Profit is a common concern when trading stablecoins, as their minor fluctuations can make it seem difficult to make money. However, you can make a profit trading stablecoins, but it is important to understand the risks involved and have a realistic expectation of how much profit you can make.
Our article will give you instructions to trade stablecoins on GMX DEX and some tips to make a profit trading stablecoins.
Disclamer: This article is for information and discussion purposes only. It should not be used to make investment decisions or seen as an offer, recommendation, advice, or solicitation for any investment.
How Can You Make Profits Trading Stablecoins?
Stablecoins are designed to maintain a stable value relative to a fiat currency, such as the US dollar. That said, their prices are less volatile than other cryptocurrencies, but it also means that there is less potential for profit.
So, how can you make a profit trading stablecoins? There are a few ways to do this:
- Arbitrage trading allows you buy stablecoins on one exchange and selling them on another exchange at a higher price. Arbitrage opportunities are typically small and short-lived, but they can be profitable if you are able to identify them and execute them quickly.
- Leverage trading enables you to borrow money to trade with more money than you have in your account. Leverage can amplify your profits, but it can also amplify your losses.
Apart from those methods, you can alternatively make a profit with swap trading, but only if you pay extremely close attention to the charts, notice the slightest changes, and make quick decisions. More importantly, you need a large trading volume to make any wishful profits and of course, a stroke of trading luck.
Currently, GMX supports 3 stablecoins - Tether (USDT), USD Coin (USDC), DAI (DAI), and FRAX (FRAX).
To start trading a stablecoin on GMX , we suggest that you have a MetaMask browser installed with ETH (on Arbitrum) and AVAX (on Avalanche).
How to Trade Stablecoins on GMX Decentralized Exchange: A Guide to Swap Trading
Below is a step-by-step guide to trading USDC on GMX DEX. You can always pick another stablecoin.
Step 1: Connect and Configure your Wallet
- First, you need to add Arbitrum Network to MetaMask. You can add the network (Arbitrum One) manually. Typically, when you click 'Connect Wallet,' GMX automatically connects and adds Arbitrum One.
Step 2: Buy ETH / Add ETH to Your Account
Option 1: Add ETH Using Hop Bridge (Directly on MetaMask)
- Since Arbitrum uses ETH as gas fee, you will need to top up your account with ETH (and later you can swap ETH to USDC and start trading).
- As seen in the notice above, you must use a bridge to send ETH from your current wallet (in this guide, Chainlink mainnet) to Arbitrum One.
- Open your wallet, choose 'Bridge.'
- After that, you will be transferred to the following page. Fill in the amount you want to send and choose the networks. The minimum of each transfer is $10.
- Note: Because you send ETH from the Ethereum Network to the Arbitrum network, MetaMask will ask you to switch (again) from Arbitrum (step 1) to Ethereum in order to facilitate the token transfer.
- Double-check all the information and press 'Confirm.' Now, you wait for it to complete. The process typically takes up to 5 minutes.
Option 2: Buy ETH Directly or Transfer ETH from Other Networks
- You can buy ETH directly using the below options or transfer ETH from Binance or Synapse. Remember to be cautious when interacting with the options you're unfamiliar with (DYOR).
Step 3: Trade USDC on GMX
- Navigate https://gmx.io/#/ and choose 'Launch App.' You will be directed to https://app.gmx.io/#/trade.
- Click on 'Connect Wallet' and pick 'MetaMask.'
With the ETH balance on Arbitrum, you can swap ETH to USDC and start trading.
- Choose 'Swap' if you want to perform Swap trades.
- Choose the trading pair.
- Enter the amount, double-check, and click on 'Swap.'
- Confirm swap and wait for a few seconds.
- You will see a notice at the bottom right of the interface.
Note: Perpeptual trading for stablecoins is unavailable on GMX.
Tips for Trading Stablecoins
Start small or start big?
Unlike trading other cryptocurrencies, stablecoins are less volatile, which makes them less likely to experience huge price swings. This leads to a paradox: starting small may be a good idea when you trade ETH on GMX, but it may not work when you trade USDC.
Do your own research (DYOR)
As a rule of thumb, you must research and understand the risks involved. This includes understanding the different trading strategies, types of orders, and the fees associated with trading on GMX DEX.
Don't trade emotionally
Trading emotionally is one of the most common trading mistakes. Staying calm and making rational decisions when trading is essential. Don't let your emotions get the best of you, especially when losing money.Be patient: Trading is a long-term game. Don't expect to 'get rich quick.' Be patient and focus on making consistent profits over time.