Crypto trading is a topic that attracts the attention of many people. Do you understand the methods to make profits from this market? In this article, Crypto Trading will introduce ways to make money in Crypto, and at the same time help you determine a reasonable investment capital. Follow along!
Basic Concepts and Elements to Know About Crypto Trading
Besides traditional forms of investment such as stocks, real estate, and gold,… Crypto trading has recently become an attractive option in the 4.0 era.
What is Crypto and what is the Crypto trading market
Crypto is a term used to refer to electronic money or digital currency. It is used as a medium of exchange on Blockchain platforms.
With a strong encryption system, Crypto protects and controls the creation of new virtual currency units. Transaction information is always confidential, ensuring the safety of users.
Considered a technology of the future with great potential for development, Crypto trading promises to bring many opportunities. However, at present, Crypto investment still has many potential risks. A lack of understanding about Crypto trading can easily cause investors to lose all their assets.
The crypto market, simply put, is the environment where cryptocurrency exchanges take place through Blockchain platforms. After success, coin miners will announce the amount of coins they own to the market. Investors who are not directly involved in the mining process will have to trade cryptocurrencies on crypto markets.
The crypto market has exploded in recent years. According to Coinmarketcap, the number of platforms offering digital currency exchange services has nearly reached 400.
Popular coins when starting Crypto trading
Many people who are new to Crypto trading often confuse the concepts of crypto, coin, and token.
- The coin represents a unit of digital currency. Some of the most popular coins include Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC). It is often used as an intermediate currency to settle virtual currency transactions.
- Tokens can represent some type of asset, benefit, or other value. Some popular tokens include ERC-20 tokens and Binance Smart Chain (BEP-20 tokens).
Bitcoin and Altcoins
- Bitcoin is the first cryptocurrency on the market. Released under open source code and using peer-to-peer protocol on the Blockchain platform. To make fast Crypto transactions.
- Altcoins are cryptocurrencies that came after Bitcoin. Their basic functionality is similar to Bitcoin but often has certain improvements. However, they are still not as popular as Bitcoin.
Popular Crypto-Making Money Strategies
| Method | Describe | Detail |
| Trade Coin | Buy & sell continuously in a short period. | Buy low and sell high to profit from the difference. Investors use technical analysis to determine trends and entry and exit points. |
| Hold | Buy and hold coins/tokens for the long term. | Profits come from the coin’s price increasing many times. Investors need to understand the value and potential of the coin through research and fundamental analysis. |
| Coin Lending | Lend crypto to earn interest. | Use cryptocurrency to lend to others at a specific interest rate. Lenders transfer coins to lending pools, borrowers pledge assets to borrow coins and pay interest. |
| Staking | Hold and lock a certain amount of coins to receive rewards. | Like saving money in the bank with interest. Rewards depend on the number of coins and staking duration. Suitable for earning extra income when the market is sideways. |
| Farming | Provide liquidity to DeFi to earn new tokens. | Deposit coins/tokens to the exchange to participate in farming. Make a profit by receiving new tokens in return. |
| Coin Mining | Solve complex algorithms to receive cryptocurrency rewards. | Requires powerful computers and technical knowledge. Algorithm difficulty increases, leading to fierce competition. Profit from 10-20%/month. |
Potential and challenges when participating in Crypto trading in the UK
Potential when investing in Crypto trading :
- Fairness: Users can buy and sell virtual currency directly without going through an intermediary. Avoid unfairness and difficulty in transactions.
- Convenience: All you need is a smartphone, laptop, or computer with internet connection. Users can participate in Crypto trading anytime, anywhere.
- Fast, low-cost transactions: Crypto trading allows investors to transfer money internationally quickly and at a reasonable cost.
- High Safety and Security: Trading with crypto ensures high safety and security.
Challenges when investing in Crypto trading :
- Crypto trading is not widely accepted. In some countries, cryptocurrencies are not yet accepted by the community. In addition, they are not yet widely circulated.
- High price volatility: Crypto prices can change constantly by the hour. Requires investors to update and monitor regularly.
- Knowledge required: Investing in virtual currency requires users and investors to have knowledge about Crypto trading and spend time learning thoroughly.
Guide to Crypto Investment
Investing in the Crypto market can bring great profits. However, it also requires understanding and the right Crypto trading strategy. Below are some popular and easy-to-apply ways to invest in Crypto.
Guide How to invest in crypto surfing
Here are some ways to invest in Crypto trading with simple, easy-to-apply, and effective swing trading strategies in today’s market. Anyone can learn by themselves and can trade freely for profit.
Scalping Strategy
The key to a successful scalping strategy in Crypto trading is to accumulate many small profits into a larger sum. Since you have to make hundreds of trades in a row, you need to make sure that the total profit exceeds the losses.
Common technical indicators used in scalping Crypto trading include:
- Price Action
- Support and resistance levels
- Bollinger Band
- Stochastic Oscillators
- Keltner Channels
Experience when scalping:
- Focus on 1 – 2 coins for easy control and increased success rate.
- Choose coins with high liquidity and large trading volume.
- Stay focused, stick to your strategy, use risk management, and be patient.
See more: Capture indicator to strongly “buff” your transaction
Swing trading coins based on intersections
This strategy uses 2 moving averages (MA). This is a technical indicator that shows the average price of an asset over time. Specifically, you need to find the intersection of 2 MA lines: MA50 and MA200 on the daily time frame.
Scalping coin investment based on RSI divergence signals
This strategy relies on the predictive power of the RSI (Relative Strength Index). This is a momentum indicator that fluctuates between 0 and 100. When the RSI is above 70, the asset is overbought; when the RSI is below 30, the asset is oversold.
Normally, RSI and price move in the same direction. However, when they move in opposite directions (divergence) – the RSI increases while the price decreases. Vice versa – it is an early sign of a possible market reversal.
Things to remember when participating in Crypto trading
Research carefully before investing in Crypto trading
- Understand the coin: Learn about the coin’s utility, technological potential, and development team.
- Avoid FOMO: FOMO psychology and lack of thorough research can lead to heavy losses.
Only invest capital you are willing to lose.
- Golden rule: Never invest more than you can afford to lose.
- Small Trades: If you are just starting, only use a small portion of your monthly income for trading.
Have knowledge & practical experience to analyze
- Technical Analysis: Understand price patterns, trading order types, and analytical indicators.
- Risk Mitigation: Informed decisions help minimize risk.
Stop Loss & Averaging Strategy
- Stop Loss: Keep losing trades to a minimum to preserve profits.
- Price Averaging: Place buy/sell orders at different prices to optimize profits.
Set rules & follow them
- Trading Plan: Determine buy price, stop loss, and take profit before trading.
- Compliance: Stick to the plan and rules set out to manage trading effectively.
Continuously updated information
- News: Follow coin-related events like government regulations, technology upgrades, bans, and exchange hacks.
- Quick response: Grasp information quickly to make timely buying and selling decisions.
Make basic crypto money with exchanges
Crypto trading investment is a field with great potential but also has many potential risks. Therefore, choosing a reputable and safe trading platform is extremely important. If you are wondering which Crypto trading platform to choose, please refer to the top 4 cryptocurrency exchanges that we recommend below!
Top prominent Crypto trading exchanges
MEXC Global
- MEXC Global (formerly MXC) was founded in 2018. Founded by a team of blockchain experts from Japan and Europe.
- Trusted Crypto Exchange with over 6 million users from over 20 countries operating since 2017. Trading volume over 900 million USD/day.
- Licensed to operate in many regional countries such as the United States, Canada, Australia, Estonia, and Switzerland.
- MEXC Global’s token is MX, currently priced at around $0.8.
By bit
- Bybit was founded in 2018 in Dubai and registered in the British Virgin Islands by Ben Zhou.
- World’s leading exchange with a 24-hour trading volume of over $2 billion by December 2023.
HTX Global
- The HTX was established in May 2013 in China and has offices in many countries.
- Large exchange with trading volume up to 32 billion USD/day, higher than Binance.
- The main features are high security, quality service, good liquidity, and easy to use interface.
OKX (formerly OK)
- OKX has been operating since 2017 under the direct management of OK Groups.
- There are over 50 million traders globally and support trading of 319 coins/tokens.
- Highlights include multiple trading and passive income features such as spot, derivatives, earn, lending,…
- Supports multiple languages and multiple payment options such as Visa/Mastercard, bank transfer, Google Pay,…
The Challenge of Applying DCA Strategy in Making Money from Crypto
- For Holders: Long-term choice. DCA (Dual Cost Averaging) strategy is suitable for those who hold coins for a long time. This is a way to minimize the cost of buying and optimize profits in the long run.
- Multiple Investments: The Key to Success. This method requires investing in the coin at different times and different prices. This helps to form an overall average price that is lower than the single purchase price.
- Buy Optimization: Respond at the right time. DCA is effective when applied at times when the coin is falling in price or at support levels. This results in subsequent purchases having a lower average price. This helps accumulate assets intelligently.
- Diversify the application: Adapt to each situation. There are many ways to implement the DCA strategy. It depends on the market situation and the investment goals of each investor. This allows participants to be more flexible and effective in daily trading and other trading platforms.
How to calculate and invest in crypto according to DCA strategy
The DCA (Dynamic Cost Averaging) formula for calculating the average purchase price is as follows:
Average purchase price = Total invested amount / Total number of coins/tokens purchased
Illustration:
- September 11, 2022: You buy 1000 USDT for 1 USD
- September 20, 2022: You buy another 1000 USDT at $0.5
- The total invested amount is 2000 USDT
- The total amount of USDT purchased is 1000 + 2000 = 3000 USDT
- Average purchase price = 2000 / 3000 = 0.67 USD/USDT
Two effective DCA strategies in cryptocurrency investing:
Scheduled recurring investment: This is a strategy where you invest a certain amount of money in a coin according to a set schedule. For example, you buy 1 BTC every month regardless of the current market price. But based on a strong belief in the growth potential of BTC. This helps you buy coins at a lower average price.
Track and apply DCA at the right time: This is a strategy that requires you to observe and choose the right time to buy coins instead of buying periodically. For example, you can take advantage of the time of price drops due to factors such as market events or technical analysis to buy at a better price.
By applying the above two strategies, you can optimize your Crypto trading investment and minimize risks during trading.
What knowledge do traders need to grasp to be able to make money from Crypto effectively?
To be able to make money from Crypto trading effectively, traders need to master the following knowledge:
Popular indicators in Crypto trading technical analysis
Below are some popular indicators that traders should pay attention to when participating in Crypto trading :
Trend indicator:
- Moving Average (MA): Simple yet effective, provides signals about the general trend.
- ADX: Measures the strength of the current trend, helping to determine the ongoing trend.
- Parabolic SAR: Identify trend-ending and reversal points.
- Ichimoku: Complex and versatile, gives buy/sell signals and identifies strong support/resistance levels.
Momentum indicator:
- MACD: Measures convergence and divergence, providing information about price momentum.
- Stochastic Oscillator: Measures price momentum and finds overbought/oversold points.
- CCI: Identify trends and overbought/oversold levels.
- RSI: Measures trend strength and overbought/oversold conditions.
- Momentum: Assesses the strength of a trend and the speed of price change.
Volatility indicator:
- Bollinger Bands: Measure price volatility, and identify buy/sell zones and market entry/exit points.
- ATR: Measures average true volatility, giving overbought/oversold signals.
- On-Balance Volume (OBV): Assesses buying/selling pressure, and predicts future trends.
- Accumulation/Distribution (A/D): Determines the accumulation and distribution of trading volume, and forecasts price trends.
The right asset management method when starting to make money from Crypto
Asset management methods in Crypto Trading are an important factor in trading to protect capital and maximize profits. Here are some suitable asset management methods when starting to make money in Crypto Trading :
- Reasonable Capital Allocation: Decide on the percentage of capital to invest in each Crypto trade. For example, specify that no more than 5% of capital should be invested in a single trade to minimize risk.
- Stop-loss: Set a stop-loss to automatically sell when the price falls below a certain level. This helps protect capital and minimize losses in case the market moves against your prediction.
- Take-profit: Set a specific profit level at which you will sell to recover your profits. Clearly defining your profit target helps avoid greed or missing out on profit opportunities.
- Diversification: Investing in many different cryptocurrencies. To minimize the risks specific to each specific coin.
- Monitor and Adjust: Periodically review the effectiveness of strategies. Adjust asset management methods based on results and market changes.
Where to find and filter effective trading information for Crypto Trading
- Learning Platforms: Crypto trading exchanges like Coinbase, Binance, and Kraken offer educational materials and support. To help traders understand trading strategies and how the market works.
- Follow market news: Use platforms like Investing.com and TradingView to follow market charts and news. This helps traders better understand trends and trading opportunities.
Learn how to apply Crypto trading tools
With the development of technology and computing, trading bots are becoming more and more popular in the Crypto trading community. Investors can choose from the bots available on the market. Or program their bots according to their strategies. The process of using trading bots is also an opportunity for investors to learn and update their knowledge about the market. Thereby improving their ability to analyze and manage assets.
However, using a trading bot needs to be done with knowledge and caution. You need to understand how the bot works. Adjust the parameters and strategies appropriately to achieve maximum efficiency. Moreover, it is extremely important to monitor and control the bot’s performance. To ensure that it operates according to the standards you have set.
Why should traders learn how to use bots to make money with Crypto now?
- The innovation of online trading: Trading bots are a tool that replaces humans in financial operations. It is completely digital. With this capability, you just need to sit in one place and develop software. You can use it from anywhere in the world without any operating costs.
- Reasonable Costs: Most automated trading tools are quite affordable to use. Usually, the monthly fee is affordable compared to other options on the market.
- Professional Programming: The most important thing is that Trading bots are programmed like professional investors. They integrate all the complex math that an investor can use. Their speed and high automation far exceed what humans can do.
Conclude
Trading any market comes with corresponding profit and risk opportunities. Therefore, understanding how to invest effectively in Crypto trading will help you achieve sustainable profits. Hopefully, after reading this article, you will be more confident when participating in this potential cryptocurrency market. Don’t forget to follow Crypto Trading to update more useful knowledge!
Frequently Asked Questions
How to start investing to earn money in crypto?
To start investing in Crypto trading, you need to create a crypto wallet (like an electronic wallet). Register for trading on a cryptocurrency exchange. Then buy crypto coins with the amount you want to invest.
How to make money crypto?
There are many ways to make money from crypto including trading, long-term investing, staking (holding coins to receive interest), and mining (mining coins). Or participating in other DeFis (decentralized finance) projects.
Should you invest in crypto to make money?
The decision to invest in Crypto trading depends on the level of understanding and risk of each person. Crypto has the potential to be profitable but also comes with high risks. Therefore, traders need to research carefully before deciding to invest.
