Hi everybody. Many traders have become victims of impulsive decisions, while many other traders have made big profits by implementing the right trading strategies.
Today I will discuss the basics of cryptocurrency trading and what to pay attention to.
So let’s start.
How to trade cryptocurrency currencies ?
Unlike traditional stock markets, the crypto market is open 24 hours, which means you can trade at certain times.
However, it is not wise to trade at any time. Sleep is important because it allows you to rest and come back with a fresh mind.
However, you can set covers during the day to help reduce losses while you sleep, allowing you to negotiate at any time.
There is a lot to learn before doing your first job and learning the basics should not be taken lightly.
Type of business
The first thing you need to know before making an exchange is the type of exchange you will do. The two main types of transactions you will encounter are cash transactions and margin transactions.
Spot trading involves buying or selling assets to make a profit from the coins you want.
For example, if you have four litecoins but want to trade until you have five, you want to trade your bed for “Coin A” and “Coin B”.
You can invest three of your litecoins in coins A and the others become coins B. It is a question of distributing your assets. A week later, the price of Room A could have increased by 40%, while that of Room B would have dropped by 5%.
You can now sell pieces A and B to Litecoin. Using this method, you will now have more Litecoin than you started. If you have not reached the target, you can repeat this method to finish.
Margin trading is very different from cash trading because it involves borrowing money from a stock exchange with fees.
The loan money is called “use”. For example, BitMEX offers several levels of leverage ranging from 1x to 100x. The use of 100x leverage means that you trade with 100 times more than the money you originally invested in assets.
If you make a profit, the original leverage will be returned, leaving you with all your advantage. However, be aware that if the market moves against you, you will be liquidated.
This means that all funds in your account will be deleted - in the BitMEX example, you will not need to leverage them, but you will lose your initial deposit.
Free trade, or OTC, involves the exchange of fiat (national currency) against a cryptocurrency by an intermediary.
Your friend selling half of Bitcoin for you is technically an OTC transaction. Similarly, many companies facilitating OTC transactions, for example, LocalBitcoins.
Study the structure of the exchanges and the main requirements
Another essential aspect of learning cryptocurrency trading is the study of trade patterns and market climate.
By doing this, you will develop a “sense” of the market - this is important because any trade is done through speculation. There is no concrete answer to the evolution of the market.
For example, you may hear a merchant discuss Bart Simpson’s famous motive or falling slice. For newcomers, these terms can be very unpleasant.
Thus, Google’s quick search on trading patterns can bring up images with graphics. This chart will have a trend line drawn to show you what the trading model looks like.
When you can match the tread pattern to the current price movement, this indicates that the market will continue the trend shown in the chart of the trading model.
It is also important to learn key terms such as support, resistance and moving averages. These terms are very important for measuring price direction.
The two most common terms you will hear are “short” and “long”. In short, if you take it short, you are sure the price will go down, while you continue if you believe the price will go up.
After learning the basics, the most important things to learn are risk management and hedging. Without learning how to apply these techniques, you may lose a lot of money.
A risk management strategy is to never invest or trade with money that you can not afford to lose. This may seem very clear, but do not overdo it.
Another strategy to use is the stop loss, which is a classic tool when trading cryptocurrency. For example, if you place a trade for short, you can place a stop loss above the price you entered. This means that if the price increases and response to your stop loss, it will be triggered and the transaction will be canceled. You will still lose a small amount of money, but you will not be liquidated.
So, was it useful? So please let me know and also if you have a topic in mind that you want me to cover for you.