• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
Trading Heroes

Trading Heroes

Forex Trading Education

  • Articles
  • Products
  • About
  • Resources
  • Login

How to Lock In Cryptocurrency Gains Without a Bank Transfer

What is the best way to lock in the gains that you have made from a cryptocurrency trade? This blog post will show you how to do it, while still keeping your cash available to take the next trading opportunity.

Home / Trading Strategies / How to Lock In Cryptocurrency Gains Without a Bank Transfer

Last updated: August 11, 2022
By Hugh Kimura

Lock in cryptocurrency gains

In order to lock in gains that you have made when actively trading cryptocurrencies, you basically have two options:

  1. Transfer the money to your traditional bank account
  2. Move your money to another cryptocurrency, like Bitcoin

Well, there are some major issues with each option.

So in this post, I'll show you why each of these options is a bad idea and how you can plan ahead of time, to be sure that you don't miss another cryptocurrency trading opportunity. 

Transfer the Money to Your Traditional Bank

Let's say that you just bought some newly-minted Bitcoin Cash and have some sweet gains, after price went parabolic.

Bitcoin Cash chart

You are worried about the price dropping as fast as it has risen…which is a very real possibility. So you want to cash out of your position, to lock in your gains.

SEE ALSO: 19 Powerful Positive Affirmations for Traders

However, you also see that ETHUSD is pulling back to support near $280. So you want to be able to take advantage of that opportunity to get in, when it hits that key level.

Ethereum vs US Dollar

If you cash out of your BCHUSD position and transfer the money to your bank account, then it could be several days before you can execute another trade in ETHUSD. For example, if you buy your Bitcoin through Coinbase and move it to different exchanges to trade for other cryptocurrencies, then you would have to do the following:

BCH > BTC > Coinbase > Bank Account

On Coinbase, this could take as long as 4 days. Here's a screenshot from Coinbase Support.

Coinbase support

Then getting your cash back into the exchange, when you want to buy BCHUSD again, will take another 2-4 days.

Well, as we have seen with many cryptocurrencies, eight days can mean making 100%…or totally missing the boat. These currencies move fast and if you miss out, they may be gone forever.

In addition, getting your bank account linked to various cryptocurrency exchanges can be a major headache.

…and that goes double if you live in the US.

The Bitfinex exchange recently announced that they are not allowing US clients to link their bank accounts to do direct US Dollar transfers to and from the exchange. The only way to trade on that exchange is to transfer in cryptocurrencies.

Here's part of the official announcement:

Bitfinex changes

So transferring money to your bank account is not a viable option for traders looking to take full advantage of trading opportunities in the cryptocurrency markets.

What else can you do?

How about moving out of another cryptocurrency?

Let's take a look at that option…

Move Your Money to Another Cryptocurrency

Once you have some sweet gains and you want to take advantage of another opportunity, a second option is to transfer your holdings into another cryptocurrency. For example, you could transfer your money into Bitcoin, since that is usually the strongest currency, with the most liquidity.

However, now you are exposing yourself to a different type of risk. If you look at Bitcoin's history, it has had tremendous volatility and there have been several times when price has dropped significantly.

For example, here's a chart from 2016, where price dropped by almost 50%, before recovering.

Bitcoin drop

Therefore, moving your gains to another cryptocurrency can result in you losing all of your gains…and then some. So what you can you do?

Here's how to can keep those gains, but still be ready to pull the trigger, when a good trade arises.

Transfer Into USD (or your local currency)

Some exchanges allow you to trade your cryptocurrency for your local currency, without doing a withdrawal to your bank, so that is the ideal situation. Bitfinex is an example of an exchange that does this.

You can trade several currencies on the platform, from your USD account on the exchange.

Bitfinex cryptocurrency pairs

But not all exchanges have this capability. Here's what you can do if that is the case…

The Next Best Option for Active Cryptocurrency Traders

Tether screenshot

There is a cryptocurrency called Tether USD and it is pegged to the US Dollar. At first, traders might not give this currency a second look because there is no opportunity to make money trading it.

Here's a chart where you can see the Tether price versus the US Dollar. The green line shows the price of Tether and you can see that it moves in a very tight band between about $1.05 and $0.89.

Tether price

Because of this price stability, it is a great place to keep your “cash” while you wait for the next trading opportunity.

So if you are going to actively trade cryptocurrencies, keep this in mind. Find exchanges where you can trade Tether USD (USDT) with your cryptocurrencies of choice.

If you don't see the currency you want to trade, you can always do:

USDT > BTC > the crypto currency you want

But it's much better if you can trade for USDT directly because you will save on transaction costs. Not all exchanges offer USDT, so be sure to check before you start trading. 

Here's a list of a few brokers that offer USDT. Just remember to move the USDT to a wallet that you control.

  • Binance
  • Poloniex
  • CEX

Conclusion

So that is a great way to lock in your cryptocurrency trading gains before he market drops.

Cryptocurrency is a very new market and there is going to be a ton of volatility in the coming years.

 

 

 

 

 

Disclaimer: Some links on this page are affiliate links. We do make a commission if you purchase through these links, but it does not cost you anything extra and we only promote products and services that we wholeheartedly believe in. 

Related Articles

  • Learn trading from tradersWhy Do Successful Traders Teach?
  • Stop LossHow to Figure Out The Right Time to Move Your Stop-Loss to Breakeven
  • Trading on laptop19 Forex Myths and Misconceptions
  • Reading COT ReportHow to Read the Commitment of Traders Report
  • Keep trade openHow Long Should You Hold a Forex Trade?
  • Flash crashHow to Profit From Flash Crashes
  • How To Trade Forex For BeginnersHow To Trade Forex For Beginners
  • Stock market analysisHow to Avoid Major U.S. Stock Market Corrections

 


Category: Trading Strategies Tag: Cryptocurrency for Beginners, Cryptocurrency Trading, Trading for Beginners

About Hugh Kimura

Hi, I'm Hugh. I'm an independent trader, educator and researcher. I used to work at a hedge fund and the largest bank in Hawaii. Now I help traders optimize their trading psychology and trading strategies. Learn more about me here.

Nobody understand everything. Double check your assumptions. Double check others.
Don’t be satisfied with stories, how things have gone with others. Unfold your own myth.

- Rumi

Primary Sidebar

Trading Guides

The Ultimate Beginner’s Guide to Forex Backtesting

How to Figure Out Your Trader Personality Profile

The Forward Testing Guide for Beginners

How to Create a Precise Trading Plan (with PDF worksheet)

Learn the weird trading method that doesn't use stop losses...

Forex Hedging Guide
FREE Guide
Download Now

Footer

Company

  • Trading Courses and Education
  • Trading Blog
  • About
  • Contact
  • Beware of Imposters

Community

  • YouTube
  • Twitter
  • Instagram
  • Facebook

Tutorials & Guides

  • Best Trading Resources
  • Free Forex Trading Course for Beginners
  • Free Backtesting Guide for Beginners
  • Trader Personality Profile
  • Best Trading Books

Articles

  • Backtesting
  • Podcast
  • Trader Life
  • Trading Psychology
  • Trading Software Tutorials
  • Trading Strategies

Trading involves risk and can result in the loss of your investment. Invest at your own risk. Past performance does not guarantee future results. All information on this site is for informational purposes only and is not trading, investment, tax or health advice. The reader bears responsibility for his/her own investment research and decisions. Seek the advice of a qualified finance professional before making any investment and do your own research to understand all risks before investing or trading. TrueLiving Media LLC and Hugh Kimura accept no liability whatsoever for any direct or consequential loss arising from any use of this information. You are 100% responsible for your losses...and gains. You are more powerful than you know, keep expanding.

 

Copyright © 2007–2023 TrueLiving Media LLC | Terms | Privacy | Risk

Learn Zen8 Forex Hedging

Hedging can be a low-stress and consistent way to trade. Enter your email and I'll send you the FREE guide. 

x