Introduction to cryptocurrency trading
Introduction to cryptocurrency trading
This is my first article on Steemit Crypto-Academy , the new project initiated by @steemitblog to support the newcomers who are entering this cryptocurrency industry. In this article I will give readers a basic introduction on crypto currency trading and how to start trading as a beginner.
The simple idea of the word “trade” means exchanging something for another. All of us have an experience in exchanging money for services or goods (buy/sell) which can be identified as an exchange or a trade. With each and every trade there is a transaction associated with it. The idea of ”Trading” is multiple number of trades or frequent transactions. In other words the process of initiating multiple trades to obtain a profit is trading. It’s the same simple principle for an any kind of market , buy units in a lower price and sell them again for a higher price. There are different types of markets where you can trade. There are non-physical financial markets stocks markets, crypto currency markets , fiat currency markets , bond markets etc. And also physical markets such as wholesale markets , auction markets etc. As a beginner for crypto currency trading you need a get a better idea about what are these crypto currencies and what is the difference in crypto currency trading compared to forex or traditional stocks trading.
It’s very important to understand the difference of an investor and a traders at the beginning of this article series. Investing expected to give profit after longer time interval and trading over shorter time periods. Investor never sell his holdings regular basis, he waits until it reach the long term target. But a trader always take advantage of every small variation of the price and try to obtain a profit. Both methods follows the same principle, but the time intervals are different.
From where should I start ?
Selecting a Crypto Currency Exchange
To start crypto currency trading , you need to select a place or a platform to trade. This is the first step. We need to consider lot of factors when selecting the perfect cryptocurrency exchange platform for you.
You need to consider following factors
Restrictions on Geographical Location : Most of the crypto currency exchanges have limitations on geographical location of the user. So the first you need to find weather that crypto exchange is accessible from your country legally. You need to clarify this before depositing funds to the exchange. Sometimes you will find out this issue when trying to withdraw funds back to you bank.
Ex: Binance is open for most of the countries in the world except North Korea Syria and Iran.
Trading Volume and Liquidity : When a crypto currency exchange have a large trading volume it can be considered as a positive indicator. The meaning of large trading volume is, the exchange has the ability to fill order by a user quickly. (Buy or Sell). This is a very important factor, you can find out the volumes of leading crypto currency exchanges from here. coinmarketcap.com
Ex : 24 hour trading volume of Binance = $22,883,323,084
Security : You need to get a clear idea about the security features of the exchange you going to use. For example , Google Authenticator , Know-Your-Customer (KYC) , 2-Factor Authentication (2FA) etc.
You need to basically consider these three factors when selecting a exchange for you. There are many good exchanges and at the same time there are lot of scams. But selecting an exchange which is ranked within first 10 , will be safe for you always.
Selecting a Crypto Currency to Trade
At the start I mentioned that there are over 1500 different crypto currencies. But all of them are not trading with a great trading volume. The next step is to select a crypto currency to trade.
There are lot of aspects you need to consider to decide which crypto currency is better for trading. In coinmarketcap.com website you can find out all the crypto currencies ranked considering various factors. There are some other similar websites which you can find out the statics of any crypto currency. livecoinwatch.com and www.cryptocompare.com are some other examples.
Before purchasing a cryptocurrency you need to do a proper research about that asset. If you check the above 2 websites and some past statics of any crypto currency , you will notice that price is changing frequently. Crypto currencies may change their value in large percentages within few seconds. So you need to study the currency you are targeting before purchasing it. There is a high risk of losing your money if you do this without a proper idea. From above two websites you can find all the statics you need to study the currency such as trading volume, supply , capitalization etc.
And you need to get updated about the latest news related to the currency you have selected. The best way is to follow the leading crypto related publications , keep in touch with their social media official pages , and be active in their official communities such as telegram channels and discord channels. You can refer to following websites for the latest updates in the industry.
crypto currency trading is completely different comparing to conventional fiat currency based trading. We need to find the best exchange platform to trade , select the best crypto currency , do a proper research on the selected currency , keep updated with the latest news to start crypto currency trading as a beginner.
Homework - Task 1
Make an article with short explanations of following fundamental trading terms : Altcoins , Stable coin , trading pair , Bagholder , HODL , Sats , Bear/Bearish , Bull/Bullish , FUD etc. You need to do your own research on each term and provide a small explanation.
• Your article should be at least 300 words.
• You have to do your own research on each term and explain the idea shortly.
• No plagiarism please . You can use images taken from copyright-free sources mentioning the source.
• The final submission date will be 14/02/2021
• Add tag @besticofinder in your post, it will help me to find your submission. Use #cryptoacademy, so that Steemit Team can find you.