The rapid growth of cryptocurrency exchange rate caused an increased interest in this industry among a wide range of people. It should be noted that many people still believe that Bitcoin and other coins are pyramids or bubbles, which sooner or later will collapse / burst, leaving their contributors with nothing. Such thoughts often arise in the minds of people who do not understand the topic at all. This is absolutely normal, when the general public does not accept the new technology and treats it skeptically. It was the same with all the fundamental things that eventually changed the world, like radio, television and mobile phones.
But even those people who do not believe in the future of cryptocurrency do not deny that you can make money on the fluctuation of the coin rates. That’s how we are approaching our today’s topic – cryptocurrency trading.
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- What is cryptocurrency trading?
- How to learn cryptocurrency trading?
- What are the main strategies of cryptocurrency trading?
- How not to lose the whole trading deposit?
This article will be useful only for beginners, who have a basic understanding of the process. For example, if your knowledge of trading consists of one sentence: buy cheaper, sell more, then you will learn a lot of new stuff here, find answers to frequently asked questions and plan your future strategy.
So, cryptocurrency trading is the purchase of an asset at a lower price, selling it at a higher cost at the right time and receiving profits. The volatility feeds the trader. The trader does not care what happens to the market in a global sense, his/her main earnings is the difference he/she gets from playing on the fluctuation of the exchange rate. It means that the trader can earn in the falling market as well. Of course, he/she tracks market movements (bears, bulls, trading range, etc.) and forms his/her trading strategy on the basis of those. Obviously, it is easier to make money in a growing market, but what distinguishes an investor from a trader is that the former earns only if the rate increases, while the latter is more autonomous.
Cryptocurrency trading for beginners is full of unpleasant experiences and 99% probability of losing the whole trade deposit. Thus, the formula for successful trading sounds like this: “Stop being newbies or stop trading at all.” Of course, people are not born with the gene of a trader in their DNA, this certainly needs to be learned. However, it is very important to understand that you must not trade a substantial sum which belongs to you or someone else at the initial stage (up to one year). There are a lot of nuances incryptocurrency trading that need to be taken into account. The industry is still too young, so the market is very volatile (subject to sharp jumps in the exchange rate) and sometimes not quite rational.
A very important aspect, which you should pay attention to first and foremost is the study of professional terminology. There is a so-called “Dictionary of the cryptocurrency trading”. Not knowing it, it will be rather difficult to plunge into trading on stock exchanges.
The ideal option is to find a mentor who inspires confidence in you and learn from him/her personally, since individual learning is more effective. Also, you can take various group online courses. In this case, try to attend the webinars, rather than watch them in the recording. In this way you will have an opportunity to ask questions in real time and be on the same level as the group.
Of course, you can just wander the Internet in search of information, but you should understand that not all content is useful and, most importantly, relevant. For example, something that worked in 2016-2017 will not bring anything except losses in 2018.
By and large, each experienced trader has his/her own personal trading strategy, but if we generalize and highlight the most widely usedones, we will get the following list:
- Scalping. Its name speaks for itself. Using this strategy the trader removes the surplus profit just like a scalp. Scalping involves high-intensity trade, the opening and closing of dozens and even hundreds of orders per day. For example, you buy BCT for $6103 and sell it for $6109 in 10 minutes. Earnings on one transaction are minimal, the profit is achieved due to a large number of transactions. The strategy is suitable for beginners, since it does not imply a deep technical analysis.
- Speculating for a fall or shorting. It involves buying assets on a downtrend and timely selling them with minimal growth. It is necessary to spend a lot of time peering into the trading terminal not to miss the price jumps.
- Daily. As part of this strategy, the coin is bought in the first half of the day at an average lower cost. After that, the trader observes the situation until the evening and sells the asset at an average higher price. For example, in the morning you buy coins which cost $500 per piece and sell them for $510 in the evening.
- Momentum. Trading with this strategy implies a complete immersion in the process. Trader actively monitors the volume of trading and news background. The success of working with this strategy depends on the ability to look through and filter tons of information. For example, you know that TRON will be listed on a new exchange tomorrow. So you need to buy this coin today and wait for tomorrow’s rally, at the first sign of a downward tendency you need to sell the asset immediately.
Frankly speaking, there are many reasons why even experienced traders can lose their savings. We will not consider them all, as no one is protected from the force majeure situation. The main rule of money management is diversification, that is, keeping assets in different places. Here are some basic mistakes, avoiding which you essentially minimize your losses. Let’s name the things that you should NOT do:
- follow the forums, chat rooms in Telegram and blindly copy their actions;
- trade using insider information from cheap or free signal groups;
- trust all insiders without conducting your own technical analysis;
- keep only one asset;
- buy because of hype and sell because of panic;
- trade emotionally;
- trade a substantial amount of money (credit card, debt, selling real estate to invest, etc.).
Trading on the cryptocurrency market is a fairly profitable sphere, but it will be very difficult to succeed in this field without proper education and knowledge. You should adhere to the rules of “smart” cryptocurrency trading and always stay calm and focused to trade coins successfully. You can not treat trading as a gamble, otherwise you can lose all your money.
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