Beginners guide: Cryptocurrency trading

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Cryptocurrency trading is the act of buying and selling cryptocurrencies with the aim of making profit. The gain in trading cryptocurrency can be massive if you know the game and you play your cards well. Some of this alternate coins grow very quickly while some are still very cheap and can worth ×500 times in the nearest future.

AFAIK there are two types of trading which are 1. Day trading 2. Long term trading (hodling)

1. Day trading

Day trading is the act of trading within a short period of time, maybe minutes, hours or days. It also entails the act of buying the lows of a particular coin and selling it when the price soars high (you made profit)

2. Long term trading

While long term trading involves the act of buying a coin that you believe is a potential asset and that will grow in value, and keeping it for a very long time (years). For example, those who bought bitcoin at 10cents and waited for years to sell at maybe $100.

There are three phases involve in trading cryptocurrencies which are:

Fiat currency <=> Bitcoin <=> Alternate coins

1. Fiat to bitcoin and back

This is the act where a trader buys bitcoin (converting fiat to btc) at a low rate and sells when profit is made (converting btc back to fiat)

2. Bitcoin to alternate coins and back

This is the trade between bitcoin against alternate coins.

3. Alternate to alternate

This is involves trading between alternate coins without going back to bitcoin or fiat.

Steps involved to begin trading

Since we already know what an exchange is from my last blog post, the first step to begin trading is registering an account with an exchange. Examples of exchanges are bittrex.com and kucoin.com

Depositing of fiat currency on an exchange.

In order to purchase cryptocurrencies on an exchange, you have to first deposit the amount of money you want to trade with using your debit card or credit card.

Purchasing Bitcoin

Depending on the exchange used, you need to input the amount of bitcoin you would like to purchase and then click buy. If successful, your fiat currency will be converted into Bitcoin. You can now buy alternate coins via bitcoin by inputting the satoshi price at which you want to buy at.

Note: i Internationally did not include any procedure for purchasing bitcoin with fiat currency because every exchange has different methods of purchase, so you need to figure it out

Doing your own research

Every single day, there there lies various opportunities in the market. So it's left to you to take your time to do research and make findings. Don't just buy into any coin, always know the reason why you are buying into a coin and sell when necessary. Don't be greedy!

Knowing when to buy into a coin or when to sell off

The big question is, how do we know that the price of a particular coin is about to increase or decrease in price? In cryptocurrency, we know this by 1. News 2. Technical analysis

News

The news is one way which determines how investors and traders will react to the market. It's is also one of the best ways to manipulate the market price. News may sometimes cause panic, fear and sell off thereby crashing the price. But sometimes it may increase euphoria, giving investors the confidence to invest more money into the market. For example, the news about China banning cryptocurrency led to the crash of bitcoin from $5,000 to $3000. Cryptocurrency News are in two forms 1. Political news (like the example given above 2. Systematic news (this involves the developments, innovation going on in cryptocurrency ecosystem). Therefore, it is very necessary as a trader to be up to date with the latest news.

Technical Analysis

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This is one of the most important and most used tool which traders makes use of to predict the future price of a coin. Technical analysis is the method of predicting the future price of a coin from past price movements or trends. It involves studying of chart showing trade histories and datas. This is a very broad topic, so in other for you to learn how to make technical analysis, i would like you to enroll in an online course. You can take lessons from the scratch at your own convenient time and your progress will be saved so you don't have to rush yourself. Here is the link https://www.babypips.com/trading/technical-analysis . After you must have mastered your lessons on technical analysis, you can always test your skills here http://tradingview.com

Conclusion

As a trader, the rule is to always buy low and sell high. Don't be greedy, trade wisely. Please feel free to leave your comments and suggestions below. Happy trading :)