Cryptocurrency trading has become a common talk amongst people. The more that people face success due to cryptocurrency trading, the more fame that this field gets. But many people are still not fully aware of cryptocurrency trading fully. They have only heard about it on a surface level. But to truly understand and be a successful cryptocurrency trader, you have to go into the details and find out for yourself if you are cut out for it. This is why I have written this comprehensive article. It is our take on cryptocurrency trading. By reading it, your knowledge about cryptocurrency trading will increase too.
People first started acknowledging cryptocurrency trading in 2017, when they got to know more about it. This was something new, and traders of all kinds were interested in it, those who were experienced and those that were new. One of the reasons for its rising popularity is because it has a lot to offer. While trading cryptocurrencies, you will always be aware of the market value. It ensures that as a trader, you are aware of the prices would drop or rise in the near future. This helps traders to be prepared, to choose what trading decisions they make very carefully. To break it down, cryptocurrency trading is the exchange of cryptocurrencies. This means you can either get a hold of it, or you can sell it off. Now you may question why do traders partake in this exchange? Well, by purchasing and then selling, a trader generates profits. For instance, a trader can buy it when the value is a bit low only to sell it off when it’s worth more.
If you are interested in gaining profits through cryptocurrency trading, then you have to learn all about it and the way that the market works. Cryptocurrencies are labeled as a digital currency that is decentralized. The blockchain network on which cryptocurrencies are based helps cryptocurrency to be valuable and regarded as being authentic. This case is different from the dollar, for instance, which is a fiat currency. Those currencies depend on a government, which helps them be deemed as worthy. But the reason that cryptocurrency has been introduced into the world and that it is so popular is that humans have no control over it. This digital currency is a product of mathematical processes that result in an end product, which is a distinct financial instrument.
Another thing to keep in mind is that cryptocurrency is completely digitized. This basically means that we cannot touch, see this currency like other ones. It is only viewable and present on the web.
When you browse through the market, you will discover that there is so much variety in blockchain assets. You can choose any of these and trade them, but you have to keep certain things in mind. Every asset differs in some way. This means that when you are interested in trading assets, you have to fulfill its requirement before you can proceed. You may have heard of these, or maybe not, but there are three blockchain assets that are on the top and are most commonly used. These are security tokens, utility, and of course, cryptocurrency like we mentioned earlier.
Exchanges of Cryptocurrency
With the passage of time, so much ease has been created in order to trade cryptocurrencies. The process of buying them has become much simpler, just like selling cryptocurrencies is not difficult either. The good thing is that the market has so many different exchanges which you can choose from. Every exchange is different, so the benefits that one can receive also differ.
As many of you will be aware, this field has its drawbacks, and one can never be too sure about the security of investments. This is why it is always recommended that when you choose an exchange, it is one that is well known. This helps to avoid any scams or losses because recently, many exchanges that were as well known would get hacked. Meaning all investments are lost too. If an exchange cannot return to you the money you have lost, then you lose your cryptocurrency too. The market already suffered a huge loss when Mt. Gox was hacked. The hacking of this exchange had resulted in traders losing amounts worth millions. So if you are still confused on which exchange to choose, then take a look at the one we have made:
- Binance
In 2017, this exchange was first introduced into the market. The aim was to help traders who were not as well experienced. This way, they can trade in a simple manner. This firm was established by Changpeng Zhao. He had previously developed software for high-frequency trading. Changpeng Zhao also had a major role in creating a distinct type of UX for Binance, which also helped the firm become very well respected in the market.
- Poloniex
This firm had first made an appearance in 2014. Poloniex had one goal, and it was to help customers of the US to be able to trade cryptocurrencies in a safe manner. The headquarters of Poloniex is located in Southern Asia, Greater Philadelphia Area, to be specific. It was created by Tristan D’Agosta and has been acknowledged publicly in Fortune’s magazine.
Poloniex is mostly known and wanted due to how easily accessible it is. Even within the market, it can be found with ease and maintains a good position. Over time, the platform has developed significantly and grants its customers more than 100 trading pairs of Bitcoin. Whilst accessing Poloniex, traders will also get the chance to use charts that are extremely well developed and other tools to help analyze data. This will aid customers when they make investment decisions. This exchange is highly preferred because it charges traders a very low amount. Traders just have to pay 0.2% per trade, which is reasonable.
- Bittrex
If you are looking for an exchange that is also on the top and is reputable, then Bittrex is a good option. It started out in 2016 and has continued to rise in the market. This firm was created with a different intention. The creators wanted this platform to be the most unique and therefore created it that way. Bittrex is, therefore, the only platform that makes the typical financial sector unite with the trading markets.
As a cryptocurrency trader, it is normal to be worried about safety whilst participating on the web, but Bittrex is a well-known platform that has constantly maintained its security. Bittrex is also a blockchain technology supplier that has ruled the American charts and has secured a top position. So if you are looking for a trustworthy firm and exchange, it is one of the right options that you have on the list. There is nothing better than working with a top exchange.
- KuCoin
This is a cryptocurrency exchange that is based in Singapore. It is also one of the first exchange platforms that were introduced in the market. This exchange is one of the top and most developed ones because the researchers had invested a lot of time and effort into it. They had started the research for KuCoin in relation to the market in 2011 but rolled out the exchange two years later. So in 2013, KuCoin was introduced in the market for the first time. And it has been a very significant cryptocurrency exchange.
This platform is a unique one, as it has been carefully designed. It also has very creative technology incorporated into it to make the platform very distinct.
- Coinbase
Coinbase is another one of the best cryptocurrency exchanges that are present in the cryptocurrency industry serving traders with various crypto trading services. It has earned a great reputation in the industry with the passage of time. It is based in San Francisco, and it is covering different users from across the world. A lot of cryptocurrencies are supported on this exchange platform, including Bitcoin and Ethereum, which are accessible to users. In terms of trading volume, it is considered one of the top digital currency exchanges in the industry.
These are just a few of the top digital currency exchanges present in the world of cryptocurrencies. There are many other trustworthy crypto exchanges that are doing their job remarkably.
The first few steps were to choose an exchange. This was a crucial part because, as a trader, you have to ensure that the exchange is reliable and safe to work with. Once that is done, you can officially start trading. To register yourself and create a trading account is really simple. Whichever platform you choose, you just need to sign up on the site, then deposit your amount to get your online wallet started up. There are different payment methods, which you can choose from when depositing. It can vary from fiat currency to cryptocurrencies.
But if you intend to change the exchanges, then do keep some things in mind. With each platform, you will come across different interfaces, and therefore you would have to use them differently. Features like prices, the timing of transactions, and limits on trades also differ. You should also consider what your location is as not all countries are eligible. For instance, there are some exchanges that are limited to certain countries, and people from other countries cannot participate. An example of this is that exchanges that implement the AML and KYC policy only let people from the US participate.
You might be confused about what is meant by these policies. AML is a security policy that prohibits any money laundering from occurring through constant surveillance and monitoring of transactions. On the other hand, the KYC policy helps to authenticate users before they can proceed with trading. This way, no fake people can trade as they have to submit government-issued documents and a document that proves their address.
Main trends you need to be aware of in the market
If you want to be a successful cryptocurrency trader, you have to be able to make really good decisions whilst trading in the market. Through education and further experiences, and acquiring skills, you have to ensure that these decisions are as accurate as possible. Just like professionals use certain strategies to reduce risks and maximize profits, you have to be smart and make wise decisions.
- Supply
Supply refers to the number of cryptocurrency coins that will be provided to you by the company for the entire project. The time or duration of how long the coins would be available in the market is also included in the supply factor. But to be on the safe side and to try and minimize your risks as much as possible, you should also analyze if coins have been destroyed previously and, if yes, then how many.
- Market Capitalization
It is always recommended to check the total market capitalization before you choose a certain project. This refers to the entire rate that a number of coins would have in that specific project. This is an important process because it helps you decide whether a project is worth it by predicting beforehand what the price range would be.
- News
To be well aware of the market, it is very important that you follow what the media shows. Whatever the media states about cryptocurrencies can really affect your strategies, and at times the media has been really helpful in making investors aware of any problems or developments coming up. This way, you can be prepared and map out your next actions. An example is when China started a gigantic cryptocurrency crackdown around 2017. Investors had already decided that this would have a negative impact on the market due to how huge the Chinese market was.
- Integration
Because of the constant modern advancements, you always have to keep in mind that whatever you invest has to be able to unite with the current financial system. If you take a look into tokens that are better adaptable, then that will benefit you as they also rise really quickly in the market.
- Major Events
If any major events take place in the market, they usually help to increase your investments.
Some terminologies you should remember
Every field has its own special terms that are commonly used. It is the same case in the trading field. When you trade cryptocurrencies, these are some of the terms you should remember.
- Spread
The spread refers to the difference in the price of the rate at which you either purchase or sell cryptocurrencies. But you have to remember that the price or price difference is dependent on the asset that you choose. Spreads also differ according to the time at which the trade takes place and the duration that is spent before your transaction is completed. Many companies and platforms use spreads to set a certain standard of payment. Spreads are also a preferred way by some traders as they benefit from it as their trading careers succeed.
- Lots
This is a term that you will come across many times during the time that you spend in trading assets. Lots are used when someone wants to refer to a group of cryptocurrencies that are used to control the dimensions of trades. A lot of times, a lot will just measure up to one coin. But these types of lots are really wanted in the market, as they reduce the risk.
- Futures
If you ever hear of cryptocurrency futures, then just try to understand that it refers to an agreement. This agreement is usually concerned with the price at which a cryptocurrency can be bought or sold. This is a very significant term because it refers to an instrument that can be used to make profits off cryptocurrencies. But to do so, you do not have to actually own the cryptocurrency. It has become one of the most used financial instruments, as many investors use it nowadays so that they can increase their profits as much as possible. This instrument is also used by miners so that profits can be secured,
- Leverage
When you start trading, you will realize that there are some, if not most, companies that promote a leverage system. When you participate in a trading that is leveraged, it is considered a top-notch strategy for investing. During this process, the trader takes a loan so that whatever the investment amount is, it can be completed. This strategy helps investors explore opportunities that are larger and helps them achieve trading goals.
- Margin
The first amount that you deposit to achieve a leveraged position is referred to as margin. But the requirements for a margin are not consistent. Every broker has different requirements, so do take a look at this when you check out brokers. A factor that increases the margin is the size of your trade.
- Pip
To measure the fluctuation in the price regarding a cryptocurrency is called pips. Pip is a name that represents a set of units, and it changes depending on what pairing or platform is used. But keep in mind that pips symbolize the fluctuation in the price by the movement of one unit.
- KYC and AML
These are policies that are commonly implemented by companies to secure platforms and grant customers their safety. KYC stands for Know your customer, and AML stands for anti-money laundering. These two policies are very important in the US.
Conclusion
If you are interested in earning more on the sidelines, then trading cryptocurrencies is a good option. It will help you really understand the inner workings of the market. The more research you do of the market, the better investor you will become. Because as your familiarity and understanding increases, it will aid you in your trades and help you make smart decisions.