With the latest boom in digital assets, many can’t help but take interest in cryptocurrencies. As the idea of going cashless is becoming mainstream, a lot of people want to try cryptocurrency investing to reap the benefits of decentralized assets that are efficient, cost-effective and transparent.
Trying your hand at cryptocurrency trading is hard work. One must be equipped with the right knowledge and information in order to trade effectively. Otherwise, doing that is like an invitation to lose all your investments. So, if you’re a beginner in the crypto sphere, here’s an easy guide you can follow to help you with crypto trading!
There’s a lot of information you need to know before you can become an expert crypto trader. However, there are three basics that you need to know by heart: fiat to crypto trading, storing cryptocurrencies, and crypto to crypto trading. Knowing these trading concepts will give you an in-depth understanding of the cryptocurrency industry.
Fiat to crypto
As the name suggests, fiat to crypto trading is investing your money by exchanging it into digital assets through the use of crypto exchange sites. There are a lot of places where you can do this, however, it’s best if you look for a site that can cater to your specific needs.
You have to create an account in the exchange site of your choice, link your bank details, and purchase the crypto you want. Before doing this though, make sure you check for the following features on the site:
- Validity
One of the most important things you should check in a crypto trading platform is the validity in the country you’re in since there are exchange sites that are not licensed to operate in some countries.
- Reputation
Before using a crypto trading platform make sure you check the reputation of the company. It would be better if you read reviews or ask someone you know who has tried out their services. Additionally, visit the site and read their terms of service to have a better understanding of the services they offer.
- Exchange rates
Another factor you should consider is the exchange rate. Compare different crypto exchanges to see if there’s a big difference with the rates they offer.
- Safety
Security is your top priority when it comes to using an exchange site. Make sure that the trading site prioritizes customers’ safety and well-being. Check if the site you’re using complies to laws and regulations, has a permit, and a great feedback from fellow crypto traders.
Crypto to Crypto trading
Crypto to crypto trading is a peer-to-peer exchange of digital assets from one user to another. Throughout the transaction, the two parties have full control over their assets and private keys.
During this kind of direct exchange, the two parties can execute a transaction even if they’re using a different blockchain. Moreover, it’s also possible to trade different currencies.
Here are the concepts you need to know before you start trading your digital assets:
- Scalping
Scalping is one of the most common crypto trading strategies in the market. This concept is about making small trades in a short period of time. Usually, scalping only takes less than an hour.
When it comes to scalping, the number of trades taking place is more important than the profit being generated in a transaction.
- Reverse trading
Reverse trading is an advanced strategy in cryptocurrency. The concept is based on the reversal of the general trend. In essence, the goal in reverse trading is to identify the timeframe where the trend is about to be reversed. Additionally, this concept also tackles the prediction of the highs and lows of the asset for the day.
- Momentum trading
Momentum trading is one of the easiest methods in cryptocurrency. With this type of trading, you need to analyse the momentum of the market or asset you’re trading. However, this is deemed as the riskiest because it can easily go in a different direction. Usually, momentum trading focuses on the volume of the current trend in the market.
- Fading trading
Fading is a strategy where traders will go against the flow of the trend in the market. However, this strategy is considered as one of the riskiest strategies to use because one wrong assessment can yield huge losses. Similarly, the fading trading can also incur massive gains when used correctly.
- Day trading using volatility
Cryptocurrency’s volatility is often viewed as negative, but when harnessed correctly, it can create a lot of opportunities for traders. In day trading, crypto users utilize this feature to make small trades and generate huge profits.
- Buy dips and holds
Buy dips and holds is a strategy used when purchasing cryptocurrencies when their price is down. People might shy away from dips in the market, but it’s actually a good way to acquire cryptos then hold it until the value booms again.
- Range trading
Range trading is a method that depends on the stocks and forex trading. To master this type of trading, traders must learn to analyse the candlestick charts. Usually, this type of trading looks at the defiance of the support levels of the asset when it’s steering towards the resistance level before buying or selling.
- High frequency trading
HFT or high frequency trading is considered to be one of the most intricate methods of trading digital assets and also the most profitable. In this type of trading, people usually rely on algorithms instead of trading manually. This makes it easy for traders to trade in a matter of seconds.
However, this type of trading requires a lot of analysis and test runs in order to measure the accuracy of the results.
Success in cryptocurrency trading doesn’t overnight. You need to have the right information and experience in order to trade your funds effectively.