Crypto trading is one of the most popular and highly profitable investment activities in today’s financial markets. In this article, we will explore How to trade crypto clearly and effectively. From understanding the basics of the Crypto market to building a trading strategy and managing risks, Crypto Trading will delve into the important aspects of cryptocurrency trading.
Find out what How to trade crypto is.
How to trade crypto is an investment activity that can bring attractive profits but also comes with many risks. Mastering the basics, building a reasonable trading strategy, and effective risk management are key factors to achieving success in this field.
What is How to trade crypto?
Cryptocurrency trading is the buying and selling of cryptocurrencies on an exchange. For example, you can trade cryptocurrencies by speculating on their price movements through CFDs (contracts for difference).
CFDs are leveraged derivatives – meaning you can trade cryptocurrency price movements without owning any of the underlying currency. When trading derivatives, you can buy if you think the cryptocurrency will increase in value or sell (‘sell’) if you think it will decrease.
In contrast, when you buy cryptocurrency on an exchange, you are buying the coin itself. You will need to create an exchange account and put the full value of the asset down to open a position.
Find out why people learn to invest in Crypto
- Access real-time prices.
- Get prices that reflect the underlying market.
- Trading with derivatives.
- Protect against adverse markets.
- Get low spreads.
- Use continuous charts.
- Enter and exit positions quickly.
- Trading on leverage and margin.
- Trade on a secure platform.
How does the Crypto futures trading market work?
While learning How to trade crypto, the cryptocurrency market is a decentralized digital currency network, meaning it operates through a peer-to-peer transaction verification system, rather than a central server. When cryptocurrencies are bought and sold, transactions are added to the blockchain – a shared digital ledger that records data – through a process called “mining.”
The cryptocurrency market moves on supply and demand. While there is still a lot of uncertainty surrounding cryptocurrencies, the following factors can have a significant impact on their prices:
- Supply
- Market capitalization
- Newspapers
- Integration
- Financial events
See more: How to “get rich” thanks to crypto trading for trader
How to do technical analysis in How to Trade Crypto?
While learning How to trade crypto, technical analysis (TA) is an analytical method based on studying and predicting the price trends of assets through the use of charts and technical indicators. For the crypto market, TA helps traders determine effective entry and exit points to optimize profits and manage risks.
Some Crypto trading strategies
- Day trading
- Range Trading
- Scalping
- Swing trading method
- High-Frequency Trading
- Avoid making trading calls based on hype
- Primary research
- Arbitrage
- Bet on Bitcoin Volatility
Choose a cryptocurrency to trade Crypto futures
You can use CFDs to trade 11 major cryptocurrencies while learning How to trade crypto, two cross-cryptocurrencies, and the crypto index – an index that tracks the prices of the top 10 cryptocurrencies, weighted by market capitalization.
- Bitcoin
- Ether
- Bitcoin cash
- Litecoin
- EOS
- Stellar
- Cardano
- Bitcoin Cash/Bitcoin
- Ether/Bitcoin
- Cryptocurrency Index 10
- Cardano
- Chain link
- polka dots
- Dogecoin
- Uniswap
Crypto trading regulations are in the works
Due to their newness, cryptocurrency regulations are still evolving. For example, in the United States, it is unclear whether certain digital currencies qualify as “securities” and therefore must comply with the registration and disclosure requirements set forth by the Securities and Exchange Act of 1933 and the Securities and Exchange Act of 1934.
In addition, several issues still need to be addressed by policymakers, including:
- Cryptocurrency Classification.
- Cryptocurrency Tax Relief
This regulatory uncertainty creates additional risks for traders. Before deciding to trade, carefully research your country’s legal stance on cryptocurrencies.
How to trade crypto how effective?
To increase your chances of success and minimize risks, during the learning process How to trade crypto, you need to equip yourself with knowledge and apply the following tips:
- Master knowledge
- Choose a reputable trading platform
- Trading Psychology
- Improve knowledge and skills
Crypto trading preparation steps
Step 1. Choose a platform
Step 2. Deposit money into your account
Once your email and identity are verified, you can add funds to your trading account. Don’t forget that making a deposit allows you to receive a 50% deposit bonus and maximize your potential profits.
Step 3. Download the cryptocurrency trading system
Download the appropriate MetaTrader desktop or mobile application and log in using the trading account number you received after registering your account in steps 1 and 2.
Detailed Guide to Creating a Crypto Trading Strategy
Step 1: Choose a coin with high liquidity
- There are over 1600 coins on the market and growing.
- By only following the top cryptocurrencies, you will reduce your range of choices.
Step 2: Apply the money flow index (MFI) indicator on the 5-minute chart
- The priority settings for the MFI indicator are 3 items.
- Change default buy and sell levels from 80 to 100 and from 20 to 0 respectively.
Step 3: Wait for MFI to reach 100
Price needs to hold on to the first and second 100 MFI readings.
Step 4: Buy signals cryptocurrency (Buy) if MFI = 100 if the next candle increases
- Now we can wait for the third MFI indicator above 100.
- It doesn’t have to be the third MFI=100, you can take any other MFI=100.
Step 5: Place stop loss below the low of the day.
- The obvious place to hide your protective stop loss is below the low of the day.
- A break below this level would signal a change in market sentiment and it would be best to exit the trade.
How to trade crypto CFD: Ether example
To better understand How to trade crypto, let’s look at an example. In this example, after applying a spread of 8 points. The CFD you use specifies an amount of 1 USD per point of market movement and you choose to trade 10 contracts. This brings your total exposure for the position to 32,040 USD.
However, since positions on ether CFDs can be opened with a margin of 50%, you would only need to deposit $15,020. At this point, it is important to note that since your exposure is greater than the required margin, you could lose more than your deposit if the market moves against you.
The market moves as you predicted, up to 3500, at which point you decide to close your position and take your profit. The sell (or bid) price after applying the spread is 3496. The difference between 3496 and 3204 is 292 points. This, excluding other costs, brings your profit from the trade to $2920 – a 19.4% profit on your deposit.
See more: Open an Bybit account – explore the crypto exchange
However, let’s say the market instead drops and hits your guaranteed stop loss, closing your position at 3000.
summary
Crypto trading offers many exciting opportunities in the modern financial world, but it also comes with significant challenges and risks. Success in How to trade crypto is not only based on luck but also requires patience, discipline, and a commitment to continuous learning. Let’s start with Crypto Trading from small steps, learn from experience, and constantly improve your trading strategy to achieve long-term financial goals!
FAQs
What are the popular Crypto trading strategies?
- Swing Trading: Holding positions from a few days to a few weeks.
- Scalping: Buying and selling quickly in a short period.
- HODLing: Buy and hold for the long term.
How to analyze Crypto prices?
- Technical Analysis: Use price charts and technical indicators such as RSI, MACD, and moving averages.
- Fundamental Analysis: Evaluate fundamental factors such as technology, development team, roadmap, and related news.
How to manage risk when trading Crypto?
- Set stop-loss to limit losses.
- Diversify your portfolio.
- Do not invest money that you cannot afford to lose.
