Steemit Crypto Academy Season 3-Week 1 | What is Cryptocurrency Trading by @doctor23

doctor23 (64)mutedBeginner[2,4,5,6,7,9]in SteemitCryptoAcademy • 3 years ago

What is trading

In normal scenario using everyday life explanation. Trading is exchanging a good or service with another. Using examples, lets say i want a litter of palm oil, and I have a bunch of plantain to give to someone who has a litter palm oil to give me; in this regards if I meet some to do this exchange, I am actually trading my bunch of plantain for a litter of oil. That is how trading works in simple terms or in the local way.

Now, explaining trading in the crypto world, it is actually exchanging one currency for another. This trading can be done using both crypto currencies or a cryptocurrency and a fiat currency.

function and relation of trading to cryptocurrency

Trading is usually carried out in pairs. Meaning we are buying a cryptocurrency against another.
Let me use the example of the famous Bitcoin. Example of pairs with the Bitcoin include;

btc/usdt
btc/doge
btc/steem
btc/ltc
btc/mnr

Now with this, when trading, it means if I am buying the btc/usdt pair, it actually means that I am buying the btc against the usdt, or better still, I am buying btc and selling usdt; when comparing with the example above, you can figure out a perfect match, there, I was buying a litter of oil and selling a bunch of plantain. Quite simple.

So concluding, the function of trading is just an aspect used to buy and sell crypto assets.

Tools used for Analysis.

Popularly known; fundamental analysis and technical analysis have been a great tool in the analysis of the crypto market. Yes! Though for this assignment I will be leaving out the popular sentimental analysis, focusing principally on the aforementioned two. This tools are basically used in the analysis of the market, trying to know the next trend or move of a particular crypto asset.

Technical Analysis

Now beginning with the Technical Analysis, it is one of the most powerful tools used by traders in analysing the market.
The technical analysis take use of indicators, which have been programmed and it takes study of the past market movement to determine the future trend. It also includes tools such as supports and resistances to draw various levels.
Examples of indicators used in the cryptocurrency market are;

Bollinger Bands
Simple Moving Average.
Stochastics
Relative Strength Index
Exponencial moving average.

Other tools used in the technical analysis include;

Fibonacci Retracement
Pivot point

Fundamental Analysis

Fundamental analysis is just a tool which is based on news events. When we talk of news events, we talk of major news events, this include actions of whales (holders of large amount of cryptocurrency) and news from some countries.

This news events when properly captured can bring a lot of profit. Lets take an example the recent tweet from Elon Musk, saying about the environmental concerns in the mining of Bitcoin. This drastically brought down the value of Bitcoin in just few days. This in how investors or traders were to take advantage of this; using the fundamental analysis and exchanging bitcoin for other currencies such as usdt.