Bitvavo advanced explanation

If you want to trade crypto currencies on Bitvavo, we have an extensive Bitvavo advanced explanation for you here. Bitvavo is a Dutch crypto exchange where you can trade from fiat money to crypto and from crypto to crypto. Besides the well-known Bitcoin, Bitvavo supports more than 175 other crypto currencies. So if you mainly want to trade large and medium sized crypto currencies, Bitvavo could be a great place to start your crypto adventure.

On this page you will find a detailed Bitvavo advanced explanation. Here you will find everything you need to know, from setting up an account and the different tools at your disposal to the different options you have in trading crypto, such as how stop loss works at Bitvavo and how to place a limit order at Bitvavo.

The difference between the Bitvavo beginner and advanced interface

Bitvavo offers two different interfaces: a basic interface for the novice trader for simple deposits and trading options, and an advanced interface. The advanced interface offers all the features that experienced traders need. You can compare the Bitvavo advanced interface a bit with the interface of the popular crypto currency trading platform Binance. The design of the website and the interface of Bitvavo is just a bit nicer and clearer.

Bitvavo’s order book is clear and well-organised, you will find various technical analysis tools and you can use Bitcoin as a reference currency in addition to the Euro. The only thing missing is the option to trade from crypto to US dollar. In the advanced interface, it is also possible to place limit orders in addition to market orders, which we will discuss in more detail in this Bitvavo advanced tutorial. With such an order you can specify a minimum price at which you want to buy or set a maximum price for selling.

What is the difference between trading in crypto currencies and investing?

Before you start using the advanced interface on Bitvavo, you should first know the difference between trading crypto currencies and investing. Often these two terms are used interchangeably but are two very different things. They only have the same end goal, which is to make a profit. The main difference between trading and investing in crypto currencies is the duration of the activities.

When we talk about crypto trading, we are talking about activities that take place over a short to medium term, which varies from a few minutes to a few days or weeks. Investing in crypto currencies, on the other hand, takes place over a much longer period. This can range from months to several years.

Crypto and technical analysis

If you have started trading crypto, you will have noticed that the trading tools you find on a regular stock market are the same as on the crypto market. For example, when trading crypto you can also perform a TA (technical analysis) or an FA (fundamental analysis).

The trading and investment strategies are also similar such as day trading, swing trading and positioning. The market products are also similar: for example, you can use leverage on both markets to increase profits.

The big difference is the volatility of the market. The stock market is comparatively much more stable than the crypto market, which is characterised by wild price fluctuations. Another difference are assets on the crypto market. On the regular stock market you invest by buying shares in a company.

With crypto, you are investing in the idea or technology behind the currency. How the markets are regulated is also not an unimportant difference. Because the stock market has been around for a while, it is now also well regulated, while regarding the crypto market regulators are still struggling to make good regulations.

Bitvavo advanced explanation: Create an account and deposit fiat money

To start using Bitvavo advanced you must first create an account. To create an account, go to the Bitvavo website and click on “Sign Up”. Then the ‘Create Account’ screen will open where you can enter your name, email address and a password. To complete the account creation process click on Create Account.

Then open the email account you used to create your account and open the confirmation email you just received. Then click on “Confirm e-mail address” in the e-mail and you will be redirected to the Bitvavo website where you have to click on “Verify”. Your Bitvavo account is now created and you can start trading and investing.

Fiat money deposit at Bitvavo

After you have verified your account, you can log in to deposit fiat money and buy crypto currencies. If you want to deposit less than €5000 into your account, you do not need to go through the identification process to deposit money and you can start trading immediately.

However, to withdraw or deposit digital currency it is necessary to verify your identity. This also applies to withdrawing money in Euros from your Bitvavo account. Trading platforms are obliged to carry out this Know Your Customer (KYC) verification to prevent fraud and money laundering.

If you wish to deposit money into your Bitvavo account, you can do so by means of a SEPA transfer or an iDEAL transaction. With an iDEAL transaction there is no fee and the transaction is completed faster. You can only deposit from a bank account which is in the same name as your account.

To deposit fiat currency, go to the bottom of the dashboard, where you will see ‘Deposit Euros’ under ‘Portfolio’. After entering the amount, you can deposit euros to your Bitvavo account using your preferred payment method. You have now added credits to your account which you can exchange for crypto.

If you want to trade, deposit and withdraw unlimited crypto and fiat currencies, you will need to provide evidence to verify the source of your assets. This could be an annual statement, a salary slip or a tax return.

The tools on the Technical Analysis (TA) website

If you want to trade in crypto currencies, it is useful to know what the prices are doing. In the Bitvavo interface, you can find several charts that show the price movements. You can use the so-called candlestick charts to predict how the market of a crypto currency will move.

The bars in the chart (candlesticks) indicate whether the market is bullish (a buyers’ market) or bearish (a sellers’ market). In case of a buyers’ market you can expect a price increase and in case of a sellers’ market a price decrease is possible. These candlestick charts are good tools for making predictions which are relatively easy to read.

You can see by the colour of the candlestick whether the market is bullish (green) or bearish (red). If you take a good look at the candlesticks you’ll see that there’s a thin line sticking out at the top and the bottom, the wick of the candle as it were. The stick itself indicates the opening and closing price within a certain time frame, and the wick shows the highest and lowest values the coin has reached.

Trading techniques for cryptocurrencies

The charts you find in your dashboard can be used to analyse and evaluate crypto currencies. The two ways or trading techniques you can use for this are Fundamental Analysis (FA) and Technical Analysis (TA). These techniques complement each other. So don’t limit yourself to only one of the two techniques but use them both to identify opportunities on the crypto market. Below we briefly describe what Fundamental Analysis and Technical Analysis entail.

Fundamental Analysis (FA)

A fundamental analysis (FA) can be used to determine the value of a crypto currency based on economic and financial factors. You can find out whether the current valuation of the coin is overvalued or undervalued by means of an FA.

When applying an FA to crypto currencies, you evaluate blockchain data such as network hash rate, network applications, inflation or deflation by token or coin issuance, network costs and transactions. In addition, you also consider so-called off-chain data such as community involvement and prevailing government regulations.

Technical analysis (or TA)

In Technical Analysis (TA) you try to predict the price movements of a currency on the basis of its historical prices. TA mainly uses technical indicators such as trading volume, moving averages, trend lines, candlesticks and chart patterns. TA can be used for both day trading and long-term investing.

Bitvavo advanced crypto currency trading strategies

To trade crypto currencies successfully, you need an effective trading strategy. Setting a trading strategy in advance helps you determine when to trade, why you should make a particular trade and how it should be done.

Therefore, in this Bitvavo advanced explanation we will also pay some attention to the different trading strategies. Whatever strategy you choose: Keep emotions at bay. Emotions are a bad advisor if you want to trade.

Here are the three most popular crypto trading strategies.

Day trading and scalping

Because the crypto market is so volatile, as a trader you can profit enormously from the volatility of the market. In day trading you carry out several transactions in one day. The aim is to buy low and sell high so that at the end of the day you have an average in which you have made more profit than you have lost.

Because the crypto market is so volatile, it is almost impossible to do this manually. With this strategy, most traders therefore use crypto trading bots which can quickly spot opportunities and place an order.

With scalping, traders profit from the small price changes that occur in extremely short trading periods. We are really talking about minutes. For day trading you mainly use TA-techniques.

Swing Trade (Swing Trades)

As a crypto trader, you can also capitalise on and profit from starting or continuing trends. This is called swing trading and is sometimes called BTFD (‘buy the f’n dip’). Also with this strategy you buy when the price is low and you sell when the price is high. Swing trading takes place over a longer time period than day trading, ranging from a few days to a few months. You need both FA and TA techniques for this strategy.

Position trade (HODL)

Position trading or trend trading are actually long-term investments. It is a strategy whereby a trader or investor typically buys a coin when the price is low and sells when the price is high, just like the previous strategies. The difference is the long period of time between opening and closing a position. A transaction with this strategy can take months and sometimes even years.

Position trading is an ideal strategy for investors who do not want to keep track of all the minute price movements all the time. This strategy is sometimes called ‘HODL’ (or Hold On for Dear Life) in the crypto world and is derived from a play on the word ‘hold’. In this strategy, a crypto trader buys a coin or token and holds on to it, even if prices fall sharply.

Bitvavo advanced explanation: The different types of orders you can place

Bitvavo currently supports the following order types: Market order, Limit order and a Stop Limit order. Market order is an order that is executed immediately at the best available price at the time. Market orders are the simplest order type, with no predefined price or time frame.

With a limit order, you indicate a maximum price at which you wish to buy or a minimum price at which you wish to sell. Limit orders are executed only if possible at the specified limit price, making them the safest type of orders. At Bitvavo you can place the following types of limit orders:

  • Good Till Cancelled: Your order is executed at the specified price or a better price. Your order will remain in the order book until it is executed or cancelled by you.
  • Immediate Or Cancel: Your order will be executed at the predetermined price or at a better price. Your order must be capable of immediate execution in whole or in part, and the part that cannot be executed immediately is automatically cancelled.
  • Fill or Kill: Your order is executed at the pre-specified price or a better price. Your order must be able to be executed immediately, otherwise it will be cancelled. Finally, there is also the Stop Limit order.

Finally, there is also the Stop Limit order.

Stop Limit Order and Stop Loss Order at Bitvavo

Crypto currencies are volatile by nature, which has the advantage that you can make large profits in a short period of time, but you can also suffer large losses. In order to gain more control over possible losses or to protect your profits, it is useful to set up a Stop Limit Order at Bitvavo.

With a limit order, you set a limit at which the order may be filled. You must set two different prices:

  • The trigger price, which is the price at which the order is initiated. As soon as the last traded price reaches the trigger price, your limit order is placed.
  • Limit price, which is the maximum price at which you want a limit order to be filled. Your order will then only be executed at this price or better.

You can reach a certain price by placing a stop limit order. However, a stop limit order does not guarantee that the order will be executed as the price may not reach or exceed your limit price.

With a Stop Limit order, the order is only executed after the price has triggered, but with a Stop Loss order, the order is immediately executed at the current price.

So why would you choose a Stop Limit Order or a Stop Loss Order? The advantage of a Stop Limit Order is that it is immediately filled if the market is erratic and shows many rapid peaks and troughs. The advantage of a Stop Loss Order, on the other hand, is that it is a lot simpler and therefore easier to execute, especially for novice traders. At Bitvavo, you can only choose a Stop Limit Order. Unfortunately it is not possible to place a Stop Loss Order at Bitvavo.

Placing a Stop Limit Order with Bitvavo

If you want to place a Stop Limit Order at Bitvavo you need to follow a few steps. You can only place Stop Limit Orders in the advanced section of the interface.

1. In the advanced section of the interface, select a particular currency for which you wish to place an order.

2. Now choose between BUY if you want to buy above the current price or SELL if you want to sell below the current price.

3. You must now determine 3 variables:

Trigger price: The price at which you should trigger your limit order.

Quantity: The amount of coins you want to buy of a certain currency.

Price: The price at which the limit order is to be placed and filled.

Make sure that you place the Trigger price and the Price a little apart so that there is room for the order to be filled. Furthermore, placing an order does not guarantee execution, as there must be sufficient liquidity to fill the order.

4. Now click “Continue” to place the Stop Limit Order

You can reach a certain price by placing a stop limit order. However, a stop limit order does not guarantee that the order will be executed as the price may not reach or exceed your limit price.

With a Stop Limit order, the order is only executed after the price has triggered, but with a Stop Loss order, the order is immediately executed at the current price.

Staking at Bitvavo

If you have crypto coins in your Bitvavo account that you are not currently doing anything with, you can decide to ‘staking’ your crypto. Staking allows you to make money with crypto coins and comes in two forms:

  • Off-chain staking where you make money by leaving the crypto in your Bitvavo account.
  • Staking on the chain where you actively contribute to the approval of transactions (similar to mining) on a proof-of-stake (POS) blockchain.

At Bitvavo, you can choose to staking with different crypto currencies. If you want to make money with staking, click on the crypto currency in your Bitvavo account and click on the ‘opt-in’ function which you will find in your account under ‘Staking’.

Leave a comment