Cryptocurrency - how to trade, terminology, analysis, strategy, education
Updated February 4, 2024
What is cryptocurrency trading. Learn how to start investing and making money trading cryptocurrency from scratch for beginners. In this article on trading cryptocurrencies, we will tell you how to start trading cryptocurrencies more effectively and what is the most important thing in crypto trading for beginners. Learn more about cryptocurrency trading.
Cryptocurrency trading from scratch for beginners
First you need to choose a cryptocurrency exchange. Today there are many, many exchanges with different benefits. OLYMP TRADE offers its clients to trade the world's best tokenized cryptocurrencies, stocks, indices, commodities and currency pairs using cryptocurrency and fiat. Achieve excellent results with Olymp Trade.
Start trading cryptocurrencies at «OLYMP TRADE» - Visit site
With a few simple steps you will be able to login, open an account, make your identity, deposit in fiat as well as in cryptocurrency [1]. And always remember, you only need to trade the amounts that you can afford to risk.
Before you start trading cryptocurrency from scratch, it is best to learn the basics of both the platform and cryptocurrency trading in general. If you are a beginner, chances are your best bet is to open a demo account and learn the following three things to get started - terminology, analysis, strategy. Start risk-free cryptocurrency trading with demo.
Trade cryptocurrency on demo - link
Terminology
The first thing novice traders need to know is the terminology. The main thing that you will see on the exchange is a pair of trading instruments such as Bitcoin against the dollar and Ethereum against the dollar. They show how much it costs to exchange one Bitcoin, or one Ethereum in USD. In the trading platform, cryptocurrencies are always in pairs and are most often denominated in dollars. Cryptocurrencies can also be exchanged with each other and you will see pairs like Bitcoin and Ethereum.
Buy and sell
The next important terms to understand are "buy and sell". When we buy cryptocurrency, if the price rises, we profit from it, and when we sell it, we hope that the price will fall, and we will make money from it on the fall in price. On a cryptocurrency platform like Olymp Trade (link), you can open trades in both directions, which is definitely a big advantage.
In addition, there are three more important terms: spread, margin, and leverage.
Spread
Spread is the difference between the buy and sell price of an instrument. The bigger the difference, the harder it is to make money. On the Olymp Trade cryptocurrency platform, you will find some of the tightest spreads on the market right now. Which will certainly be a huge advantage, given that the larger the difference, the harder it is to make money between the buying and selling prices of the instrument.
Margin trading
Trading with margin (margin trading) is a mode in which you can make transactions not only with your money and securities, but also with assets that you kind of borrow from a broker.
Leverage
Financial leverage is, in simple words, the ratio of a trader's own finances to funds borrowed from a broker for trading on a cryptocurrency exchange. The reason for the use of leverage was the rise in prices for financial instruments. For example, 1 bitcoin costs over $25000. How can you trade, buy, then sell and make a profit with only $10000 on your trading account? Only by using leverage, that is, leverage, from a broker. For example, with a leverage of 1:10, the purchase of any financial asset will cost 10 times less. Not $25000 in the example we are considering, but only $2500 will be frozen in your account with full compliance with money management.
What to trade?
And then you need to understand, just choose what you want to trade. Most crypto traders prefer the popular Bitcoin and Ethereum, as there is a lot of information, forecasts and analysis of their price movements. Our site also provides analysis for Bitcoin and Ethereum, as well as for other popular cryptocurrencies (look at the online charts page). Other traders, on the contrary, prefer to trade other less popular instruments, where they hope to find stronger price movements and potential profits. It is up to you to decide which cryptocurrencies to trade; more than 70 pairs are represented on the online platform.
Analysis
So, after you have decided what to trade you need to do an analysis to decide whether to buy or sell, otherwise you would just gamble.
There are two types of analysis in crypto trading and trading in general: technical analysis and fundamental analysis.
Technical analysis
Technical analysis is based on the chart and how the price moves on it, regardless of the latest news and opinions of traders. It uses patterns, indicators, to try and predict where the price will go next. There are 50 technical indicators on the Olymp Trade platform for digital assets and tokenized shares of global companies, but we advise you to only use two or three that you think are most suitable for you.
Fundamental analysis
Fundamental analysis looks for signs of future price movement in the news, in investor sentiment and, of course, in information that the market has not yet discovered and to which it has not yet reacted. These two types of analysis, technical and fundamental, are not mutually exclusive, and on this site we use both types of analysis, technical and fundamental, to analyze cryptocurrency trading.
Strategy
After we have done the analysis, we move on to the specific strategies used to trade cryptocurrency. One of the most popular is day trading.
Day trading
In day trading, a trader tries to take advantage of the cryptocurrency price movement on the daily chart. Most often it is used by traders with smaller amounts of deposits, as they prefer not to wait for a slow price movement. This requires undeniably quick decisions to make profits and avoid losses, as cryptocurrency markets can be extremely volatile.
Hodling
And hereinafter, "crypto-hodling" is the name of such a strategy, which is preferred by many long-term investors. In traditional markets, traders also refer to it as a buy and hold strategy. This is where the investor conducts his fundamental analysis, finds the cryptocurrency that he believes has the most long-term potential, buys it and holds it for a longer period of time, usually more than a year or until it reaches a predetermined price. The hold will not take you long, other than the initial analysis.
Swing trading
The next strategy is "cryptocurrency swing trading". Swing trading or swing trading exploits fluctuations in the highly volatile cryptocurrency market to the benefit of the trader. Unlike day trading, swing trading keeps funds invested or ready to invest for longer than one trading session while the trader tries to determine the reversal pattern for entering and exiting a trade.
Trade with trend
Another popular trading strategy is "trending cryptocurrency trading". As the name suggests, trend trading requires only one thing from the investor - the ability to recognize medium and long term trends. Once a trend is detected early in its formation due to some major market events, the trader uses the momentum of the price movement to his advantage. Trading with the trend is certainly easier and more basic than day trading and swing trading, but it still requires more experience than hodling.
Scalping
Scalping takes a lot of time and energy as the trader implementing this trading strategy focuses on very small but numerous trades in order to summarize the profits that will be more than enough at the end of the day to meet their needs. Due to its high volatility, the cryptocurrency market is ideal for scalping as the price tends to move in both directions, sometimes several times a day.
Education
Last but not least, the importance of education. To become a profitable cryptocurrency trader, you need to know how to apply various tactics and methods in trading. Yes, the knowledge gained from trading other assets can come in handy, but since the nature of cryptocurrencies is so special, certain tools and their use need to be changed so that they can work in the cryptocurrency market. From the very beginning, it will only be better for you if you make an informed decision about which trading strategy you are going to use. After that, you will need to study technical or fundamental analysis, or even both, in order to be successful in cryptocurrency trading.
Read the Olymp Trade broker review.
learn more about cryptocurrency trading:
How not to lose money on cryptocurrency. Five blunders in trading
Important information: Trading carries the risk of loss. Cryptocurrency trading provides a high rate of return on investment, but is also associated with the possibility of losing your investment. Before starting trading, it is recommended to familiarize yourself with the trading conditions presented on the broker's website.
External links (Wikipedia):
1. Cryptocurrency - link.
