Hi everyone! This time I want to try to participate in a task given by professor @reminiscence01 from the Steemit Crypto Academy community. The professor gave several questions related to about trading cryptocurrencies.

Question 1

Explain the following stating its advantages and disadvantages: Spot trading, Margin trading, Futures trading

1. Spot Trading

Source

Spot Trading is a type of trading that is most often done by many people, both traders and investors. Even many of these people do not realize that the type of trading they do is Spot Trading. Spot trading is a purchase or sale of an asset directly at that time, this type of trading is carried out directly by making or taking the price in the market.

Spot traders usually do spot trades in the hope that they will be able to make a profit on their trades by buying a crypto asset at a low price and selling it when the price of the cryptocurrency increases. This is what they will do continuously so that they continue to benefit from the trades they make.

A transaction on spot trading will be successfully carried out if there is a price match between the buyer and seller, therefore spot traders usually often set the price at the price they want (the cheapest price) and often sell instantly when there is an instant price momentum going up. significant over a relatively short period of time.

The advantages and disadvantages of Spot Trading are as follows:

Advantages	Disadvantages
Can trade (buy and sell) instantly because it can take orders that have been made by other people in the order book.	Can only enter a buy position to enter a trade and can only sell to exit a trade.
Each buyer will receive an asset that has a value, so even if the price goes down there is still the possibility of taking profit if the price goes up.	Will suffer losses when the purchased cryptocurrency experiences a decrease in price.
Can make orders at prices according to personal wishes.	Must analyze the market carefully before deciding to enter into a trade.
Can trade in large or small amounts.	Must have patience in making trades in order to get profit.
All trading decisions are in the hands of each, no party can control trading decisions.	A trading fee is charged for each type of trade made (buy and sell).

2. Margin Trading

Source

Often we trade in small amounts because we don't have enough capital so that even if we make a profit, the profit is still in a small amount. Therefore, a type of trading is made where traders can maximize the profits they will get in trading on the cryptocurrency market.

Margin Trading is a type of trading where traders who have little capital can borrow capital from platforms that provide margin in order to get maximum profit. The type of loan provided by the provider is pegged based on the capital offered by the trader and the capital will be multiplied to 2, 5, 10, or even 100 times according to the trader's request.

So that way traders can trade with more capital than the capital they have. But keep in mind that there is a risk that traders will have to be able to repay their loans if their trades are unsuccessful

The advantages and disadvantages of Margin Trading are as follows:

Advantages	Disadvantages
Can trade using any capital.	Can be exposed to liquidity if the trade is not as expected.
Can get large profits with only relatively little capital. This is very suitable for traders who already have professional trading skills but do not have enough capital.	Must repay loans borrowed from the platform, so must have large capital reserves to pay for these losses.
Unlike spot trading, traders can trade in two different directions (entry buy and sell) so they can profit even if the cryptocurrency price is experiencing a decline.	Must be very careful in making trading decisions, because a slight mistake can result in very large losses.

3. Futures Trading

Source

Futures Trading is a trading activity where traders will predict the price movement of a cryptocurrency. In this type of trading, traders will analyze the graph of a cryptocurrency and before deciding to enter into a trade, he will decide where the trend direction of the cryptocyrrency price movement is, be it long buying or short selling. What is predictable is whether the trend is bullish or bearish.

This trading method is almost the same as the margin trading I discussed earlier. Where in this trade traders can also trade with a small amount of capital and take leverage of 2, 5, 10, 100 or 125 times the capital they have. So that in this trade the trader can maximize the profits he will get.

Unlike previous types of trading, Futures Trading is really made only for professionals who have long studied and analyzed candlestick patterns and technical indicators. This is because this type of trade has a very high risk if the trader is wrong in predicting the ongoing trend then he will be able to lose a lot or even all of the capital he invested in an instant. Futures Trading was originally introduced to one of the largest exchanges in the world today, namely Binance, so if you are interested then you can try on the exchange.

The advantages and disadvantages of Futures Trading are as follows:

Advantages	Disadvantages
Can trade in 2 directions, either Buy long or Short Selling in a Bullish or Bearish trend.	Traders do not have full control over the assets that have been traded, all decisions will depend on the direction of the cryptocurrency price movement.
Can trade using any capital.	If the trade does not match then traders can be exposed to liquidity if they forget to set a stop loss so they can lose all their assets.
Can get large profits with only relatively little capital. This is very suitable for traders who already have professional trading skills but do not have sufficient capital.	Must repay loans borrowed from the platform, so must have large capital reserves to pay for these losses.
	Must be very careful in making trading decisions, because a slight mistake can result in very large losses.
	Must have high knowledge and experience in trading on the cryptocurrency market.

Question 2

a) Explain the different types of orders in trading

In the cryptocurrency market there are various types of orders that can be used when trading, the types of trading orders that are often used are as follows:

• Market Orders
• Limit Orders
• Stop-Limit Order
• One Cancel The Other (OCO)

1. Market Orders

This type of order is an order to make a transaction to buy or sell cryptocurrency by fixing the price at the price on the market when the order was made, so that a market order can also be referred to as an instant order where the transaction order made will be directly executed by the system using the market price at at that time.

For example, if the price of TRX coins on the market is $0.1 and I want to buy 1 dollar of TRX at the current market price, then my order will be executed by the system and I will immediately get 10 TRX coins.

2. Limit Orders

A limit order is an order made by traders whose order price is different from the current market price. Usually people will buy cryptocurrency at a lower price than the market price and will sell cryptocurrency at a higher price than the market price. Therefore, unlike Market orders, Limit orders are orders that are not executed instantly and must wait until there is a price match between the seller and the buyer.

For example, if the price of TRX coins on the market is $0.1 and I will buy TRX for 1 dollar at a price $0.09, then the order I made will go to the Limit Order and have to wait until the TRX price drops to $0.09 and someone sells TRX at that price, and if my order is completed then I will get 11.11 TRX coins.

3. Stop-Limit Order

Stop-Limit Order is a type of order that is made so that traders can get greater profits from the transactions they make, often the price of cryptocurrencies undergoes significant changes in a short period of time, because even though we have made orders at the agreed price our ideal price could be even more ideal.

Stop-Limit is a type of order that will be created if a cryptocurrency has reached the price we want, so when placing this order traders will place 2 different price levels where if the cryptocurrency price has touched the price of the first level then it will trigger so that the order can be strengthened at the second, more ideal price.

For example, if the price of TRX coins on the market is $0.1 and I will buy TRX for 1 dollar with a target purchase price of $0.07, but I don't know when the price of TRX can touch that price because it is too cheap. Therefore I will make a Stop Order at a price of $0.85 which will be the trigger so that if the TRX price really touches the $0.85 number then my order will be automatically created at the price of the second level Limit Order, which is $0.07.

And if the TRX price touches the Limit Order price then the order I made has been completed and I will get 14.28 TRX.

4. One Cancel The Other (OCO)

OCO is a type of order that is made so that traders can get maximum profit while minimizing losses on one order transaction. As the name suggests, OCO is an order made at 2 different prices and if one of the prices made has been executed, the order at the other price will be canceled (One Cancel The Other).

For example, currently I want to sell 10 TRX and the current TRX price is $0.1. Then my sales target is to sell my TRX at a price of $0.2, but I doubt it because there is a possibility that the TRX price will decline in the near future. Therefore I will use an OCO order where I will set 2 different prices which are at $0.2 and $0.09. If the price of TRX manages to go up to my liking at a price of $0.2 then my TRX will be sold at that price, but if the price of TRX reverses and declines then my TRX will be sold at the second price at $0.09 and the order I set at $0.2 will be cancelled.

b) How can a trader manage risk using an OCO order? (technical example needed)

As I discussed earlier that OCO is a type of order that is made in two different directions to maximize profit while reducing losses in one transaction, and each order that is successfully fulfilled will cancel the other order.

In this type of order, the order maker will be asked to place orders at 3 different prices which are summarized in 2 types of orders at once, namely Limit Orders and Stop-Limit Orders. The Limit Order is the ideal price most desired by the order maker while the Stop-Limit Order is 2 prices that are used as a precautionary price if price movements do not match the expectations of the order maker. If the order is executed at the Limit Order price then the Stop-Limit order price that has been created will be canceled and vice versa if the order is executed at the Stop-Limit Order price the Limit Order price will be cancelled.

Until now, from what I know there is only one exchange that provides services to its users to be able to use this type of order, namely Binance, and this type of order is very unique because we can really benefit from the transactions we make. .

So that you are clearer in understanding this type of OCO order, you can look at the sample OCO order image below.

Screenshot From Binance App

You can see in the picture of the order above, I intend to sell a number of Polakadot coins as much as 1 DOT. The target selling price I want is to sell 1 DOT that I have at 40.45 USDT, therefore I place my Limit Order at 40.45 USDT.

Then just in case if the Polkadot price decreases, I will place a Stop-Limit Order where the price of the first level is at 40.42 USDT as a trigger and the second Limit price is at 40.4 USDT, so if the Polkadot price reverses direction and touches the price of 40.42 USDT then this is will trigger my second Limit order at 40.4 USDT and my Polkadot will be sold if the Polkadot price hits one of the Limit Order prices I have created and the other Limit Order prices will be automatically canceled by the system.

Question 3

Open a limit order on any crypto asset with a minimum of 5 USDT and explain the steps followed. (Screenshots needed from any cryptocurrency exchange)

In the example of trading using a Limit Order this time I will do it through the Binance Application on my smartphone, and the steps are as follows:

After I opened the Binance application and logged in to my account, I chose the Market option at the bottom, after that I chose the fiat currency market, namely USDT and I chose to trade on the BTT/USDT market.

Screenshots From Binance App

After the BTT/USDT market opened I chose the BUY option because in this example I will show you how to buy BTT coins using a Limit Order. After that I chose the Limit Order option on the order selection menu provided by Binance.

Screenshots From Binance App

I see that market price is currently at 0.003755 USDT per 1 BTT. That's why I set the Limit Order price below that price, which is exactly at the price 0.003752 USDT per 1 BTT. I will buy BTT approximately 10.5 USDT which means if my order is executed successfully then I will get 2798 BTT.

After that I started to enter the purchase order that I made earlier, and because I did a Limit Order, my order was not immediately fulfilled and had to queue up in the Order Book first. And we can see at the bottom in the middle picture my order looks waiting on the Open Order menu.

And after a while my order was successfully fulfilled and I managed to buy BTT coins using a Limit Order at 0.00375 USDT and I got 2798 BTT.

Screenshots From Binance App

Question 4

Using a demo account of any trading platform, carry out a technical analysis using any indicator and open a buy/sell position on any crypto asset

Now I will be trading on the Paper Trading demo account which is a Demo account created on the TradingView Platform. For trading this time I will do it with the help of an indicator called Moving Average Convergence Divergence (MACD), I chose this indicator because on the MACD on this indicator there will be two Exponential Moving Average (EMA) lines that will help me see price movements and the direction of trends that occur in the market, so that I can determine when is the best time to enter a cryptocurrency market.

Then the cryptocurrency market that I chose this time was BNB/USDT with a timeframe of 5 minutes. The reason I chose BNB as a crypto asset that I will trade is because I think BNB is a cryptocurrency that has very good fundamentals. It is a cryptocurrency issued by the largest cryptocurrency exchange in the world today (Binance), so it has many uses that can be used on the Binance exchange. And it is also in the top 5 cryptocurrencies with the largest Market Capitalization. This proves that BNB is a very good cryptocurrency to trade in the short and long term.

Screenshots From TradingView

Before starting trading, I will analyze the chart from BNB first. From what we can see that BNB is experiencing a decline in price and the direction of the trend is in the Bearish Trend. However, the two EMA lines on the MACD indicator show that there is a Golden Cross moment where this is a trend reversal momentum from Bearish to Bullish.

Screenshots From TradingView

After that I decided to trade with Entry Long Buy position on the BNB/USDT market at a price of 471.6 USDT. Then I set the Stop Loss Level at the price of 466.4 USDT which is slightly above the Resistance Level just in case if the BNB price goes back up to the Support level, the Stop Loss will not be executed immediately. Then because in this trade I used Risk/Reward Ratio of 1:1, then the Take Profit level that I set for this trade is at the price of 476.6 USDT.

Screenshots From TradingView

After a while, the trading process that I did was over and I managed to get a profit on the trade I made of $20.00 which can be seen in the picture above.

Conclusion

From the assignment given by professor @reminiscence01, we can see how many types of orders there are on the market provided by cryptocurrency platforms. Each type of order has its own advantages and disadvantages, all of which are made with the aim of helping traders and investors to take maximum profits and reduce losses that should not occur. Especially the OCO order feature which is a quite unique order feature and I just discovered on Binance is a feature that many people should know, because with this feature more traders and investors will be helped in placing orders on the cryptocurrency market.

I thank professor @reminiscence01 who has given lessons on a very unique topic like this, I really get new knowledge from this given topic.