Today, cryptocurrency is confidently conquering the electronic world. Therefore, many who were able to appreciate its advantages quit their main job and devote themselves to trading. It has long been history that trading on exchanges was available only to a narrow circle of people, brokers who, buried in piles of securities, monitored the movement of prices of certain assets. The whole process associated with this activity almost completely went to the world wide web. Moreover, it has become available to most network users. Today, everyone can become a cryptocurrency trader, regardless of their level of knowledge and the amount of initial capital.
What are currency exchanges, securities and commodities – many know, and someone even engaged in more extensive study. The 21st century is an era of information technology and the virtual world, so the emergence of cryptocurrency exchanges trading in crypto-money is a quite expected phenomenon.
Modern virtual trends, originating in the hype industry, lead to the fact that this area is turning into far from the only place to earn money. And one of them is cryptocurrency exchange. Although, many experts agree that this is nothing more than another ‘financial bubble’, which after some time simply bursts. However, this approach is far from true. Having sufficient experience, certain specific knowledge and possessing information, you can work as efficiently as in the stock market or the Forex market.
The cryptocurrency exchanges, which are among the top ten, offer their users ideal opportunities for online earnings. And if you consider that there are cryptocurrencies that show daily growth of up to 100%, and sometimes grow by 1000% in a few months, then we can safely say that such exchanges are an excellent and fairly profitable investment tool that can significantly increase capital.
What is a cryptocurrency exchange
A cryptocurrency exchange is a platform where you trade and exchange one digital currency for another or for different world currencies, including dollars, euros, rubles and yuan. In addition to mining – the original way to create cryptocurrencies, exchanges are considered one of the ways to get them.
Cryptocurrency exchanges are a kind of analogue of trading, such as, for example, Forex. Each participant, investing real money, has the right to perform operations related to the analysis of bets, receive signals, sell and exchange bitcoins and other popular types of currencies for real money. Each novice miner who wants to try his hand at this earnings can take advantage of a whole list of cryptocurrency exchanges on which he can start, and, having filled a few bumps (an unavoidable circumstance for all newcomers), start earning very real money.
What are cryptocurrency exchanges for
Analyzing the activities of the cryptocurrency exchange, two areas can be distinguished – trading and exchange. For example, you want to get crypto-money at a favorable rate, and exchanges are just perfect for this. There are such users who even store their “hard-earned money’ on such resources, using them as a kind of wallet. However, seasoned experts do not advise doing so, since exchanges, although rare, are sent to scam. The main function of the exchange is the sale of currency pairs, bringing tremendous income to traders.
To get a profit, it is not necessary to be an assistant in cryptocurrency exchanges. You can also make a fortune through speculation, while many who, at the initial stage, invested only a couple of hundred bucks, were already able to ‘raise’ their first million. In order to understand that you are just a step away from a big profit, you just need to watch how quickly the cryptocurrency exchange rate changes online.
Due to the high level of volatility, cryptocurrency can be used as a speculative tool, which will allow you to extract maximum profit. This method is similar to trading that takes place on regular currency exchanges. In general, online earnings through cryptocurrency can be really big. For example, over the year, stocks rise by an average of 30%, and such income is considered huge. However, for comparison, we can consider the well-known to many Bitcoin, which grew in price by more than 5000%, and this is only for 2013.
Naturally, such a situation in the market attracts a large number of investments, fueling interest in virtual currencies. The cryptocurrency exchange allows you to trade, and most importantly, earn money. At the same time, trade as a whole is similar to exchange processes. This is precisely the difference between the cryptocurrency exchange and the Forex market, where the broker himself appoints quotes. In general, if we talk about Forex exchanges, then they are formed, as a rule, artificially. At this time, the cryptocurrency exchange is distinguished by a single price and can conduct trading even with the minimum difference resulting from its placement on a particular trading resource.
Types of cryptocurrency exchanges
The main and most common type of cryptocurrency today is Bitcoin. As soon as he appeared and gained a certain popularity, many of his derivatives appeared – forks, which differ from the original in the sense of mathematical calculations. Due to the wide variety of “assets”, cryptocurrency exchanges have just formed, on the platforms of which forks can be placed. Well, the rest of the virtual currency exchange are divided into two types:
- Resources on which users can exchange crypto for fiat currencies;
- Areas where cryptocurrencies can only be exchanged for other cryptocurrencies.
As for the first option, it is attractive to users in terms of earnings. Trade provides for the possibility of speculative operations in the market, withdrawing profits as real currency, which is highly volatile. Exchange of one currency for another will be profitable if it will be used in the future. But, as experts say, this is all nothing more than theoretical data. In order to verify the effectiveness of a particular method, there must be a practice. This means, before engaging in trading, you need to carefully analyze the work of today’s popular exchanges.
Criterias of choice
It is known that on the Internet, today there are a large number of cryptocurrency platforms for exchanging virtual money. Therefore, some novice users who are just starting to master the interesting world of blockchain face many difficulties. To avoid them, you need to learn a few simple rules that will help you not to make a mistake in choosing a trading platform.
For successful operations, you need to pay special attention to some factors:
- Daily trading volume. This indicator is among the most basic in terms of the cryptocurrency exchange, as it shows users the level of its activity. In addition, it helps to determine how promising a particular digital currency is.
- Transfers and withdrawals of funds. Before registering on the site, you need to familiarize yourself with the input / output conditions, as well as find out which payment instruments are supported by this service. Large commissions will not allow making operations profitable. This also applies to digital money mining.
- A wide range of cryptocurrency pairs. On some trading floors, they work only with popular electronic money. Paradoxical as it may seem, in 2017 there are still websites that specialize only in transactions with Bitcoin.
- The ability to monitor courses. As a rule, experienced investors create accounts using several platforms at once. This helps not only in finding the best conditions for buying / selling, but also gives a chance of earning through arbitration.
- Installation of additional software. As a rule, most cryptocurrency exchanges that are firmly on their feet do not provide for this need. No need to download software from a little-known site. An alternative way to convert real currency are the terminals. Of course, there is one drawback – many resources support only Bitcoin operations, and the exchange rate in this case is not beneficial for users.
More recently, they began to launch sites that combine the functionality of trading portals and resources for mining. However, some of the platforms presented are blocked for Russian customers. You need to use special applications to open access to them.
Choosing a cryptocurrency exchange, you need to take several important criteria as a basis:
- What tokens are extracted;
- The possibility of exchanging earned funds for rubles;
- The presence of hidden fees;
- What currency is used to purchase;
- Are there delays in running on this platform and how often do they occur.
The resource must be selected so that it matches, if not all, but at least a few of the points given.
How is trading on the exchange carried out
A novice trader must choose the right trading floor. The fulfillment of all set goals mainly depends on this. If you do not want to mess with little-known cryptocurrencies, then large exchanges are best avoided at the initial stage. You may simply not understand their functionality and get confused. Long-term trading of major currencies is best done at sites such as Bithumb and Kraken. Traders wishing to make transactions between the fit and cryptocurrency are best to use the Exmo, Bitfinex or Livecoin service. A large number of currency pairs differ YoBit, Poloniex, Bittrex. If you have already mastered the coin algorithm and take the risk for good profits, then such sites will be an ideal start for you.
How to trade on the stock exchange
As soon as you decide on a suitable platform, the most important question for you will be – how is the trade carried out? If you have already had to trade something in your life, then you will not have any difficulties in this undertaking. Despite the specificity of the product, the principle here is extremely transparent – buy cheap, sell expensive.
This is the basic principle of trading. It does not matter what you intend to sell – potatoes on the market or cryptocurrency on the exchange. In the latter version, adhering to this algorithm is simple, since the exchange rates of coins are distinguished by their dynamism and constantly “jump” in different directions. Therefore, acquiring crypto-money in the face of a recession is not a complicated matter. It is indisputable that each user wants to invest at a minimum, and earn at the maximum. If in the case of the sale of stable goods – gold, oil, dollars – all the necessary information presented in special news, then with crypto everything is completely different. Until the news reaches the addressee, the market will have time to change its path 10 times, and the user can simply miss the profit. An experienced trader must analyze the market independently, and each platform provides its own tools for this purpose:
- Charts. They will show how the value of coins changed over a certain time period.
- A glass of bidding. Allows you to understand the difference between the existing offers for the purchase / sale, and also allows you to make a thorough analysis of which direction the price will rush in the future.
- Bid history. Knowing the volume of trade of a particular pair, you can easily establish how popular this direction is on a particular exchange. The most sought after couple will rapidly pick up the course.
It is best to analyze all this data comprehensively. This will significantly increase the likelihood that the situation will be correctly interpreted, which means that the user will be able to enter the market in a timely manner and exit it before the trend changes.
Another important feature that every trader should be familiar with is orders. They represent a kind of application of the user to perform operations. There are two types of orders:
- BUY – purchase;
- SELL – sale.
They are ideal for simple purchase / sale transactions, regardless of whether the market price will be used or not. Unfortunately, not all platforms have a stop order. It helps a lot in the process of earning in the face of reduced risks.
Principles of trade
- Do not panic under any circumstances. As soon as the user is confused and sells the coins that have gone into drawdown, he will immediately lose.
- Half of the funds should be stored in bitcoin, so it is the basis of the market.
- Part of the funds must be left in fiat. Even if the market collapses, then fiat will help buy coins at a cheap cost.
- Do not store large amounts on the exchange. If you purchased a currency for a long time, then it is better to withdraw it to hardware or software wallets.
Advantages and disadvantages of cryptocurrency exchange
Working on a cryptocurrency exchange involves using a standard set for analyzing a price chart. This contributes to certain inconveniences in the trading process. For example, if in programs offered by stock market companies, transactions are managed literally in a couple of clicks, then in a cryptocurrency exchange, a special calculator or spreadsheet in Excel format is used to carry out a similar calculation. However, the full information provided by such exchanges fully covers this drawback.
Companies registered in the USA or the European Union offer their customers deposit insurance in case of unforeseen bankruptcy or in the event of any other unexpected situations. Accordingly, the safety of funds in this case is the prerogative of the state, not the company. As for cryptocurrency exchanges, they cannot offer such services to their customers, at least today. Attacks by hackers or the work of dishonest employees are problems associated with the risk, which, unfortunately, has a place to be. That is how the Mount Gox failed. Until a regulatory system or protection has been created, such risks on cryptocurrency exchanges will not go anywhere. However, the lack of regulation allows anyone who wants to become a client of the exchange, having only an email address. To trade on the stock market, the user must confirm his identity and place of residence by providing a package of relevant documents.
The trader’s profession is filled with risks that the player is trying to minimize. Especially when trading is the main source of income. Therefore, it is unlikely that investors will start investing in a new business before they have any guarantees.
Volatility is one of the main advantages of cryptocurrency. Every day she shows her growth, which has never been in the stock market. Even when the United Kingdom announced its withdrawal from the European Union in 2016, the GBP / USD currency pair has dropped by more than 12% in just one day, which cannot be compared to cryptocurrency. She is able to fall immediately by 90%. And all this is the fault of the same regulation. As long as there is no regulation on the cryptocurrency exchange, liquidity will accordingly be low, which will contribute to sharp jumps.
Writing a trading robot without trading through centralized exchanges is another advantage of cryptocurrency. This provides a kind of protection for users when access to their funds is not available to third parties.
The trading bot greatly simplifies the trading process, since the user will not need to sit for hours at the monitor. At the same time, there are not very many profitable robots, and they, as a rule, do not spread. And this is no coincidence. Massive use will lead to the fact that the whole strategy of such a bot will simply come to naught, and it will no longer bring good profit.
Instead of a total
If you compare the cryptocurrency exchange with the stock market or Forex, the first one has an undeniable advantage – access to data, high volatility, easy access to trading. However, as a result of the absence of a regulatory system at such sites, making a deposit is accompanied by certain risks associated with its complete loss. At the same time, no insurance is provided on cryptocurrency exchanges.
The difference between a cryptocurrency exchange and a currency exchange
None of the exchanges existing today, including currency ones, can boast of such a volatility of the exchange rate as in the case of cryptocurrency exchanges. For example, only in 2013 the Bitcoin exchange rate grew by almost 5500%! In a minimum amount of time, you can break a really attractive jackpot, because the price can grow rapidly, as well, and fall down. The main cryptocurrencies, the hallmark of which is the largest capitalization, show that the value of money can not only grow rapidly, but also reach the highest maximum levels. Thanks to these features, smart traders can easily earn fortunes in just a couple of months. And this is not an exaggeration.
In order for the cryptocurrency exchange to be truly successful, you need to choose the right trading platform and learn how to independently analyze the market sentiment, cryptocurrency quotes online, be able to operate with charts and pay attention to such circumstances as the activity of other players. This whole complex will allow for competent trade, and therefore significantly increase capital.