Trading in the cryptocurrency market is like walking on the hanging rope. You have to keep a tight balance on your pace so that you can walk stably.
The cryptocurrency market is extremely volatile and therefore there is gross unpredictability. Trading in the cryptocurrency market, therefore, should be done with complete awareness and support of meticulous homework, market analysis, and product knowledge.
Earning with trading cryptocurrency is one in many ways of earning into cryptocurrency. So here is cryptocurrency trading for beginners.
The cryptocurrency market is a high-profit yielding trading platform but it is risky too. Unless you remain cautious, you may incur a huge loss instead of profit. It is important, therefore, to know a few points before you start crypto trading.
People usually ask questions like “What is Bitcoin trading?”, “How to start trading cryptocurrency” & “Simple Steps to start trading cryptocurrency”. But what exactly does Crypto trading meaning?
Trading Crypto means exchanging one coin with another. You place your bids on some asset which you believe to be raised in value over a period of time. Just like gold you buy when you believe that price will increase. A person who trades cryptocurrency is known as Trader, more specific a “cryptocurrency trader”.
Theory Of Trading
Trading is the fundamental working of cryptocurrency. We must know that these coins have the value just because of Demand and supply. If there is no Demand of Bitcoin then Price of Bitcoin will fall, on the other hand, if more people want to hold the bitcoins then the price will increase.
The cryptocurrency coin runs on a specific algorithm known as cryptography. Before you start, the market operation you must learn the theories of the cryptocurrency market in order to get the hang of the market.
Basic Terms in Trading
You can take an online class or you may search online to understand the terms like Candlestick Chart, spread, depth chart, Line Chart, Different Time Chart, Volume Stats, 24h change, Highs-lows, trade history, trade analysis(TA). Video Tutorial will work the best in learning the basics in a shorter time.
Try to be logical on technical analysis: ideally, it is to be based on past price and its undulation. Future prediction for the cryptocurrency is highly uncertain and therefore risk should not be taken at any cost.
Cryptocurrency trading fee: Almost all trading platforms charge fees for trading. Before starting trading, you must understand that every transaction will attract a payment obligation. Before starting trading on a platform do not forget to understand the platform and its trading protocols.
Learn to distribute: It is not wise to invest in one cryptocurrency while doing trading. In order to play safe, it is important that you distribute your asset to different coins.
Tracking resources: Understanding crypto trading is difficult but it can be easier if you read and track global market new, indicators, and ranking, etc. Mentoring of trading pros can help you to understand and play safe deals. Also, you can use different coins for your investment.
Short Term Vs Long Term Trading
You can trade in the cryptocurrency market with two objectives. One is short-term trading and the other is long terms trading. Like both sides of the coin, both short term and long term trading have their pros and cons.
Short term trading:
Short-term trading is about buying a cryptocurrency and holding the same for a short period. This short-term holding period can be for some hours, few days, or for a few weeks. This kind of purchases is done for enjoying some instant profit out of the purchase.
Advantage: short-term crypto trading
- Short term trading helps in making some instant profits, you may enjoy the good profit from a single trading deal within a short period.
Disadvantage
- However, it can be disadvantageous if the market gets largely down for the cryptocurrency you have bought, it may incur a great loss for you. Unless the market is analysed, short-term trading can be risky.
- If you invest with a large stake, then will you will get to see some financial profit, which can be risky too in terms of market volatility.
Long-term trading
When you are holding a crypto coin for one year or more than that, it is called long-term trading.
Advantage:
- You can simply invest and forget to pursue the currency for some time. Unlike short-term trading, you don’t need to chase the market hourly.
- You can start your trading with smaller ticket size.
- You don’t need to understand every titbits of cryptocurrency market.
Disadvantage
- You may lose the scope of earning a big stake of crypto profit by short terms trading with your fund…you never know the market actually!!
- Learning Cryptocurrency trading is not an overnight process. It will take time and you need to learn ways to stay safe while yielding the profit of your trading deals. One of the safest ways for trading in the crypto market is to gather knowledge by learning insights shared by the pros.
Tips to Start Cryptocurrency Trading
Analyze Trading Volumes
Understanding the trading volume is a prerequisite before you start your crypto trading with a specific currency/coin. You will be in a safer place if you select a crypto coin that is enjoying high daily trading volume. High volume signifies its market liquidity and the presence of an active community behind the network. Low volume cryptos often get delisted from exchanges, which will be risky for you.
Check the Sharpe Ratio
Sharpe Ratio is a chart that will let you know the historical price movement of the crypto-coins with bigger trading volume. The chart will help you to calculate approximately the measured return of an asset based on its market volatility. If you find Sharpe Ratio of a Cryptocoin is showing 1 or bigger than one, these are crypto coins with the possibility of high potential return. Your task is to make use of this ratio, filter the cryptos, which have the highest Sharpe ratio in comparison to the rest of the market to enjoy safer and cost-effective Cryptocurrency Trading
Stay Updated About the Market
Staying updated about the market and about a specific cryptocurrency is realistically possible when you will be following the news and newsfeeds about the cryptos with higher trading volume. You may subscribe to different newsfeeds from reliable crypto related news sites and keep a watch on the market. Market knowledge is one of the most important resources for crypto-trading.
Few sources you can rely on updates:
- cryptopanic
- Top New website: CCN, Coindesk, etc.
Just remember, since the crypto market is extremely volatile you may many times encounter with a FUD or Fake News, which can force you to make certain action; just be cautious of these things.
Find an Appropriate Entry Point
Finding an appropriate entry point for your investment in the crypto market is one of the vital points of starting crypto trading. Doing meticulous technical analysis is the safest way to find an entry to the crypto market for you.
For example, you can use a candlestick pattern (a special type of financial chart for tracking the movement of securities) to find an appropriate entry point. For example, if you after buying litecoin, you should check for bullish engulfing candlestick pattern on the weekly chart to check the indicators of the high trading volume of that crypto coin.
These are some basic points you need to check before you start crypto trading. It is a tricky job that demands insight play, knowledge of market, perseverance, and money to invest. You should not invest you all assets in crypto trading because of the risk of loss. You can start with demo trading with demo coins on Bitmex TestNet and try your hands in trading before you put actual money into. It is always wise to do demo crypto-trading for first few days. Or you may practice safe trading under an expert crypto trader to stay safe and learn the real-life tricks for yielding some good profit.
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