Cryptocurrency trading involves the buying and selling of cryptocurrency on the exchange or through contracts for difference (CFD). The latter lets you engage in crypto trade without having to own any coins. When you trade on the exchange, you buy crypto coins directly in your name. The cryptocurrency market is decentralised, digital, and has a currency network. The main operations in the market occur through peer-to-peer checks instead of operations via a central server. When you engage in cryptocurrency trading, all transactions get added through the process of mining. This is the last crypto trading guide you’ll ever need, it includes all the basics of basics of cryptocurrency trading. Read on!
Cryptocurrency doesn’t depend on banks for transactional verifications. Moreover, it is not a form of physical money. Cryptocurrency is a digital entry to the online database describing specific transactions. When transferring cryptocurrency funds, a public ledger records these transactions. Cryptocurrency gets stored in digital wallets. Cryptocurrency is called so because it makes use of encryption for verifying transactions.
Among the very first cryptocurrency coins is Bitcoin. It is one of the best cryptocurrencies used currently. There is a huge interest in cryptocurrencies because there is a possibility to trade in the same for profit.
Understand what cryptocurrency trading is
The markets in the crypto trading industry move as per demand and supply. As mentioned earlier, the markets are decentralised; therefore, no economic or political issue affects cryptocurrency and its trade. Besides supply and demand, market capitalisation influences cryptocurrency trading. This refers to the value of all coins that exist. Additionally, this also takes into account how users think the coins are developing in the market.The way the media portrays cryptocurrency also influences related trading in the domain. Furthermore, main events, including updates to regulations, breaches of security, and setbacks in terms of economies, also influence cryptocurrency trading.
Understand why people trade cryptocurrencies
According to reports from Statista, for the cryptocurrency market, the user numbers will expectedly amount to about 994.30 million users by the year 2027. The question you might be asking here is why there is so much interest in crypto trading?
When you trade in crypto, you are trading via a leveraged product. This signifies that you could simply open up a position for a very small part of the entire value of the trade. Leverage products when the market moves up, can magnify profits, but it can also cause immense losses when the market falls.
Types of different crypto trading
Take a look at the different modes of crypto trading in a head-to-head manner-
| Type | Explanation | Pros | Cons |
|---|---|---|---|
|
Scalping |
Involves very quick trading at low price differences between buys and sell-offs. |
Helps make quick profits |
Needs constant focus on the trade |
|
Day Trading |
Involves buying and selling on the same day as per market movements.
|
Helps mitigate market risks and earn quick returns |
Doesn’t help in benefiting from long-term strategy |
|
Swing Trading |
Involves trading after observing markets for weeks, if not longer.
|
Helps profit from long-term changes in markets |
Leaves no scope to trade on short-term market movements and impulses |
|
Position Trading |
Involves a more traditional approach to trading by anticipating gains from holding coins
|
Lesser risks that might amount from market volatility |
Inability to make very quick returns |
Understand the basics of crypto technical & fundamental analysis
Cryptocurrency traders mostly use technical and fundamental analysis to adjudge an asset for trading. Take a look at the two and how they compare against each other-
| Technical Analysis | Fundamental Analysis |
|---|---|
|
Focuses on the historical performance of an asset |
Focuses on the fundamentals of an asset
|
|
Considers factors such as price over time and volume of trading |
Considers factors such as financials of the cryptocurrency, real applications of the same, and user community
|
|
Based on the principle of evaluating the value of the cryptocurrency
|
Based on a numbers-based approach. Considers asset price as an indicator of its public perception
|
Choose a reliable cryptocurrency exchange
Cryptocurrency trading might get confusing. Therefore, choosing the right cryptocurrency exchange ensures that it gets easier. Here are the top pointers to check on when sealing on one-
- Verify the number of crypto coins you can trade
- Ensure that there is ample liquidity in the exchange
- Ensure there is ample security involved in trading via the exchange
- Check the regulatory authorities involved in the exchange
- Check up on the insurance policy of the exchange
Set up your account
Once you are clear about what crypto exchange you want to pick, set up an account. Most crypto exchanges ask for basic information and a linked email account to set up a cryptocurrency exchange account. The process is similar to opening a stock brokerage account.
Practise different crypto trading strategies
Mitigate your financial risks with the right cryptocurrency trading strategy. Choose one that best suits your trading targets.
| Strategy | Why pick the strategy? |
|---|---|
|
Day Trading |
|
|
Buy-and-Hold Trading
|
Enables you to hold cryptocurrencies over a long period to gain profit from asset value enhancement |
|
Futures Trading
|
Enables you to sell off cryptocurrency in the future at a pre-contracted value on a set date |
|
Arbitrage Trading
|
Enables you to gain profits by selling off crypto in a market different from where you bought the cryptocurrency |
The key to making the best trade decisions in cryptocurrency trading is observing how the market works. Once you understand the various strategies, you can get an idea of which suits your targets best.
You can trade virtual crypto via games on apps such as TradingLeagues. The games let you practise the ways of the trade and also ensures that you understand how crypto trading works in the real world.The top games on the app are listed below-
Target Leagues– Compete with players for a prize pool that is pre-mentioned, by trading with coins such as Ethereum and Bitcoin. The right prediction will let you win big!
Selection Leagues– This needs a basic entry fee and offers a winning amount when you make profits by picking the right crypto coins on the portfolio you create virtually.
Battle Leagues– In Battle Leagues, the goal is to choose the winning crypto. Battle Leagues lets you practice choosing the right crypto. For example, in Battle Leagues, you may have to predict whether Bitcoin or Ethereum delivers more returns after 1 hour.
Classic Leagues– These games are linked to the preset prize pool as you get to compete among players for trading with crypto coins such as Bitcoin and Ethereum.
Find your crypto trading opportunity
Once you find the right crypto trading platform and set up an account; look for the right coins to buy. Crypto trading is a short-term game while crypto investing requires months and even years of holding coins. The crypto market is decentralized and more volatile. There also exists security-related risks. Some coins might be riskier to trade in than others.
Manage your risks well
Here are the top ways you can manage your risks while trading in crypto.
- Make sure you are abreast of the market trends.
- To help mitigate the risk of losses, you can go on to set a specific stop-loss point.
- When there is a trigger, this stop-loss automatically closes the position you hold to cap your risk.
- When the market is in favour, you can also seal the profits by setting a limit level.
- The trade can automatically close to secure positive returns when the market touches a price you have set.
Monitor and close your position
If you are trying to understand how to analyse and close your position in crypto trading, read below-
- Opening trades mandatory requirement for trades on an exchange
- Closing trades mandatory for getting profits or lowering losses.
- Positions help you engage in trading effectively but have nothing to do with investing over the long term or even holding coins
Stay updated with the market
Keep track of what goes on in the crypto trading world. This helps you fine tune your trading decisions while letting you learn about how the niche operates. The top channels to tap for staying updated with the market are-
- News and media stories
- Twitter threads
- Leading websites that cover crypto trading and related stories
- Analytical tools and charts
- Blogs and communities in the domain
- On-trade metrics
Conclusion
Once you decide to go ahead and trade in crypto, you get exposed to several new elements. Learn the nitty-gritty of such trade and engage in virtual apps that help you understand crypto trading in detail.
Stay ahead of the curve by practising virtual trading on TradingLeagues. Several games that allow you to practise trading while you master crypto strategies are available on the app. Gain valuable industry knowledge and absorb quick insights by engaging in the games on TradingLeagues, the fantasy crypto & stock market game. By registering early, you’ll be a part of an exclusive group that gains priority access to the application from 1st October 2023. Register now!
