice versa, in order to take advantage of those market movements. Swing trading requires daily attention from traders, who can easily get involved in day trading as well, given how they are already investing time and energy into tracking the markets on a daily basis, so why not do both?
HODLing
HODLing, or hold-and-buy, is a trading technique where you purchase cryptocurrencies and hold them for a significant amount of time. The essence of this technique lies in the long-term value of the asset. With this strategy, you don’t worry about the daily volatility and take the time to track the market and achieve the dream of buying low and selling high.
Risk Management Techniques Used in Crypto Trading
Since the collapse of FTX, Celcius Network, and other exchanges, crypto investors are kicking their risk management efforts up a notch or two. They are starting to turn to exchanges with stronger asset protection. They are also executing trades in smaller bits and performing due diligence on their trading partners, all in order to minimize exposure.
Of course, crypto assets should be put into cold storage, which can decrease the risk of having your funds stolen by hackers. Then again, diversifying and hedging your crypto portfolio can be equally as effective in protecting your funds.
Applying Trading Strategies to Cryptocurrency Gambling
Trading and gambling are concepts akin to each other in more ways than one. For starters, odds lie at the core of both activities. They describe the likelihood of a bet coming through in gambling or the asset reaching a certain price in crypto trading.
Nonetheless, gamblers can take a leaf out of crypto traders’ book and use some of their strategies in their gambling adventures. First of all, tracking the volatility of certain cryptos can help them decide which one to use. Many Bitcoin gambling sites offer crypto exchanges, so you can quickly exchange from one crypto to another and cash in on the price hike.
Also, the strong analytical skills of crypto traders are something gamblers could use. Taking note of the game’s payout percentage, hit frequency, and different strategies, like the blackjack basic strategy, can increase the chances of walking away with a positive bankroll. In fact, basic blackjack strategy is exactly how you leverage technical analysis in making gambling decisions. Based on the card you have been dealt and the dealer’s up card, you need to make a move. The strategy is based on probability, which also plays a major part in crypto trading as well.
Risk Management in Cryptocurrency Gambling
Cryptocurrency gambling also shares risk management strategies with crypto trading. First of all, there’s setting up a budget strictly for gambling and sticking to it. You should never gamble or trade with money you can’t afford to lose.
Additional tools you can use in gambling that can help you control your spending also stem from trading — Stop-Loss and Take-Profit. Stop-Loss is designed to limit your losses during a gambling session and, as such, provides a kind of insurance if things don’t go as planned. Take-Profit is another useful mechanism which allows you to set an exit point, or the amount you win, after which you cash out.
These systems let you stay in control of your gambling habits and spending and ensure you gamble responsibly.
Profit Maximization in Crypto Gambling
Everyone is trading and gambling for a profit. To achieve that goal, there are some essential concepts to keep in mind. First, there’s the position sizing — determining the right amount to bet or invest wager. More specifically, getting the right amount to bet in terms of your capital. This practice is crucial for risk management, as well as optimizing returns and keeping your emotions in check, no matter if you are winning or losing.
Another crucial segment to be aware of and implement is diversification. Focusing on different betting markets with varying odds and breaking down your intended bet amount into several betslips can possibly reduce the negative impact. If one loses, others may yet succeed.
Case Studies: Real-Life Examples
We’ve seen big shots of Wall Street hit big on casino floors, leveraging their trading skills. Blair Hull, the man behind the Hull Trading Company, which was one of the first market makers, used Edward O. Thorp’s 10 Count Card system and Lawrence Revere’s Advanced Point Count system to shift the odds to his favour during the 1970s, thanks to his math and analytical skills, that not only helped them find the best-performing stocks but also attain success on casino floors.
However, being overconfident when betting and chasing down losses looking for that lucky break are some of the biggest pitfalls you need to avoid. Also, making rash decisions and betting on the team you support, which involves investing your emotions, not only your money, are not great ideas and can’t lead to success in the long run.
Challenges and Considerations
It’s crucial to note that there are no guarantees that any of the strategies that apply to crypto trading will work in gambling. The reason for this lies in the very essence of gambling. It automatically generates a negative expected value. That is, casinos and bookmakers always have the house edge on their side. With crypto trading and the right strategies, it’s possible to turn the negative into a positive expected value.
Also, crypto gambling is facing a lot of scrutiny from legislators around the world. Their main objection is that crypto gambling allows for anonymous gambling, so the Know Your Customer policies can’t be upheld. Also, there’s the issue of cryptocurrencies failing to meet Anti-money Laundering regulations gambling platforms abide by.
These legal impediments are a considerable hurdle for a more widespread usage of cryptos in gambling.
The Future of Crypto Trading and Gambling Integration
The synergy between crypto trading and gambling is already on a chartered path. We can see gambling payouts in the form of crypto tokens that users can appreciate in value or dividends, which sets the stage for investing in cryptocurrencies.
Cross-products are another potential innovation in the area of crypto trading and gambling integration. Imagine a gambling platform that allows you not only to bet on casino games and sports, but also the future price of cryptocurrencies. These sites would be a perfect blend of both worlds.
Final Thoughts
Crypto trading and crypto gambling have a lot of things in common. In essence, they both require staking some money on a future event. Furthermore, both trading and crypto gambling require extensive research, analytics, and no small degree of luck. What’s more, the key to having a successful trading and crypto gambling session lies in trading and gambling responsibly. Never invest more than you can afford to lose and always keep track of your spending. That is the only guarantee of long-term success.
