Crypto Trading: Main Things to Know On the Start
The Internet has provided many opportunities to make money online. And with the advent of blockchain, the list of possible sources of income has expanded even more. A large share of remote earnings falls on cryptocurrencies and related operations.
Сryptocurrency becomes interesting for investing in order to generate income. Today, anyone can conduct trading operations in cryptocurrency. Despite the increased risks of investing in cryptocurrency, more and more people are ready to overcome their fears, because on the other side there are incredible prospects for making a profit. However, you should not hope for a quick profit, in order to successfully make money on digital cash trading, you need to have a sufficient amount of knowledge.
Cryptocurrency trading. First Step
Crypto trading is one of the main ways to make money on cryptocurrency. Trading in cryptocurrency tokens is not significantly different from trading in precious metals, currencies, and stocks. The main task remains the same: buy as cheaply as possible, sell at a higher price, and make a profit. The main difference between cryptocurrency trading and the stock market is the high volatility of the exchange rate. Many traders dream of a return of thousands of percent on a deal, but in the stock market, such a deal has to wait for years, buying back shares of little-known companies in anticipation of their capitalization growth. At the same time, fast trades with high profitability are not uncommon for crypto trading.
It is impossible to start successful cryptocurrency trading from scratch. Having decided to invest free funds in cryptocurrency trading, you should, first of all, prepare a knowledge base. For successful trading, a crypto trader must learn basic skills:
· to analyze the cryptocurrency and its trading volume;
· use charts and encodings;
· to conclude sale and purchase transactions;
· track your trading history.
When assessing the viability of a cryptocurrency, you should pay attention to the following aspects:
· what idea the cryptocurrency was created for and how much it can be in demand;
· speed of transactions and convenience of working with tokens;
· professionalism of the development team;
· demand and popularity.
The combination of these factors provides an increase in the capitalization of the cryptocurrency and, accordingly, its value. The charts display the history of the growth of the token rate in relation to another cryptocurrency or fiat money. Charts can be drawn using the exchange interface, specifying a different time interval, and choosing different trading pairs. With its help, you can conclude how reasonable the current price is and give a preliminary forecast for further changes in value.
Based on the history of trading and volumes, they track the total liquidity of the cryptocurrency, how interesting it is to users, and the demand for it is growing or decreasing.
Based on the knowledge gained, it is possible to draw a conclusion about the profitability of the cryptocurrency, predict its movement, and make a profitable deal.
To make a deal, a trader must place an order by choosing a trading pair to exchange and indicating the number of coins he wants to sell and their value. You can place and close orders non-stop, but the most preferred is American and Asian time. It is during this period that especially high activity is observed, which makes it possible to more clearly predict the rate and make a quick deal.
Features of Investing in Cryptocurrency
The most popular cryptocurrency bitcoin in December 2017 crossed the $ 20,000 mark. Its main advantage is the limited amount of capitalization — 21 million tokens. This means that each new bitcoin purchased decreases the number of coins remaining. This trend allows Bitcoin to grow exponentially. Thanks to active investment in bitcoin, the entire cryptocurrency market begins to flourish, including altcoins, which are characterized by good volatility and liquidity.
Due to the growing popularity of cryptocurrency, more and more investors are willing to risk their money. Cryptocurrency trading is attracting more and more new speculators — both beginners and experienced ones.
The high liquidity of digital cash encourages the creation of new cryptocurrencies. At the moment, there are more than a thousand tokens of various cryptocurrencies on the market. However, most cryptocurrencies are not in demand due to the huge amount of capitalization. But there are 10 of the most popular cryptocurrencies that are highly volatile, and wise investments can bring great dividends. In order to make money on cryptocurrency trading, you need to be able to correctly predict the future price movement.
Initially, the purchase of a cryptocurrency is made if the trader, based on the analysis performed, considers its current value to be low. The next task is to sell it when its value rises. In order to choose the optimal moment for placing an order, you should return to the analysis and decide whether this coin is worth more. If not, then this is the optimal time to sell it and reinvest the funds.
Coming to the world of trading, one should say goodbye to greed. Do not wait long for profitable value. It is better to make several trades with a 100% chance of profit than to miss a moment while waiting for the value to fall or rise as much as possible.
Most traders use a strategy based on the analysis of the order book. Depth of orders — a table of all placed orders on the exchange for one type of cryptocurrency. According to it, even for dummies, it will be clear what demand the cryptocurrency has, and what cost they are willing to pay for it.
Relying on orders of large volumes, it is possible to accurately determine in which direction the further rate of tokens will go, since it is the traders who trade in large volumes that determine the trends in the price movement and carry out large-scale changes in the rate, which are not influenced by insignificant trading participants. For them, the only opportunity remains to detect upcoming changes in time and use them to make a profit.
Where is the best place to trade?
Below we will look at options for where a beginner trader can get started.
Cryptocurrency exchange
The most common way is to trade on a cryptocurrency exchange. They contain all the tools necessary for a trader, allow you to track the rate and history of transactions, place and redeem orders, replenish and withdraw capital. When choosing a cryptocurrency exchange, you should pay attention to the following factors:
· Trading volumes of the exchange. To make quick deals, it is recommended to choose exchanges with a high trading volume.
· Language support and interface. The cryptocurrency exchange is the main tool of the trader. It should be clear and easy to use.
· Methods of depositing and withdrawing funds must be accessible to the trader.
· Trading pairs. Not all cryptocurrencies are traded on exchanges, and even the trading pairs of popular altcoins may differ. Some platforms provide the ability to make transactions between fiat currencies and cryptocurrencies, some are limited to digital transactions only. When choosing an exchange, be sure to study the pair trading of cryptocurrencies presented on it.
Choose only trusted sites with high user protection. If not all pairs of interest are represented on the trading exchange, then several of the most suitable options can be used. And then transfer funds between exchanges using transactions to internal wallets.
Cryptocurrency broker
If mining cryptocurrencies requires a large amount of special knowledge, and experience is required to trade on the exchange, then for trading through a broker you only need to open an account with a brokerage company.
Financial experts often voice their opinion on the increased risks due to the high volatility of digital cash, but proper money management and a trading strategy can turn trading into a profitable activity. It is always worth remembering about money management and not risking more than 2–3% of the entire deposit on one deal. Following these rules, you will be able to earn in the long term.
Advantages and Disadvantages of Crypto Trading
Benefits
• high volatility of the cryptocurrency market, which provides high percentages of profitability on transactions
• opportunity to start with small investments
• decentralized and secure trading system
• large selection of trading pairs
• the ability to make transactions online at any time
• the rapidly developing field of cryptocurrencies provides an opportunity to earn high income by investing in new projects
Disadvantages
• successful trading is impossible from scratch without learning additional knowledge
• requires constant monitoring of news reports and market analysis
• relatively stable trading pairs (bitcoin-dollar) bring modest income
• traders use professional terminology, which is not easy for a beginner to master
Conclusion
Cryptocurrency trading provides wide opportunities for earning. You can start trading on the exchange with minimal investment, but for profitable trading you will have to make a lot of effort and devote time to in-depth analysis of the cryptocurrency and the market.
