What Is Crypto Trading and How to Make Money on It?
The Internet has provided a lot of opportunities to make money online, and with the advent of blockchain, the list of possible sources of income has expanded even more. A large share of remote earnings falls on cryptocurrencies and related operations.
Digital cash, or in simple words, cryptocurrency actively interested more and more new investors who are ready to invest in it in order to generate income. To hold trading operations on cryptocurrency, today, can anyone. Despite the increased risks of investing in cryptocurrency, more and more people are ready to overcome their fears, because on the other side there are incredible prospects for profit. However, do not hope for a quick profit, to successfully earn on trading digital cash, you need to have enough knowledge.
What is cryptocurrency trading?
Cryptotrade — is one of the main ways to earn money on cryptocurrency. Trading cryptocurrency tokens is inconsequentially different from trading with precious metals, currencies and shares. The main task remains the same: to buy as cheaply as possible, to sell more expensively and to make a profit. The main difference between cryptocurrency trading and the stock market is the high volatility of the exchange rate. Many traders dream of a yield of thousands of percent of the transaction, but in the stock market such a deal has to wait for years, buying shares of little-known companies in anticipation of the growth of their capitalization. At the same time, fast deals with high profitability are not uncommon for crypto trading.
Cryptocurrency trading: how to start?
It is impossible to start successful trading of cryptocurrencies from scratch. Deciding to invest free funds in cryptocurrency trading should, first of all, prepare a knowledge base. For successful trading, the crypto trader must learn basic skills:
- to analyze the cryptocurrency and the volume of its trades;
- Use graphs and encodings
- To make sales and purchase deals;
- track the history of trading.
Assessing the prospects of the cryptocurrency, you should pay attention to the following aspects:
- for what idea the cryptocurrency is created and how much it can be in demand;
- Transaction speed and ease of dealing with tokens
- The professionalism of the development team;
- demand and popularity.
The combination of these factors provides an increase in the capitalization of the cryptocurrency and, accordingly, its value. Charts show the history of the token rate growth in relation to another cryptocurrency or fiat money. Charts can be made using the exchange interface, indicating different lengths of time and selecting different trading pairs. With his help, we can draw a conclusion of how reasonable the current price is and give a preliminary forecast for further change in value.
According to the history of trading and volumes, the total liquidity of the cryptocurrency is tracked, how interesting it is to users, the demand for it is growing or decreasing.
Based on the knowledge, we can draw a conclusion about the profitability of the cryptocurrency, predict its movement and make a profitable deal.
To make a trade, the trader must place an order by selecting a trading pair to exchange and specifying the number of coins he wishes to sell and their value. You can stir and close orders non-stop, but American and Asian times are considered to be the most preferable. It is during this period that there is a particularly high activity, which provides an opportunity to more clearly predict the course and make a quick transaction.
Features of investing in cryptocurrency
The most popular cryptocurrency Bitcoin in December 2017 overcame the mark of $20,000. Its main advantage lies in the limited amount of capitalization – 21 million. Tokens. This means that each new bitcoin purchased reduces the number of remaining coins. This trend allows bitcoin to grow exponentially. Thanks to the active investment in bitcoin, the entire cryptocurrency market, including altcoins, which are characterized by good volatility and liquidity, is beginning to flourish.
Due to the phenomenal growth of bitcoin during 2017, more and more investors are willing to risk their money. Cryptocurrency trading attracts more and more new speculators – both beginners and experienced.
High liquidity of digital cash encourages the creation of new cryptocurrencies. At the moment there are more than a thousand tokens of various cryptocurrencies on the market. However, most cryptocurrencies are not in demand because of the huge number of capitalization’s. But there are 10 most popular cryptocurrencies, which are highly volatile, and reasonable investments in them are able to bring excellent dividends. In order to make money on cryptocurrency trading, you need to be able to correctly predict the future price movement.
How to make money on cryptocurrency?
Today, there are several types of earnings on cryptocurrency – mining, investment and trading. The first two we will not consider in view of the complexity and increased risks. Trading cryptocurrencies involves opening speculative positions to buy or sell a token of one or another digital cash. When investing through the exchange, you can earn only on the growth of the cryptocurrency, trading through a broker can increase your financial investments both through the purchase and through the sale.
Below is a graph of bitcoin for 2017, on which the naked eye can see the perfect uptrend, which brought its investors a huge amount of money.
Cryptocurrency trading strategies
Initially, the purchase of cryptocurrency is made if the trader on the basis of the analysis considers its current value low. The next task is to sell it when the value increases. In order to choose the optimal moment for placing a order, you should re-examine the analysis and decide whether this coin is worth more. If not, it is the optimal time for its sale and reinvestment of funds.
Coming into the world of trading, you should say goodbye to greed. Do not wait long for a profitable value. It is better to make a few trades with a 100 percent chance of profit than to miss the moment in anticipation, while the value will fall or rise as much as possible.
Most traders use a strategy based on the analysis of a glass of orders. A glass of orders is a table of all placed orders on the exchange for one type of cryptocurrency. It will be clear even for Dummies what demand the cryptocurrency has and what price it is willing to pay.
Based on orders of large volumes, it is possible to unmistakably determine which way the further rate of tokens will go, as it is traders trading in large volumes, determine the trends of value movement and carry out large-scale changes in the rate, which minor bidders can’t influence. For them, it remains possible only in time to detect the upcoming changes and use them for profit.
Where is the best place to trade?
Below we will look at options where a new trader can get started.
The most common method is trading on the cryptocurrency exchange. They contain all the tools necessary for the trader, allow you to track the rate and history of trades, place and buy orders, replenish and withdraw capital. Choosing a cryptocurrency exchange, you should pay attention to the following factors:
- The trading volumes of the exchange. To make quick trades, it is recommended to choose exchanges with a high volume of trading.
- Language support and interface. Cryptocurrency exchange is the main tool of the trader. It should be clear and easy to work with.
- Ways to top up and withdraw funds should be available to the trader.
- Trading pairs. Not all cryptocurrencies are traded on exchanges, and even trading pairs of popular altcoins may differ. Some platforms provide the opportunity to make transactions between fiat currencies and cryptocurrencies, some are limited only to digital transactions. Choosing an exchange, be sure to study the steam trading of cryptocurrencies presented on it.
Choose only proven sites with high user protection. If not, all interested couples are represented on the trading exchange, you can use a few of the most suitable options. And then transfer funds between exchanges through transactions to internal wallets.
If cryptocurrency mining requires a large amount of special knowledge, and trading on the stock exchange requires experience, then trading through a broker will only need to open an account with a brokerage company. International broker FXopen provides favorable trading conditions for both novice traders and traders who have years of experience trading in financial markets.
The main advantage of cryptocurrency trading in FXOpen is that the broker provides a wide range of financial instruments. Financial experts often express their opinion about the increased risks due to high volatility of digital cash, but proper capital management and the presence of a trading strategy make trading a profitable occupation. It is always worth remembering about money management and do not risk more than 2-3% of the entire deposit on one trade. Based on these rules, you will be able to earn in the long run.
The pros and cons of crypto-trading
|high volatility of the cryptocurrency market, which provides high interest rates on transactions||successful trading is impossible from scratch without learning more|
|opportunity to start with a small investment||requires constant monitoring of news reports and market analysis|
|decentralized and secure bidding system||relatively stable trading pairs (bitcoin-usd) bring a modest income|
|a large selection of trading pairs||traders use professional terminology, which is not easy for a beginner to master|
|the ability to make transactions online at any time
the rapidly developing sphere of cryptocurrencies provides an opportunity to earn high income by investing in new projects
a wide variety of trading floors
Cryptocurrency trading provides ample opportunities for earning. You can start trading on the exchange or with broker with minimal investments, but for profitable trading will have to put a lot of effort and devote time to deep analysis of cryptocurrency and market.