Where to start cryptocurrency trading
The popularity of the topic of earnings on cryptocurrencies is growing along with an increased interest in cryptocurrencies themselves and their development. At the moment, according to coinmarketcap.com, there are more than 1900 different cryptocurrencies in the world that are traded on more than 14 thousand sites. And each of these exchanges has its own traders.
Now imagine how popular cryptocurrency trading is and how many people are involved in it. Even now, in a period of decline in investment activity and interest in cryptocurrencies, daily trading volumes amount to 20-30 billion dollars. As you can see, the numbers look very impressive.
But in cryptocurrencies, as well as in any other field, you need to understand. First of all, you need to know the principles of operation of the main cryptocurrencies, the value that they have for society, that are new.
The fact is that despite the large number of existing cryptocurrencies, most of them have no practical value, but simply duplicate the more successful cryptocurrencies.
Almost all cryptocurrencies are open source so that anyone can check them for vulnerability. Thanks to this, copying an already existing successful and popular cryptocurrency and launching a new one is not very difficult.
The ecosystem surrounding it is important for any cryptocurrency, that is, wallets that support this cryptocurrency, miners who mine it, exchanges and exchangers, so that it is easy to exchange cryptocurrency and stores that accept cryptocurrency as a means of payment. But cryptocurrencies with a developed ecosystem are units.
The most stable cryptocurrencies from the list of TOP 10 cryptocurrencies by capitalization. The behavior of other cryptocurrencies is difficult to predict even for professionals, not to mention newcomers.
Also, one should not forget that scammers often use unknown cryptocurrencies for various tactics of manipulating courses. They artificially raise hype around a cryptocurrency or token, starting to actively buy it. The rest of the investors, seeing that the asset is in demand and its price is rising, also begin to buy it. After the price of an asset has grown quite strongly, scammers get rid of purchased coins. The rest of the investors are left with stocks of useless cryptocurrency, the price of which begins to plummet.
The fact is that the cryptocurrency market is not yet settled. Along with traders, there are many scammers on the exchanges, whose actions are not limited to anyone and, trading in a little-known asset, an inexperienced trader can fall into the hands of experienced scammers and manipulators.
Therefore, before embarking on trade, it is necessary to carefully study the asset and understand its usefulness for society, it is also necessary to study the infrastructure around the asset in order to understand how developed and self-sufficient it is.
Cryptocurrency Trading Strategies
Just like in HYIPs, there is no ideal strategy in cryptocurrency trading that is suitable for all cryptocurrencies and different market situations. All cryptocurrencies are extremely volatile, that is, their course fluctuates greatly.
But even despite the volatility, there are more stable cryptocurrencies and less stable. The least susceptible to Bitcoin fluctuations. But making money on it without trading huge volumes is extremely difficult.
The most volatile are little-known cryptocurrencies and tokens. But among these assets, scammers and various manipulators often thrive. On many exchanges, groups of manipulators thrive, conspiring to warm up the hype around a certain asset, and then merge it. Therefore, trading in unknown cryptocurrencies carries a big risk for the trader, since the hype around the cryptocurrency can be caused artificially and is not justified by anything.
Despite the fact that now there are more than 1900 different cryptocurrencies, more than half of the entire cryptocurrency market belongs to Bitcoin. This is called the dominance index and means that if Bitcoin falls, other cryptocurrencies will also fall, since Bitcoin dominates the market.
To select a strategy, it is necessary to take into account the following parameters:
- Market condition
- Cryptocurrency volatility
- Trading time frame
- Base capital
Key Trading Recommendations
Better to trade in a stable market. But the problem with the cryptocurrency market is that it is not stable. The market is influenced by news, most of which are difficult to predict.
Therefore, the cryptocurrency market is more risky than the classic.
The risk of the cryptocurrency market is increased by the fact that classic exchanges are subject to state control and licensing. There are strict laws. Manipulation of rates and collusion of large investors on classical exchanges is prohibited.
The cryptocurrency market is either not regulated at all, or is still poorly regulated by the state. Scammers have many loopholes for deception and abuse. In the cryptocurrency market, speculation, manipulation of courses and various abuses flourish.
This makes it possible to earn money, but even more it increases the risks of losses.
Based on the foregoing, the following recommendations can be made.
- Trade the most stable cryptocurrencies. Enter the falling market, exit the rise. Do not rush, be able to wait. The fact is that the main cryptocurrencies usually “forgive” the trader’s mistakes. And if you missed the next rise in courses, you have the opportunity to wait for a new jump in the course.
- Capturing and withdrawing profits. Cryptocurrencies fall for a fairly long time, so if you do not take profit at the time of the next rise in prices, the next rise may not be so significant and you simply will not have money to buy during the next fall.
- If you decide to take a chance and choose a little-known asset, then it is better to take profits on time and exit. Here the tactics are the same as in HYIPs. Gradually, you need to sell assets while their price rises. Since if an asset does not have practical value, then its rate growth is temporary and it is necessary to get rid of such an asset quickly.
- Learn the news to predict the movement of courses.
- Carefully study the glasses, especially pay attention to the orders of large traders, since the market is done by large traders and market orders can be predicted by their orders.
- If you decide to trade a little-known asset, carefully study it. Remember that in the field of cryptocurrency trading there are a lot of manipulations and frauds. But this does not mean that you will not be able to earn money on the machinations of others. You need to know the rules of the game in order to be able to get out of the traps that the manipulators set to profit.
Where is better to trade
Suitable for self trading.
Ideal exchanges do not exist. Each exchange has its advantages and disadvantages, as well as its own characteristics.
When choosing an exchange, you need to pay attention to the following points:
- Liquidity of the exchange. The greater the volume of trading on the exchange, the more opportunities for traders.
- Availability of a license at the exchange. Theoretically, the presence of a license says that there is more order on the exchange, since it is controlled by the regulator. In fact, an exchange license means that exchange customers must undergo mandatory verification and KYC procedures. Therefore, the management of many exchanges specifically selects jurisdiction in order to avoid licensing and mandatory verification of users.
- Centralized or decentralized exchange. Centralized exchanges have higher liquidity. Decentralized exchanges are more secure, and no one can block the accounts of traders, as is often the case on centralized exchanges.
- Does the exchange work with fiat money. You need to learn in advance how to replenish and withdraw funds, so that it is convenient for you.
Unlike exchanges, all brokers are licensed. They have stringent requirements for traders. Various frauds with courses and other abuses that abound on various exchanges, with cryptocurrency brokers, are either minimized or prohibited.
You can trade with a cryptocurrency broker only with the main cryptocurrencies, the source codes of which are carefully checked for vulnerability and are safe.
The fact is that many cryptocurrencies are created not by professional programmers, but by amateurs, and contain vulnerabilities in the code. Through this vulnerability, the exchange is hacked and cryptocurrency is withdrawn from it. For any exchange, hacking is a loss of reputation, therefore, cryptocurrency brokers are much more careful in checking the cryptocurrency for vulnerability than exchanges.
Trading with cryptocurrency brokers is much safer, but they set their requirements for traders. Among such requirements are: mandatory verification, requirements for trading volumes or minimum deposit volume. Brokers more closely monitor the transactions of traders and control so that there are no fraud and manipulation.
Typically, brokers provide a more complete set of tools than exchanges. Often brokers offer trust management to their clients, as well as conduct training seminars and provide educational literature and news support.
Advantages and disadvantages of cryptocurrency trading
- Volatile market provides great opportunities for earning
- Large selection of cryptocurrencies for trading
- Large selection of exchanges for trading
- Different rates for the same cryptocurrency on different exchanges provide excellent opportunities for inter-exchange arbitrage
- Unstable market, lack of government regulation
- Numerous fraud on exchanges
- Hacking exchanges, risks of blocking the accounts of traders
Trading cryptocurrencies at the present time, despite the high potential profit, is extremely risky. The market is not fully formed, there is no single regulation and rules of the game. There are a huge number of market abuses and various frauds. To successfully trade in the cryptocurrency market, you need to know the cryptocurrencies themselves, their features, as well as take into account possible abuses in the cryptocurrency trade and be prepared for them.