Cryptocurrency trading on the stock exchange: where to start for a beginner, the basics of successful crypto trading

Cryptocurrency is an invention of the 21st century. These are financial means that have no physical expression. They can only be in electronic form. It is protected from forgery and is outside the jurisdiction of regulators of standard forms of payments.

This is a tool with a high volatility index. And this property allows you to make good money on cryptocurrency trading.

Principles of trading on the crypto exchange

The key principle, as on any other exchange– is to buy cheaper, sell more expensive. The difference will be a profit. To form a strategy correctly, it is necessary to understand the basics of selling stocks, other securities, and national currencies.

In the process of work, a full-fledged technical and general analysis of the market is carried out with the help of graphical displays available on the exchange. The main components of any trade, including cryptotrading:

  1. Charts of changes in prices and quotations.
  2. Buy and sell orders.
  3. History of operations performed and completed transactions.
  4. Final trading volumes.

Earning on trading

Trading in English means trading. Now this term is understood as trading on international exchanges. The main essence of trading cryptocurrencies means to buy them at the minimum rate and sell them at the maximum. This is the essence of all operations in trading.

To achieve success, the first step is to find a reliable exchange. The main indicators of the trading platform should be positive reviews and the volume of trading operations.

Cryptocurrency trading on the stock exchange

To make a purchase, you should choose currency pairs. For example, Bitcoin to dollar (BTC\USD) or Bitcoin to euro (BTC\EUR). Such a pair is called a fiat pair. If a trader works exclusively with cryptocurrencies, then the ratio of two cryptocurrencies is selected (for example, bitcoin and ethereum).

Pairs should be actively sold and bought – this is a key factor for choosing. As a result, you will not have to wait for a buyer for a long time. Also, you need to take into account such a criterion as volatility. It contains information about the dynamics of fluctuations in the price of the currency.

If a trader does not have sufficient experience, it is worth buying a currency with minimal exchange rates in accordance with statistics. And sell immediately after reaching the maximum level. At the beginning of trading activity, it is worth minimizing risks to increase free capital.

Earning on automatic trading

A bot is a set of parameters and indicators that are set by a trader. The system itself, within the parameters set, makes a transaction without the participation of a direct user. Sometimes the exchange requests the operator’s permission. In this case, the transaction takes place in semi-automatic mode.

There are the following types of bots:

  1. Trading bots.
  2. Arbitration.
  3. Warrant bots.
  4. Scripts.

The use of the bot is justified in a number of transactions, especially when gaining experience by a beginner. However, you have to pay for these programs, both on a one-time basis and by subscription. In addition, the profitability of the program may be lower than playing manually.

Earning on investing

Investing in cryptocurrency makes sense when the duration of the investment is from a year. It is worth carefully analyzing the market and having a positive forecast of the development of the exchange rate for the expected period.

The algorithm of participation in the investment differs depending on the duration of the investment.

Long-term investments:

  1. Conduct an appropriate analysis of the project. To study analytics with forecasts and opinions of specialists. Select the appropriate currency.
  2. Track the dynamics of the currency price. Buy it at a minimum cost.
  3. Withdraw funds from the exchange.
  4. Invest in an investment project.
  5. Wait for the end of the project and withdraw the deposit from it.

Depending on different circumstances, the profitability can range from 100 to 1000 percent for the final financial period.

Short-term investments:

  1. Find the currencies that best meet the signs of promising growth.
  2. Purchase them (it is not recommended to focus on only one option, it is better to form a portfolio).
  3. Track the dynamics of changes in value, study the cryptocurrency market in detail.

The profitability of this type of earnings can be at a high level. However, it is difficult for a beginner to understand all the subtleties of this issue.

Earnings on arbitration

Arbitrage in the thematic sense corresponds to trading. However, the investor’s activity is not limited to one exchange, but extends to several. On one exchange, you can purchase currency at minimum quotes. Using the maximum quotes of another sell.

The choice of an exchange should depend on the speed of response to changes in the exchange rate of the selected currencies. Funds are deposited on their deposits on these exchanges. The course can change quickly. Therefore, an offer to buy on one exchange and to sell on another should be put up simultaneously.

The effectiveness of cryptocurrency arbitrage depends on the speed of the investor’s reaction. With a sufficient level, the profitability will be high. You can use the bot as a safety net, since the work is mostly purely mechanical.

Rules for safe trading on the cryptocurrency exchange

It will not be possible to completely eliminate the risks of the players. But you can minimize the risks by following the advice of successful traders:

  1. Divide investments into four or five areas.
  2. Before performing any of the actions, you should write down the chosen strategy and follow the plan.
  3. Carefully monitor the changes in quotes, and not shift all responsibility for trading to automatic bots.

Published: 27 July, 2021

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