Crypto Academy Week 11- Homework Task for Professor @alphafx on Holding and Trading.

Hello Steemians, I’m happy to join week 11 of Steemit Crypto Academy. Today’s topic was delivered by professor @alphafx on Trading and holding. The lesson was an educative one with perfect examples for anyone to understand. In this post, I’m here to submit my homework task for the lesson.

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Do you hold any coins? Talk about the wallet type you prefer/ would prefer holding in.

Yes, I have multiple coins I’m holding in both an exchange wallet and also a mobile wallet. Most of the coins I have are been held in Trust wallet. This is because some exchange wallets are selective of the coins they list. Similarly, I have Steem and BUSD stored in the Binance exchange. Though Trust wallet also supports storing these coins but I have my reasons for holding my coins both in a mobile wallet and an exchange wallet which I will discuss later in this post.

From the picture above, it shows the cryptocurrencies I’m currently holding in Trust wallet. This is a Multi-coin wallet in Trust wallet which supports multiple cryptocurrencies from different blockchain.

The picture above shows the cryptocurrencies I’m holding in Binance exchange wallet. I’m currently holding Steem and BUSD in this wallet. These coins are held in the Binance exchange because I can easily trade them for other cryptocurrencies or fiat currencies. I am an intra-day cryptocurrency trader and also trade multiple coins in a day. These also attract some transaction fees which Binance is a better option in terms of trading fees.

My preferred wallet is a Mobile wallet

My preferred wallet is a mobile wallet because it is a decentralized wallet. The only reason I choose a mobile is because of the security of my funds. This is the most important feature I look out for in any wallet or exchange. Though I hold some assets in an exchange wallet I only hold few coins for spot trading. Binance exchange is a centralized exchange and I don’t have any access to the private keys of my assets. If Binance should experience any hack, that means my assets are gone and cannot be retrieved.
Similarly, another reason is that mobile wallet supports a wide variety of cryptocurrencies from different blockchains. Though exchange wallets like Binance are selective on the kind of coins they list. This is for security reasons but it is not suitable for investors who buy coins during ICO or presale. I invest majorly in new cryptocurrency projects and I can easily swap them using the DApps like Uniswap and Pancake swap.
Furthermore, mobile wallets have features like the built-in web3 browser that enables user’s access and interact with DApps on the Ethereum network. DeFi platforms and DEX platforms can be easily accessed directly from your wallet.
Some exchange wallets serve as a third party and control transactions. This can be the limit of transactions you can perform which will require a KYC verification, but in a mobile wallet, you do not need any KYC to perform transactions and nobody has control over the transfer of funds.

With screenshots show how to perform spot trading on any pair of your choice.

In this section, I will perform how to perform spot trading on the Binance exchange. This spot trading will be performed on BUSD/REEF. The following steps can be followed to perform spot trading in Binance Exchange:

Step 1:

• Login to your Binance account and click on Wallet as shown in the picture below.
• After that, click on spot and ensure that you have the underlying asset to carry out the trade. In this case, we have 50.96 BUSD which we will use to purchase REEF token.

Step 2:

• Click on Trades on the homepage.
• After that, the trading interface pops up, click on spot because we want to perform a spot trading.

Step 3:

• Click on the currency pair at the top to choose the pair you want to spot trade on.
• After clicking that, a search bar pops up where you can enter either the base currency or the quote currency and all the trading pairs on the currency will show up. Scroll down to your preferred pair and click on it. In this case, our preferred pair is BUSD/REEF.

Step 4:

• After clicking on your preferred pair, the spot trading interface pops up. Since I'm are buying REEF with BUSD, I clicked on buy.
• There are parameters to be filled just like the mode of execution and the amount of BUSD you want to use to purchase REEF. But before that, click on the arrow down to see the different modes of order execution on the Binance exchange. After putting the required parameters and mode of execution, click on BUY REEF to execute the order.

Different types of order in spot trading on Binance exchange

Limit order:
This kind of order allows you to buy or sell at a specific price. For example, let's assume the price of REEF is $0.036 and from my analysis, I predicted that the price will dip a little before it starts going up, I can set a limit order to buy REEF at $0.025 so I can buy at a cheaper price. Once the price of REEF gets to the set price at $0.025, the order will be executed. But before then, it will be a pending order.

From the picture above, I have carried out spot trading using a limit order. The order will be kept pending until the REEF price comes to the limit price at $0.025.

Market Order:
The market order is the fastest way to carry out spot trading. Market order fills in order instantly at the current price of the market or at the best price available in the market.

From the picture above, we have carried out spot trading using the market order. The order was executed instantly and can be shown in my spot wallet section. I bought 715 REEF instantly at the best price available in the market.

Stop-limit order:

stop-limit order enables you to set a limit order on a pair when a stop price has been hit. I have already explained a limit but I will explain the stop-limit order using this example. Let's assume the price of BTC/USD approaching a support level at $50K. From all indications, you predicted price will break the support level and continue going down. You can set a stop-limit order at $49k and a limit price of $48k. This means that, as soon as the price breaks the support and hits the stop order at $49k, a limit order will be placed to sell BTC at $48k.

OCO order:

This stands for "One Cancels the Other". OCO order allows users to place two orders at the same time. OCO order simply means, if one order is executed, the other order is canceled. This kind of order is often a combination of stop-limit order and limit order. From Binance exchange, traders can use OCO order to minimize potential risks in the market. Let's assume the price is at a support level and from your technical analysis, you are not sure if the support will be broken or rejected. You can place an OCO order to place a limit order below the support along with a stop-limit order above the support. This means that, if the price breaks below the support, a sell stop order will be executed and the buy stop-limit order will be canceled. On the other hand, if the price rejects the support level and reverses to the upside, a stop-limit order will be executed to buy the asset and the limit order to set below the support level will be canceled.

Step 5:

• After you have executed your trade by any of the orders explained above, click on the icon as shown in the picture below to view and monitor your orders. Similarly, open order, completed order, and order history can be viewed in this section.

I hope at this juncture, I have been able to explain in detail how to carry out spot trading in Binance exchange.

Holding or Trading, which do you prefer?

I prefer Trading. The reason is that, the markets make swings every time creating higher-highs and higher-lows patterns. This means it's constantly going up and down even though it's in an uptrend. So I think it worth it to capitalize on these moves in the market. There will always be corrections and retracements in the price of an asset. So I prefer trading my assets by selling at a higher price and buying back when there's a retracement. I can't stand watching my asset hit $2, then come back to $1 and start trading higher again when I know I can sell at $2 and buy when the price drops down. Trading cryptocurrency is very risky and requires good trading skills due to the highly volatile nature of cryptocurrency. Proper fundamental and technical analysis is required to make a successful trading.

In conclusion, Trading and holding cryptocurrency depends on your objective and goals in investment. Different users have different approaches and strategies for their investment and either holding your asset or trading them isn't preferred than the other. Both of them have its Pros and Cons. What matters the most is the technical knowledge and proper risk management to make better decisions at the right time.

Note: All pictures used in this post are screenshots taking from my Trust wallet and Binance mobile application unless otherwise stated.

Thank you Professor @alphafx for this wonderful lesson.