Cryptocurrency trading is the riskiest trade on earth. It has nothing to do with others currency trading. “You either win big or lose it all” is the only thing that really matters in cryptocurrency trading. Cryptocurrency has no central bank backing it up which means there are no assets to secure the loan so you can trade with it.
The cryptocurrency market is a 24/7 global market which means there are no opening and closing hours for trading unlike in the stock exchange where the markets open once a week, on Monday morning and close on Friday afternoon.
Crypto trading has become more popular than ever since the price of Bitcoin was skyrocketed. It traded at around $8000 at the end of November 2017 and now it has reached an all-time high with a price of over $61,000 in 2021.
Crypto trading is a profitable thing but you need to be very careful about it as many people have lost their money due to crypto scams like Bitconnect. So how do you trade safely in the cryptocurrency market?
There are a few things that you need to take into account when trading cryptocurrencies.
Market Trend
The first one is the market trend. You need to study the charts and understand what is happening so you can make an informed decision on when to buy or sell.
There are three types of market trends:
1) Upward Trend: This is when the price of the asset is increasing over time.
2) Downward Trend: This is when the price of the asset is decreasing over time.
3) Sideways/Range-bound Trend: This is when the price of the asset is staying mostly the same with a little movement up and down.
You should study these three trends before you start trading so you have a clear idea of what’s going on in the market. You’ll be able to see an upward or downward trend forming and decide if it’s a good opportunity for you to buy or sell your cryptocurrencies. To understand market trends in detail, please click here.
Intraday Trading Vs Swing Trading
Before you start trading in the cryptocurrency market, you need to decide if you are going to do intraday or swing trading.
Intraday is day trading with trades that last less than 24 hours while Swing is holding the assets for a few days up to weeks.
The main difference between the two types of trading is that intraday traders take profits and cut losses quickly while swing traders hold on to their assets in the hope that they will increase in price.
Which type of trading you should do depends on your risk tolerance and investment goals. If you are a beginner, I would recommend starting with Swing Trading as it is easier and it takes a lot less time than intraday trading.
Technical Indicators
Technical indicators are another tool that you should use in your technical analysis of the charts to predict where the asset will move next.
There are different types of indicators each with its own strengths and weaknesses. If you use them properly, they can improve your accuracy in predicting the market trend.
Some of the most popular indicators are:
– Moving Averages
– Relative Strength Index (RSI)
– MACD (Moving Average Convergence Divergence)
– Stochastic Oscillator
Each indicator has its own calculation and interpretation, so you need to understand how they work before you start trading.
Cryptocurrency trading is a very profitable thing if you do it right. However, you need to take into account the market trend, your risk tolerance, and technical indicators before you start trading.
