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How To Trade Bitcoin Gold - Step-by-Step Guide

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Ever since it hard-forked from Bitcoin in October 2017, Bitcoin Gold’s market-price has shown volatility signs time and again, just like the majority of the altcoins. If you wish to actively trade Bitcoin Gold (BTG), we’ve created this comprehensive guide with all the updated information.

When it comes to trading cryptocurrency, you can either buy/sell its ownership on a conventional crypto exchange or use leverage to take long/short positions on a broker trading platform.

In this guide on how to trade Bitcoin Gold in 2021, we will also cover leverage trading BTG through CFDs on a broker platform.

Bitcoin Gold Trading Summary

You can trade BTG using all kinds of trading strategies and make full use of its price volatility to book regular profits. In fact, many people actively trade Bitcoin Gold and other cryptocurrencies to make regular income for themselves. Talking a bit more about trading strategies, there are multiple types you can employ, for instance, swing trading, day trading, trend trading, arbitrage trading etc. 

The majority of the trading activity that happens on crypto broker platforms is through a derivative financial product called Contracts for Differences (CFDs), which allows you to leverage trade the underlying cryptocurrency without investing a lot of capital in the activity. Other derivatives products used for trading are futures and options. No matter which route you take to trade BTG, it will have both profit and loss potential.

Start Trading in 3 easy steps

1. Plan your Trades

The first step in trading Bitcoin Gold is making a sound plan for your trades. Each trading strategy offers its own respective entry and exit points. It’s about picking one and mastering it thoroughly. Please know, you’d need to learn about multiple tools and indicators, as well as have absolute clarity about your goals before deciding on any specific trading strategy.

2. Register on an Appropriate Platform

Registration on a broker trading platform is normally a very quick and easy process, not requiring any fee. You would nevertheless have to deposit some initial capital to start trading. Most platforms will also require you to submit identity documents and go through a verification process to confirm your identity.

3. Start Trading

Once you have registered with a broker website, you’d need to deposit some funds into your trading account to open trades. Many brokers may also allow you to test-drive their platforms, and get familiarised with their workings before trading with any real money/cryptocurrency. Ensure that you specify appropriate exit points to cover your risk and to book profit at the right level. This can be achieved with the assistance of tools like stop-loss order and limit order respectively.

Bitcoin Gold Trading Explained

Trading Bitcoin Gold through CFDs on a broker platform requires taking trading positions based on the direction in which you expect the cryptocurrency’s price to move. In the earlier days, people used to buy a crypto’s ownership and then keep it safe in a wallet, and wait for an increase in price. However, nowadays you can speculate on a cryptocurrency’s price volatility using derivative products like futures, options and CFDs. These products enable something known as leverage trading wherein you can take big trading positions and get large exposure, by investing only a small percentage of the trade capital, called margin. The extent of leverage offered may vary from account to account, however, it magnifies both losses and risks to an equal extent.

Please note, when you buy or long BTG, you’re speculating on its price to go up. If you choose to sell or short it, you’re essentially hoping for its price to fall. In the end, you book profit or incur a loss depending upon whether the market moves in your favour or against you. When you indulge in this type of trading, make sure you steer clear of mistakes like insufficient research, emotional trading, improper use of a trading strategy and overexposure.

Trade Bitcoin Gold: Establish a Proper Plan

We cannot stress enough on the importance of establishing and using a proper plan for trading BTG. In this section, we’ll delve into the fundamental & technical analysis for BTG trading and some commonly-known trading strategies you can employ.

Understand What Moves the Price of Bitcoin Gold

In order to trade Bitcoin Gold and benefit from the profit opportunity it presents, you must understand it well and get acquainted with all the factors that impact its price movement. This can be accomplished by studying the factors which determine its fundamental strength and its true value. This process is referred to as fundamental analysis wherein you focus on the aspects like hash rate, network stability, demand and supply etc. The idea is to ascertain if the BTG is presently undervalued or overvalued, and trade in it accordingly.

When combined with technical analysis, fundamental analysis can give you a very good idea about a cryptocurrency’s future price movements, in the short-term, medium-term and long-term. Let’s go over some important factors which contribute to BTG’s price movements:

Network stabilityAltcoins like BTG have always been targeted by hackers owing to their price vulnerability and profit potential. The Bitcoin Gold team took special care regarding its safety measures, right from the time of its launch, by taking various measures such as unique wallet addresses and replay protection. All these measures make it a fairly secure cryptocurrency and this contributes notably to its price movements.

News - It’s common for a cryptocurrency like BTG’s price to increase or decrease depending upon the breaking news related to cryptocurrencies’ adoption in general. Any news story about crypto regulation or anything that can possibly impact the crypto investors’ sentiment overall, can impact BTG’s price too.

Demand and supply – The overall demand and supply of BTG also has a say in its price movements. As is dictated by the demand-supply principle, BTG’s price can go up with a rise in its demand, and fall as more and more BTGs are supplied to the market. At the time of writing this piece, around 17.5 million BTG coins were in circulation out of a total possible supply of 21 million. As BTG will close in on its maximum supply in the future, the scarcity factor will come into play and may drive up its price.

Hashrate – Unlike as in the case of BTC mining, wherein powerful ASIC devices are responsible for transaction processing and mining of Bitcoins, BTG miners primarily use GPU devices. The higher the hashrate, the more will be the improbability of a cryptocurrency’s blockchain witnessing a 51% attack. The BTG hashrate stood at around 753.80 KS/s at the time of writing this piece.

Technical Analysis: Read the Charts!

Technical analysis is done primarily using charting patterns and statistical indicators. Of all the charts used generally in the trading circles, it’s the bar charts, line charts and candlestick patterns that are used frequently by crypto traders. It’s the same data that feeds most of these charts and the main difference is only in the manner in which it is presented. These charts help you speculate on future trends and ascertain the appropriate entry/exit points for your trades.

Coming to the statistical indicators, Relative Strength Index (RSI), Average Directional Index, Bollinger Bands and Standard Deviation are the most commonly used by cryptocurrency traders. Other statistical tools such as volume-weighted average price (VWAP), time-weighted average price (TWAP), moving averages/RSI/MACD and Fibonacci ratios are also used frequently. Essentially, it’s about studying the principle of demand and supply, to make correct predictions about the trends. 

As you go about doing technical analysis for BTG, it’s important to remember that there’s no 100% success guarantee in it. Starting out traders are advised to use some expert’s opinion, or even better try out a strategy like social trading, wherein they can follow some experienced traders and replicate their decisions. These services are offered by platforms such as eToro.

Common Strategies to Trade Bitcoin Gold

News Trading for BTG

Bitcoin Gold being a hard fork of BTC and closely associated with the blue-chip cryptocurrency, it gets normally impacted by any news piece the same way as Bitcoin. In order to use a News trading strategy for BTG you should pay close attention to BTC as well as general cryptocurrency news stories. It would be best to set-up alerts for specific notifications.

Day Trading

This trading strategy is about picking any specific time frame of your regular trading day and then open & close as many trading positions as you possibly can, to profit from the activity. It’s common for crypto day traders to take multiple short and long positions within a 24-hour timeframe, and ensuring that all of them are closed in time. As it is normal for BTG to experience notable intraday price movements, day trading is an obvious strategy used by a large number of BTG traders.

Scalping

Scalping enables you to benefit from the price differences between different broker websites and the overall market inefficiencies. Two very good examples of scalping are spread scalping and arbitrage. Both work very well with BTG. While arbitrage is about seeking and banking upon discrepancies between the buy and sell BTG prices of two different brokers, spread scalping is similar, however, works with the same broker.

Choose a Platform that Fits your Trading Strategy

It’s very important that you pick a trading platform that meets the specific needs of your trading strategy. When it’s about leverage trading cryptocurrencies, you can go with derivative exchanges and/or online broker platforms. Experts suggest that you should choose the latter over the former, owing to their strict regulation and security measures.

It’s not uncommon to find crypto exchanges lacking in regulation, which makes them an easy target for hackers. In addition, these websites can sometimes be found lacking in efficient customer service. Not to forget, you might even be asked to pay fees for making deposits and withdrawals.

Set Up Your Trading Account 

You’d need to set up a trading account with an online broker website to be able to place BTG trades. It will involve three steps detailed below:

Registration - In this step, you will need to supply some basic info like your name, phone number, residential address, email id etc., to the website, to start the account-opening process.

KYC and identity verification – The trading platform will verify your identity and may ask you to upload a government-issued ID as a part of its KYC (Know Your Customer) process.

Funds deposit – After your identity is verified and your trading account becomes active, you can deposit funds in the form of fiat or cryptocurrency accepted by the broker and via an approved payment method.

Open your First Bitcoin Gold Trade

How you go about opening your first Bitcoin Gold trade may vary from platform to platform. The majority of the CFD broker websites will provide simple ‘Buy’ and ‘Sell’ buttons, enabling you to long and short BTG respectively. What’s more important is the position you choose to take based on your analysis and trading strategy.

You get multiple leverage options in case of CFDs and may also be allowed to specify ‘Stop-Loss’ and ‘Take Profit’ points, in order to prevent losses and book profits at the right levels. It’s common for such websites to offer handy tools and indicators to help you make well-informed trading decisions. The user interface (UI) may vary from one platform to the other, but the good ones will make trade executions a breeze.

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Order type

An order is an instruction given to the trading platform by the trader to execute a specific cryptocurrency/CFD trade. It can be a market order to buy/sell the crypto under consideration, at the existing market price, or a limit order to buy/sell it whenever the price reaches a specific level.

As can be expected, limit orders are preferred over market orders as they fetch the best possible price for the concerned trade. Other popular order types include stop-loss orders, trailing stop orders, IOC (Immediate or Cancel) and All or None.

Buy or Sell?

The simplest way to understand ‘Buy’ or ‘Sell’ in the context of trading platforms is to consider them as instructions given by traders to ‘Buy’ or ‘Sell’ the underlying asset. Whenever you use ‘Buy’ to open a CFD trade, you’re essentially taking a long position on the underlying cryptocurrency, and expect its price to go up. On the other hand, using a ‘Sell’ order to open a CFD trade is about shorting the underlying cryptocurrency in the hope of its price to decline.

Spread is the term used to refer to the difference between ‘Buy’ and ‘Sell’ prices of a specific cryptocurrency on the platform. It’s also a commonly used revenue-making method for such broker websites. An order book on the other hand consolidates all such buy-sell orders. As the orders get completed or cancelled, the corresponding updates are made in real-time to the order book too.

Amount

The amount of BTG you may trade on a broker platform will depend entirely on how experienced you are in trading cryptocurrencies, as well as your risk appetite. New traders must avoid investing big sums and should keep their trade sizes small, at least until they’ve learnt the ropes and can confidently switch to big trades. Please always bear in mind that CFD trading though may seem highly profitable, but it comes with the risk of equally big losses.

Leverage on Bitcoin Gold

Leveraged trading in Bitcoin Gold is about trading the same amount of BTG as you would normally do on a conventional crypto exchange, but by investing only a small percentage of the involved capital. In other words, you’re not required to deposit the complete trade value upfront, and only a small percentage of it, referred to as margin.

Let’s explain it to you with an example. If BTG is trading at $25 per coin right now and you expect it to hit $28 soon, you go ahead and buy 4 CFDs, with each CFD consisting of 10 BTGs (called a lot). 

The broker asks for a 10% margin for the trade and hence you are asked to deposit a total of $ 100 for the 4 CFDs. This way, you’re getting exposure worth $1000 of trade (40 BTGs) by paying only $100. 

If the BTG price does increase to $28 per coin, you’d end up making a profit of $120 by tying up only $100 for the trade. Making the same $120 profit on an exchange would require a $1,000 capital otherwise. 

Please note, the actual figures may vary and the broker may also charge a spread on the ‘Buy’ and ‘Sell’ trades. On a cautionary note, please also know that the market may move against you too, and end up making you a big loss. 

Stop-Loss and Trailing Stop-Loss

Stop-loss is a type of order which helps you limit your losses while trading crypto on a broker website. You can take the help of support & resistance levels (from technical analysis) to ascertain the right stop-loss point. While the support level comes into the picture as you take a long position, the resistance level helps to minimise losses as you short a cryptocurrency.

Another order known as trailing stop-loss is immensely popular amongst traders as it offers two-in-one benefits of working as a stop-loss order to prevent big losses and a limit order to ensure profit-booking at the right point. 

Take Profit

You can make use of the ‘Take Profit’ setup to specify the price point at which you’d like to exit your trade and register profit. Normally, this is the point where you can make the best possible profit, just before the price starts moving against your position. As in the case of trailing stop-loss and stop-loss orders, it’s the support and resistance levels that guide in setting up the ‘Take Profit’ point too.

Finishing Touches

As mentioned earlier, you can use multiple derivative products to trade BTG on derivative exchanges and broker websites. You may or may not have to pay a commission or trading fees at these portals. Hence, it is always better to cross-check beforehand. Further, make sure that you do your share of due diligence before using any trading strategy or derivative product.

It is equally important to be aware of the contract size, referred to as a lot. In the leverage example we shared above, each CFD had a lot of 10 BTGs in it. 

Pip is another term that deserves attention. It provides a measure of a crypto’s price movement. For example, if 1 pip equates to $1 in case of BTG, its price moving from $25 to $28 would imply that the currency has moved 3 pips. You’d need to be aware of the pip equation at the time of specifying the stop-loss and take profit levels for your trades. 

Please also be aware that the margin requirements of a platform may vary based on the sizes of your trades and the available equity.

Open Your Bitcoin Gold Trade

Once your setup is complete, right from the order type to the size of your order, it would be time to open the BTG trade. This can be done by clicking on the ‘Sell’ or ‘Buy’ button available on the dashboard, and will be based on your strategy. Please note, it never harms to double-check if everything is as per your requirements before clicking on the button to execute a trade.

Closing Orders

This can be done either automatically or manually. The automatic execution happens through limit orders and stop-loss orders, whilst the manual execution involves logging into the broker website and manually executing the corresponding reverse trade/s.

Final Thoughts: Ready to Trade Bitcoin Gold?

We delved into the various aspects of Bitcoin Gold trading, beginning with locating the best broker platform for your needs, followed by creating a good trading plan, then setting up a trading account and lastly, opening your first BTG trade.

BTG offers trading opportunities but the risks are also equally big. To benefit from BTG trading, you’d need to master some proven trading strategy and gain a good understanding of analytical tools and market indicators. Never invest more than what you can afford to lose and manage risk properly. You can start trading BTG today by clicking on the button below.

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Frequently Asked Questions

  1. No, most of the well-known broker platforms don’t charge any trading fee. However, they may charge a nominal spread for every executed trade.

  2. Yes, crypto CFDs are legal to trade in many countries across the world, excluding the US and UK. Please check with your local trading laws to confirm.

  3. Bitcoin Gold came into being on 24th October 2017 as a hard fork of Bitcoin.

  4. Yes, there are several reputed broker sites that permit deposits through credit/debit card.