Start trading cryptocurrency
What is cryptocurrency?
A cryptocurrency is a digital asset used as an analogue of traditional money for various transactions. It has no physical form, it exists only in the electronic network in the form of data. Payment with cryptocurrency is about the same as the exchange of emails, hence the much shorter processing time than a regular bank system, minimal fees and the absence of an intermediary.
The сryptocurrency is accounted via blockchain, and it is conducted collectively by all members of the network that own the currency. Each cryptocurrency is programmed and identified by a complex code.
Cryptocurrencies are one of the most profitable and therefore popular trading instruments on the spot market. Since the creation of Bitcoin in 2008, its value has skyrocketed hundreds of times and reached unprecedented levels. During this time, more than 6 thousand coins appeared on the crypto market. It explains the endless interest in this asset and its unlimited prospects.
If you trade on a cryptocurrency exchange, then you must purchase an asset that remains in your ownership, even if its price drops to a critical minimum. When you trade on brokerage platforms, you don't need to go into complex algorithms for buying and storing cryptocurrencies. Numerous forex trading companies allow earning on the difference in rates.
Trading cryptocurrency CFDs means you don't have to invest in a real asset. Instead, you need only to predict which direction the price will go. With a reliable broker, you are protected from any kind of cryptocurrency fraud, and at the same time, you can enjoy the opportunity to earn a good income.
What do you need to trade crypto?
Every trader is faced with the question of how to properly start trading cryptocurrencies
- The first step is to study the peculiarities of the cryptocurrency market and read books about trading. Learn to track the situation with the cryptocurrency rate, keep abreast of changes in the dynamics of currencies, including the main digital assets.
- Choose a broker. It is advisable to start with a simple platform. But it should have good customer service and strong customer support. Such platforms are easy to use. They offer desktop terminal version as well as an app for mobile devices.
- Opt for resources that allow you to gain experience on a demo account. You can move to a trading account when you reach stable success trading with virtual deposit.
- Check the available replenish deposit options of the broker. Start with the companies offering low minimum deposit. The platform should not hold funds for long. The withdrawal funds procedure should be fast.
- Implement financial management rules that will minimize your financial risk when you properly start trading cryptocurrency.
How to start trading cryptocurrency in India? In this country, digital assets are on the rise. It happened after the Supreme Court cancelled a two-year crypto ban. For trading, you can either use a crypto exchange or start speculating via a broker platform.
Main tradable cryptocurrency
Bitcoin is a leading cryptocurrency in terms of price and market capitalization since its launch in 2009 to the present day. It remains the most known cryptocurrency in the world.
Ethereum ranks second in the cryptocurrency top list. Ethereum is the first coin providing a system that is much more than just a way to transfer funds. Ethereum runs code, also known as "smart contracts," on its own blockchain, which allows programs to run with a wide variety of different functions.
Ripple is the company that owns and operates the XRP token, one of the top five cryptocurrencies by market capitalization. XRP token is the "fuel" of transactions in the financial payment network. Many major players in the banking sector cooperate with Ripple.
Litecoin is another popular digital currency. The profitability of Litecoin has been one of the most successful over the years.
There are other coins that deserve attention. These include Bitcoin Cash, Stellar, Cardano, IOTA, and Monero.
The market capitalization of cryptocurrencies is the value of all issued coins. Another important crypto parameter is trading volume. The more money is invested in a cryptocurrency, the higher is its capitalization (the total value of an asset in circulation) and, accordingly, the liquidity.
Traders use a number of methods to analyze cryptocurrencies before making a decision to trade or invest for long term. The two main methods can be divided into fundamental analysis and technical analysis.
The fundamental indicators of the coins are tied to the technical features of the coin's blockchain. These are hashrate, block size, number of miners, mining difficulty. It is also necessary to take into account the upcoming hard forks, the size of the community, and the activity of the development team.
Technical analysis is the forecasting of future financial price movements based on the study of past price movements. Like the weather forecast, technical analysis does not provide absolute correctness but helps you develop a trading plan. It works because people constantly repeat behavior under similar circumstances.
Technical analysis indicators help traders to achieve maximum accuracy of forecasts based on signals. Let’s review the most popular of them.
Moving average (MA). The indicator analyzes the average prices for the selected time interval. The chart is overlaid on top of the chart of the current price movement, which gives a relative indication of the general price trends. If the actual price of the cryptocurrency keeps above the moving average for a long time, it can be assumed that it will continue to grow. Accordingly, a fall below the moving is a signal to reduce the price of an asset.
Exponential Moving Average (EMA). This technical indicator shows the price of the period and helps to more accurately determine the direction of the trend. Better to use two indicators at 15 and 30 candlestick intervals. Indicators of this kind are called lagging and they cannot predict anything, but they will help determine the direction of the trend and confirm it. The direction of the trend is determined by the direction of the EMAs themselves: if both moving averages are looking up, the trend is up. Down - downward. The intersection of the two EMAs confirms the trend direction.
Relative Strength Index (RSI). It is a useful indicator in the arsenal of traders. The instrument shows overbought and oversold conditions in the market. It is better to combine it with the Oscillator and EMA, which will allow you to confirm the readings of each of the indicators and take the most profitable position. Using this indicator, you can try to identify the sell point and buy point.
Moving Average Convergence Divergence (MACD). This indicator can be used to get information about the general market trend, as well as a tool that will mark the entry and exit points in the market. It is important to know that when the MACD is above the zero line, we speak about the bull market trend. On the contrary, if the MACD line is below the zero line, then it is the bear market.
The Stochastic Oscillator is another tool you can use to track momentum, but it has other purposes as well. It is based on the principles of chaos and randomness. This indicator acts when the market moves without a trend. It can predict when large, tradable price movements will begin.
Fibonacci Retracement. Sometimes it is difficult to find good, solid targets for support or resistance, especially after big moves or new highs / lows have been made. Fibonacci is the perfect tool for finding these levels, which can be used any time the cryptocurrency market is trending.
Bollinger Bands. Technically, this indicator consists of three SMA lines defining the price channel and accurately showing the trend movement. Bollinger Bands serve as a kind of border between a random spike in price to fairly high / low levels and the beginning of a new trend. This implies a completely natural idea to use this technical analysis tool as benchmarks when determining stop loss
Average Directional Index (ADX) is a classic trend technical indicator. It identifies a trend in the market and measures the strength of the trend. Using the indicator, you can determine the moment to open buy orders, the moment to open sell orders, then moment to take profit.
General trading strategies
There are dozens of various strategies teaching how to start trading cryptocurrency, but some of them remain the most popular to plan sell stop and buy stop deals.
Buy and Hold. This strategy is more about investing than trading and belongs to long term trading. People buy assets and store them for some period. Fans of this trading strategy try to predict prices for several months in advance and keep track of price chart throughout this time. This strategy is based on fundamental analysis.
Swing trading. This strategy involves the use of correction when a trend is formed. That is, a trader needs to open a deal within a trend at the time of its correction. Swing trading implies the need to adjust to the trends.
Day trading. The name of this strategy discloses its essence. In this case, we are talking about trading time on the crypto market within one trading session during the day. Trading position is opened on a specific day and cannot be postponed to the next day or another session.This strategy is used for sell limit and buy limit trades.
Scalping. This is a short term trading with a lot of deals. The trader opens positions and closes them after 1-15 minutes. Ideally, each trade brings a small profit, but in the end, these small amounts form a large profit.
There is not a single strategy or a trading robot that you can turn on and calculate your profit. Each strategy needs to be tested individually on a demo account. It is desirable for at least 100 trades. Then collect statistics and decide whether this strategy suits you or not.
Is crypto trading safe?
Cryptocurrency is one of the riskiest financial instruments. It is highly volatile, and it is difficult to predict its value in the long term. You should also take into account all cyber risks associated with the trading via crypto exchanges.
How do day trade Cryptocurrency make money?
Day trading is very short-term trading within one-day frame work. It means holding an asset from a few seconds to several hours. The idea is that you make as many trades for the day as you can, hoping to make a small but quick profit. Even if there are some failures, small sums will make together a good profit.
Which cryptocurrency is best for beginners?
Novice traders should pay attention to the following coins:
· Bitcoin is the oldest and most popular cryptocurrency with the highest capitalization.
· Ethereum. It is used for concluding smart contracts - agreements, the execution of which is checked by a computer algorithm.
· Neo coin that is widely spread in the Asian region.
How much does it cost to start crypto trading?
Most forex brokers that offer cryptocurrencies as assets allow you to start trading with only $1. However, this amount is enough only to get acquainted with the technical aspects of the platform. You will not be able to make money with this small capital.
Is trading Cryptocurrency profitable?
Digital money trading can bring high profits. But do not think that trading this instrument is easy money. In fact, you have to work hard to achieve the goal. So it's worth studying statistics, monitoring the market and training well in order to start making a profit.
Which Cryptocurrency is best for trading?
You can trade any cryptocurrency. But the goal is not just to trade, but to make a speculative profit on the difference in exchange rates. You can only earn such a profit if there is liquidity. If a cryptocurrency does not have liquidity, then its value does not change either. That is why you should choose cryptocurrencies with high liquidity for trading.
What are the top 3 crypto assets?
At the moment, the most widespread coins are:
There are different approaches to cryptocurrency ranking. But most often its capitalization is taken into account.