What is cryptocurrency trading
The Internet has provided plenty of opportunities for making money online, and with the advent of blockchain, the list of possible sources of income has expanded even more. A large share of remote earnings falls on cryptocurrencies and related operations.
Digital cash, or in simple words, cryptocurrency is actively interested in more and more new investors who are willing to invest in it in order to generate income. To carry out trading operations on cryptocurrency, today, anyone can. Despite the increased risks of investing in cryptocurrency, more and more people are ready to overcome their fears, because on the other side there are incredible prospects for making a profit. However, do not rely on quick profits in order to successfully make money on digital cash trading, you need to have enough knowledge.
Crypto trading is one of the main ways to make money on cryptocurrency. Trading cryptocurrency tokens is not significantly different from trading in valuable metals, currencies and stocks. The main task remains the same: to buy as cheaply as possible, sell at a higher price and make a profit. The main difference between cryptocurrency trading and the stock market is the high volatility of the exchange rate. Many traders dream of a profitability of thousands of percent of the deal, but in the stock market, such a deal has to wait for years, buying back shares of little-known companies in anticipation of growth in their capitalization. At the same time, fast transactions with high returns are not uncommon for crypto trading.
Cryptocurrency trading: where to start
It is impossible to start a successful cryptocurrency trading from scratch. Having decided to invest available funds in cryptocurrency trading, you should, first of all, prepare a knowledge base. For successful trading, a crypto trader must learn the basic skills:
- Analyze cryptocurrency and its trading volume;
- Use charts and encodings;
- Conclude sales and purchase transactions;
- Track bid history.
When assessing the prospects of cryptocurrency, you should pay attention to the following aspects:
- What idea is cryptocurrency created for and how much can it be claimed;
- The speed of transactions and the convenience of working with tokens;
- Professionalism of the development team;
- Demand and popularity.
The combination of these factors provides an increase in the cryptocurrency capitalization and, accordingly, its value. Charts display the history of the growth of the token exchange rate in relation to another cryptocurrency or fiat money. Charts can be made using the exchange interface, indicating a different period of time and choosing different trading pairs. With his help, we can conclude how reasonable is the current price and give a preliminary forecast for a further change in value.
By the history of trading and volumes, they monitor the total liquidity of the cryptocurrency, how much it is interesting to users, the demand for it is growing or decreasing.
Based on the knowledge gained, it can be concluded that the cryptocurrency is profitable, predict its movement and make a profitable transaction.
To complete the transaction, the trader must place an order, choosing a trading pair for exchange and indicating the number of coins he wants to sell and their value. You can place and close orders non-stop, but American and Asian times are considered the most preferable. It is during this period that there is a particularly high activity, which provides an opportunity to more clearly predict the course and make a quick deal.
Features of investing in cryptocurrency
The most popular cryptocurrency Bitcoin in December 2017 exceeded the mark of $ 20,000. Its main advantage lies in the limited amount of capitalization – 21 million tokens. This means that every new bitcoin purchased reduces the amount of remaining coins. This trend allows Bitcoin to grow exponentially. Thanks to an active investment in bitcoin, the entire cryptocurrency market begins to flourish, including altcoins, which are characterized by good volatility and liquidity.
Due to the phenomenal growth of bitcoin during 2017, more and more investors are willing to risk their money. Cryptocurrency trading is attracting more and more new speculators – both beginners and experienced ones.
The high liquidity of digital cash encourages the creation of new cryptocurrencies. At the moment, there are more than a thousand tokens of various cryptocurrencies on the market. However, most cryptocurrencies are not in demand due to the huge number of capitalization. But there are 10 of the most popular cryptocurrencies that are highly volatile, and a reasonable investment in them can bring excellent dividends. In order to make money on cryptocurrency trading, you need to be able to correctly predict the future price movement.
How to make money on cryptocurrency
Today, there are several types of earnings on cryptocurrency – mining, investment and trading. The first two we will not consider in view of the complexity and increased risks. Cryptocurrency trading involves opening speculative positions to buy or sell a token of one or another digital cash. With investments through the stock exchange, you can earn exclusively on the growth of cryptocurrency, trading through a broker can increase your financial investments both through purchase and sale.
Cryptocurrency Trading Strategies
Initially, the purchase of cryptocurrency is made if the trader, based on the analysis, considers its current value low. The next task is to sell it with an increase in value. In order to choose the best moment for placing an order, you should again turn to the analysis and decide whether this coin is worth more. If not, then the time has come for its sale and reinvestment of funds.
Coming into the world of trading, one should say goodbye to greed. You should not wait a long time for the profitable value. It is better to make several transactions with a 100% chance of profit than to miss a moment in anticipation until the value drops or rises as much as possible.
Most traders use a strategy based on the analysis of a glass of orders. Glass of orders – a table of all placed orders on the exchange for one type of cryptocurrency. According to it, even for dummies it will be clear what demand cryptocurrency has and what value they are willing to pay for it.
Based on orders of large volumes, it is possible to accurately determine which direction the further exchange rate of tokens will go, since it is the traders who trade in large volumes who determine the trends in the movement of value and carry out large-scale changes in the rate, which insignificant bidders cannot influence. It remains for them the opportunity only in time to detect future changes and use them to make a profit.
To simplify the work of the trader, there are also special tools. For example, the terminal for earning on the cryptocurrency TraderBox includes 27 different tools for profitable trading in one interface. The service combines such useful functions as signals, technical analysis indicators, smart charts and the largest exchanges for trading – all this works in one window, without the need to constantly switch tabs.
Where is better to trade
Below we will consider options where a beginner trader can start working.
The most common way is trading on a cryptocurrency exchange. They contain all the tools necessary for the trader, allow you to track the course and history of transactions, place and buy orders, replenish and withdraw capital. When choosing a cryptocurrency exchange, you should pay attention to the following factors:
- Exchange trading volumes. For fast transactions, it is recommended to choose exchanges with a high trading volume.
- Language support and interface. Cryptocurrency exchange is the main tool of the trader. It should be understandable and convenient for work.
- Methods of replenishment and withdrawal of funds should be available to the trader.
- Trading pairs. Not all cryptocurrencies are traded on exchanges, and even trading pairs of popular altcoins may differ. Some platforms provide the ability to make transactions between fiat currencies and cryptocurrencies, some are limited only to digital transactions. When choosing an exchange, be sure to study the pair cryptocurrency trading presented on it.
Only select trusted sites with high user protection. If not all pairs of interest are presented on the trading exchange, then you can use several of the most suitable options. And then transfer funds between exchanges using transactions to internal wallets. For example, to exchange cryptocurrency for fiat money, the CEX.IO exchange, created specifically to solve this problem, is best suited. It allows you to exchange popular altcoins and bitcoin for rubles, dollars, euros and British pounds.
If cryptocurrency mining requires a lot of special knowledge, and experience is required for trading on the exchange, then for trading through a broker you only need to open an account with a brokerage company. The international broker AMarkets provides favorable trading conditions for both novice traders and for traders who have many years of experience in trading in the financial markets.
The main advantage of cryptocurrency trading at AMarkets is that the broker provides a wide range of financial instruments – 15 cryptocurrency pairs and 8 major cryptocurrencies. Financial experts often express their opinion about the increased risks due to the high volatility of digital cash, but proper money management and a trading strategy make it possible to turn trading into a profitable business. You should always remember about money management and do not risk more than 2-3% of the total deposit per transaction. Guided by these rules, you can earn in the long run.
Cryptocurrency trading provides ample opportunities for earning. You can start trading on the exchange with minimal investment, but for profitable trading you will have to make a lot of efforts and take time to deeply analyze the cryptocurrency and the market.