Steemit Crypto Academy Season 3-Week 1 Assignment| What is Cryptocurrency Trading and on what platforms can we do it?
Hello Steemains,
Nice being here again. Thumbs up to @lenonmc21 and @awesononso for an interesting lecture on "What is Cryptocurrency Trading and on what platforms can we do it?". Below is my homework task.
1. Define in your own words what trading is, what its function is, and how it relates to the cryptocurrency market.
Trading in the layman's term is simply the act of buying and selling of goods and services. Trading is a process that involves the exchange of goods and services for money from one personto another, with the sole aim of making profits over a period of time.
These goods and services provided in trading ranges from Commodities such as Food items, Aplianances, Gold and Silver), Fiat currencies such as Naira, pounds, dollars e.t.c and Cryptocurrencies such as Steem, SBD, Bitcoin, Dodgecoin, Ethereum etc, also financial assets like shares.
Trading involves active participation in financial markets as it involves investing and works basically on a buy and hold strategy, as what is sometimes seen in the cryptocurreny market. There are different forms of trading such as Forex trading, Financial trading, Retail trading and Cryptocurrency trading. Most importantly, in trading a trader can either make profits or loss at any time.
Cryptocurrency Trading involves the buying and selling of crypto assets (such as coins, tokens, contracts) digitally via a cryptocurrency exchange platform or market such as Binance exchange, Huobi Global, Coinbase Exchange, Kraken, and Bitfinex etc.
Trading in cryptocurrency market involves a crxpto trader buying cryptocurrencies with their Fiat currency(with a debit/credit card) or using another cryptocurrency, via an exchange platform or market eg. Binance, the trader holds onto the bought cryptocurrency untill there is a rise in the value of the assets he bought. And when the trader whats to sell the purchased(value has increased) cryptocurrency puts it up for sell in the crypto market, sells it at a desired price to make more profit.
For instance, krisani (crypto trader) buys a Bitcoin at $5,000 at a low price, she holds the coin till its price value increases and sells it at $20,000. Krisani in turn makes a profit of $15,000. But if Krisani sells her Bitcoin at $4500 due to news trend, she incurs a loss of $500.
2. Define and explain what are the tools used for trading ( Technical Analysis and Fundamental Analysis ) and at least one example of each. ( A screenshot is required ).
Trading also involes taking critical decisions, that can be right or wrong, these decisions could be Long-term, Short-term, or staying out of a trade completely. A trader makes these decisions with the help of trading tools such as Technical Analysis and Fundamental Analysis
▪︎TECHNICAL ANALYSIS
Technical Analysis as a tool for trading involves trading based on historical trends. Technical analysts study the chart patterns, statistical data and historical trends ( past trading volume and price of a coin) of a particular coin to determine the future of the price of a coin. Traders use Technical Analysis for cryptocurrency trading as It is believed that crypto market follows patterns, so traders study these charts to determine the next move of the market.
Technical analysis is helpful to traders in determining the suitable time to buy or sell an asset, to take profit as well as losses if it occurs. Traders use Technical Analysis for short-term trades, although it may still be harnassed for general long-term trades.
Example
An example of Technical Analysis is trading with chart patterns.
A screenshot of Technical Analysis Trading with Candlestick chart, Bar chart and Line chart.
▪︎FUNDAMENTAL ANALYSIS
Fundamental analysis is a trading technique that takes into consideration economic factors and financial numbers to determine the financial value of an asset, tell the best time time to buy or sell an asset. Trading with Fundamental analysis is based mainly on global factors that influences supply and demand of a commodity, such as cryptocurrencies, shares, contracts and equities. These global factors can be news trend, financial statements or geopolitical interference.
Fundamental analysis is a useful tool harnassed by all traders. It is usually more handy for swing and long-term trades, unlike Technical Analysis that is useful for mostly short-term trades.
Example
A good example of how Fundamental Analysis affects the price of a cryptocurrency was when a news trend from guardain.com about what happened on the day Elon Musk(CEO of Telsa), made mention of dogecoin in his statement and immediately the price of dodgecoin to fell rapidly, as such investors and traders took advantage of this news. Some investors and traders bought dodgecoins while some sold their HODL (held coins) in other to gain their capital.
A chart below showing fall in price of dodgecoin as at 09/05/2021
However, it is petinent to note as a trader, to use both fundamental and technical analysis method for determining the price value of an asset, to know when is good to trade an asset or crypto coin.
3.Name at least 3 cryptocurrency exchanges with the highest trading volume where we can buy our first cryptocurrencies and explain in your words the ways to buy cryptocurrencies on at least one of these platforms ( Do not use Binance ).
In other to get the three exchanges with the highest trade volume where traders can buy their first cryptocurrencies from,
•First, i explored coinmarketcap.com. then click on the three dash lines at the top-right.
•It takes me to the next page. I click on the exchange cursor, the next page pops up and i click on spot.
•It shows me the the trading platforms accordingly to their highest trading volume.
Apart from Binance with the highest trading volume as,seen on the screenshot, the other three platforms include;
1. Houbi Global with a trade volume of $4,959,817,262.
2. Coinbase Exchange with a trade volume of $2,527,040,203
3. Kraken with a trade volume of $1,048,442,805
Step 1: Visit the official website of Houbi Global by clicking on the link[https://m.huobi.com/en-us/] or download the app from playstore.
Step 2: After downloading the app, you click on open, then fill in your email and password and click on Login shown in the screenshot below. If you don't have an account yet, click on sign up to get registered first before Login in.
Step 3: It takes you to the home page of Houbi Global. To buy cryptocurrency click on 'Buy Crypto'
Step 4: The next page shows, choice the cryptocurrency you desire to buy(i choose BTC). At the top right of the page, you click on the USD icon to change the currency for payment.
Step 5: I choose NGN, as it is my country's Fait currency
Step 6: For buying cryptocurrency in my country we use pair-to-pair(P2P), so i choose the person i want to buy from and click on buy.
Step 7: fill in the amount you want to buy the the coin and click on Order.
Step 8: It takes you to the next page where you make payment for the purchase of the cryptocurrency. As see below.
Cryptocurrency trading is one of the leading trading accepted and recognised globally, as it is very efficient, reliable and stress free. Although Cryptocurrency trading comes with some high risk of losing money in the crypto market, that is why it is petinent as traders you should ensure you understand the crypto market with the help of of trading tool like Technical Analysis and Fundamental Analysis.
Currently, the number of trading markets/exchange are also on an increase, which shows that Cryptocurrency Trading is on the lead and has a bright future globally.