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Everyone seems crazy about cryptocurrency trading! And why not? Crypto is the future. It disrupts not only financial sectors but also major sectors such as information technology, healthcare, retail, travel and tourism, automobiles and many others. However, owning cryptocurrency is great, but handling it in the right way is challenging. Is cryptocurrency trading a trend, and are people interested in learning how to do it? If you are interested in starting cryptocurrency trading, you have come to the right page. This article will provide a complete guide to cryptocurrency trading.
Overview
In order to trade cryptocurrency, many factors and specific steps need to be followed. Experts recommend that before investing time and money into this particular field, it is essential to have a comprehensive knowledge of cryptocurrencies, crypto exchanges, cryptocurrency security and all the necessary terminologies related to cryptocurrency trading. In this busy cryptocurrency market, it is very important to keep the right strategies in mind to make the right trading decisions and be aware of the potential risk at any given time. Although cryptocurrency trading is different from stock market trading, some concepts of stock market trading can be considered when understanding cryptocurrency trading. Therefore, stock market knowledge can be advantageous when implementing crypto trading.
What is Cryptocurrency Trading?
Before going directly to cryptocurrency trading, let us understand the meaning of trading. Trading can be defined as the economic concept of buying and selling assets. Assets can be goods and services exchanged between trading parties. Here we are talking about financial markets where financial instruments are traded. These can be stocks, currencies, cryptocurrencies, margin products, etc. Trading is generally considered short-term; However, this concept is misguided by many. Also, we will discuss the types of trades i.e. day trading, swing trading and trend trading in detail later.
Cryptocurrency trading is the buying and selling of cryptocurrency using a crypto trading platform or exchange. Some of the most popular cryptocurrency trading platforms are Coinbase, Binance, CoinDCX, etc. The idea behind cryptocurrency trading is to get profitable results over a period of time. Trading is different from investing and we are going to discuss the concept behind it further.
Difference between investing and trading?
Investing is very different from trading; Trading has the concept of making a profit over a certain period of time, but investing works when you hold assets for a long period of time. While making any investment, we should look for long term trends and keep an eye on short term fluctuations in the market. In cryptocurrency investing, the main goal is to get more coins. For example, if you bought four bitcoins at a certain price, after a few years, the total investment value of your asset will increase in proportion to the price of the coin.
On the other hand, trading is concerned with short-term fluctuations, so it is essential to understand the daily market while trading. The main goal is to earn dollars or other currency. Experts recommend understanding market trends and short-term price trends if you want to excel in cryptocurrency trading. It's like buying low and selling high so the trends turn in your favor. In cryptocurrency trading, you will often need to drop coins to get the maximum profit.
The structure of the trade
The structure of the trade combines the buyer and the seller. In trading, one will gain and the other will lose. In simple words, if the person makes a profit from the sale, the other person will get less profit. When you get into cryptocurrency trading, keep it clear that you understand the market trends to avoid high losses. Since the crypto market is volatile, it is always recommended to invest the amount you can afford to lose, and if you are a newbie, you should consult an expert. A certified cryptocurrency trader is an expert in managing the buying and selling of cryptocurrency by considering market trends. Also, they are aware of the trade structure and execute the trade accordingly. If you are interested in exploring crypto trading, you should consider factors that influence market trends. For example, when more people buy a particular order, the price usually goes up. Conversely, when people sell more than they buy, prices fall.
To better understand the market trends, we understand different types of trading strategies.
Different types of trading strategies
There are four active trading strategies that generally work through the market. An active trading strategy can be defined as the act of safe buying and selling taking into account short-term market trends and profiting from market volatility. Many experts believe that active trading strategies differ from long-term strategies where investors buy and hold assets.
The four strategies are scalping, day trading, swing trading and spot trading, which are explained below:
Scalping
Scalping is a short-term trading strategy followed by many experts to make quick profits. In these types of trades, people hold coins for a few minutes or seconds. However, the profit is not as much as other trading strategies. The purpose of scalping is to make small gains that accumulate throughout the day. The optimal time to execute the trade is when the market is busy, then the chances of profiting are maximum. Certified cryptocurrency traders and experts actively practice scalping to profit from small price movements.
Day trading
This type of cryptocurrency trading involves holding assets for a day. Day trading is also known as "intraday trading" where traders enter the position and exit within the same day. In this type of trading, basic technical analysis should be considered using technical indicators to help determine current market conditions and identify trends. Executing this type of trade also gives small profits; However, it also insulates you from overnight market volatility. Day trading is usually held for a few hours.
Swing Trading
In the swing trading strategy, people hold the position for several days or weeks. This type of trade usually follows short to medium term trends of 1-30 days. A person who is not active on a daily basis and devotes time to his job can implement this kind of trading strategy. Here, you don't have to worry about daily fluctuations becai] in swing trading you don't hold the cryptocurrency for a day. However, following the trend and checking the daily analysis will help you make optimal profits.
Spot trading
In this type of trading strategy, you should focus on long-term price movements. To maximize profits, trading experts consider key price movements. Position trading is also known as "trend trading" as traders tend to hold the position for a longer period of time. Also, analyzing weekly and monthly price charts can be helpful for you in evaluating market trends. When implementing this type of trading strategy, traders do not worry about small fluctuations in price. In fact, they only care about major market trends and follow up accordingly.
So depending on your need and availability, you can choose any cryptocurrency trading strategy.
Cryptocurrency Trading Steps
For beginners, it's imperative to follow the proper steps for cryptocurrency trading. Here are few steps which you can take and start your trading journey.
Step 1: Look For Cryptocurrency Exchange
As a beginner, the very first step is to look for the best cryptocurrency exchanges. Some of the most popular ones are:
- Binance
- Coinbase
- Kraken
- CoinDCX
- Gemini and many more.
You need to make a crypto brokerage account. It will be similar to opening a stock brokerage account. Also, make sure to provide the necessary information required.
Step 2: Fund Your Account
As soon as you create your account in any of the Cryptocurrency exchanges, the next step is to fund your account. Using debit cards and wire transfers. You can easily add money to your digital wallet. Also, wire transfer is one of the cheapest options for funding your account. Crypto exchanges like Coinbase and Gemini provide wire transfers for free.
Step 3: Choose your Cryptocurrency
There are many cryptocurrencies in the market, but most expert traders go for bitcoin and ethereum. The reason is that these cryptocurrencies are more predictable than other small coins. However, the altcoins have also seen a rise of about 1000% in just a month which can be considered as a good option while trading.
Step 4: Choose a Strategy
Picking up a trading strategy is a critical step in cryptocurrency trading. Therefore, by utilizing the trading indicators with the correct fundamental and technical analysis, you can achieve high profits in cryptocurrency trading. However, if you are a beginner, pursuing a cryptocurrency trading course and becoming an expert is recommended.
Step 4: Securely Store your Cryptocurrency
Finally, it is essential to store your crypto in a safe place. For that, you can choose a digital wallet, and it can be software or hardware. Cryptocurrency wattles are highly recommended for storing your digital assets. Cryptocurrency security can be achieved more with hardware wallets.
Conclusion
We have discussed the basics of cryptocurrency trading, which includes trading, the structure of cryptocurrency trading, types of trading strategies, and steps that must be taken to start crypto trading by yourself. If you are interested in learning more about cryptocurrency trading and blockchain technology, check out the blockchain council.
If you want to keep up with the trends of the blockchain industry, join our communities on Discord, Reddit and Telegram.
Disclaimer: All the information provided above is merely for the purpose of your knowledge. We do not deal with any type of cryptocurrency trading. Therefore, we recommend doing proper research and learning before investing your money in cryptocurrency trading.
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