Table of Contents
1 Key Takeaways
- This article covers all the topics you need to know about crypto trading.
- 7 Must-know basics before trading crypto.
- Master the 4 vital crypto trading instruments and profit from the market.
- 9 Practical steps guide for beginners to start trading crypto.
- 4 Best trading bots for beginners.
- 4 Powerful reasons that you should start trading crypto.
- Decode the 4 Market Scenarios and crush crypto trading.
- 8 trading strategies you need to know as a beginner.
- 4 Analytical methods to predict price moves.
- 8 Key factors significantly impact crypto prices that you can’t miss.
โNote
This is a very comprehensive and long article.
I recommend that you save it first so that you can read it anytime in the future.
This article will significantly reduce your chances of losing money in crypto trading.
2 What is Crypto Trading?
Crypto trading involves buying, selling, and exchanging digital currencies like Bitcoin and Ethereum, aiming to profit from their price fluctuations.
Like traditional stock trading, it requires strategic analysis, but in a highly volatile market.
It’s a blend of careful strategy, timing, and understanding of market trends.
People often trade on cryptocurrency exchanges such as Binance, Bitget, and Pionex, which provide a wide range of trading pairs for them to choose from.
In crypto trading, some people like to make many short-term guesses, buying and selling quickly based on price changes.
With leverage, the profits can be very significant.
Others prefer to take a long-term approach.
They hold cryptocurrencies regardless of market fluctuations, hoping for value appreciation over time, like planting a seed and waiting for it to grow.
โWays to Trade Crypto
There are a few ways to trade, most of them are crypto derivatives, as they are particularly popular among traders.
With spot trading, you buy or sell the cryptocurrency right away.
With futures trading, you agree to buy or sell at a certain price in the future.
Margin trading lets you borrow money to make bigger trades.
Options trading is a bit like insurance, letting you lock in a price to buy or sell later.
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โAnalytical Methods in Crypto Trading
Just like stock trading, crypto trading also requires research and understanding of market trends to be successful.
There are several popular analyses commonly used by traders, and we’ll go through all of them later.
In on-chain analysis, you examine transaction data on the blockchain to infer trading patterns and potential market trends.
With technical analysis, you utilize chart patterns, effective indicators, and statistical analysis to predict future price movements based on historical data.
Through fundamental analysis, you evaluate the intrinsic value of a cryptocurrency based on economic factors, industry conditions, and company performance.
In sentiment analysis, you assess the collective attitudes, feelings, and opinions of market participants to gauge the overall market sentiment which can greatly influence crypto prices.
3 How Does Crypto Trading Work?
Crypto trading works by speculating on price movements through long (buy) or short (sell) strategies, with or without leverage.
Leverage can amplify both profits and losses, so it should be used wisely.
It’s critical to close trades to realize profits or limit losses.
โBuyer and Seller
Crypto trading is like stock trading.
There are two parties for each trade: the buyer and the seller.
The buyer places a bid, or the price they’re willing to pay for a cryptocurrency.
The seller asks for a specific price.
When the buyer’s and seller’s prices match, the trade happens.
โLong or Short, with or without Leverage, to Profits
If you think the price is going to go up, you buy now to sell later at a higher price.
This is called ‘going long.’
If you think the price will go down, you sell now and plan to buy it back cheaper later.
This is called ‘going short.’
With leverage, your profits can be significantly augmented.
Imagine that in January 2021, you bought $1,000 worth of Bitcoin when the price was around $40,000, and you used 10x leverage.
Fast forward to March 2021, the price of Bitcoin shot up to $60,000.
If you hadn’t used any leverage, your original $1,000 investment would have given you a $500 profit.
This is a 50% return on your initial investment.
But because you used 10x leverage, your profit was not $500, but $5,000.
That’s a whopping 500% return on your original investment.
In short, using 10x leverage turned a 50% return into a 500% return.
That’s the power of leverage in crypto trading.
But remember, while leverage can boost your profits, it can also amplify your losses.
Always trade responsibly.
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โZero-Sum Game
In crypto trading, for every winner, there’s a loser.
This is because the total amount of money doesn’t change, it just moves around from those who guess wrong to those who guess right.
4 What are Crypto Trading Strategies?
In crypto trading, having a solid strategy is crucial for success.
The purpose of implementing a trading strategy is to increase profit potential and minimize risks.
There are various strategies available, each with its own approach and level of complexity.
Some strategies can be used across multiple types of derivatives, while others are specialized for specific instruments like futures and options in crypto.
We have curated the best strategies specifically for crypto futures and strategies for options trading.
These trading strategies often rely on technical analysis and the use of related indicators to determine entry and exit points.
But, which strategy is right for you?
I suggest you first consider your risk tolerance, available capital, and time commitment.
You can either go long or short based on market scenarios.
For example, a bear market might have more short-selling opportunities, while there can still be small upward movements that present opportunities for going long.
Different market conditions call for distinct strategies.
Continue reading this article, you’ll learn about different trading styles (click here to jump).
Consider all these factors and knowledge together, and start with a demo account or a small amount.
It’s natural to take some time to trial and error to figure out what is your right strategy.
5 7 Must-Know Basics of Crypto Trading
โTrading Pairs
A trading pair is a pair of currencies that can be traded against each other.
Most often, a cryptocurrency is paired with a fiat currency such as the US Dollar (BTC/USD) or a popular cryptocurrency like Bitcoin or Ethereum (LTC/BTC or ETH/BTC).
โMarket and Limit Orders
Market orders are executed instantly at current market prices, while limit orders are set at a specific price and are only executed if the market reaches that price.
โOrder Book
An order book is a real-time, continuously updated list of buy and sell orders for a specific cryptocurrency, organized by price level.
It provides insights into potential resistance and support levels, market depth, and the liquidity of a cryptocurrency.
โPrice
In crypto trading, the price of a cryptocurrency is determined by the market in which it trades – by means of supply and demand.
This is the same as traditional financial markets.
If more people are trying to buy than sell, the price goes up.
If more people want to sell than buy, the price goes down.
โSpread
The spread in crypto trading is the difference between the buy (bid) price and the sell (ask) price of a cryptocurrency.
The spread can fluctuate based on the liquidity of the cryptocurrency and overall market volatility.
Liquidity refers to how quickly and easily a cryptocurrency can be bought or sold without impacting its price.
When a cryptocurrency is highly liquid, there are more buyers and sellers, which usually results in a smaller spread.
A lower spread generally means the market is more liquid and less volatile, which can lead to lower trading costs.
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โLeverage
As you just read about the magic power of leverage.
Leverage is often the most attractive feature of crypto derivatives, which allows you to borrow capital to increase your trading position beyond what you have.
Leverage magnifies both profits and losses, so while it can lead to higher profits, it can also lead to larger losses if the market moves against your position.
โMargin
Margin is the amount of capital required to open a leveraged position.
The margin requirement will depend on the leverage ratio.
For example, if you use 2x leverage, your margin requirement would be 50% of your trade size.
If a trade goes badly and your losses exceed your margin, you could be required to deposit additional funds into your account or face the closure of your position.
6 4 Profitable Instruments for Crypto Trading
โCrypto Spot
Crypto Spot trading is a straightforward way to buy or sell cryptocurrencies at the current market price for instant settlement.
For example, if you are buying Bitcoin in a spot trade, you pay the current market price for each Bitcoin, and upon the completion of the transaction, the Bitcoin is directly transferred to your cryptocurrency wallet.
You directly own and control the cryptocurrency, with the ability to use it for other transactions, lend it, or even convert it to another currency.
However, spot trading also exposes you to the volatility of cryptocurrency prices, which can lead to significant gains or losses.
This article provides a detailed view, including the pros and cons of spot trading.
โCrypto Futures Contracts
Crypto futures contracts are probably the most popular tool in crypto trading.
It lets you speculate on cryptocurrency prices without actually owning the underlying assets.
You can buy or sell contracts that settle at a future date and predetermined price.
Thus, you can earn from price shifts.
The magic feature of crypto futures that attracts people is the leverage, ranging from 1x to 100x.
This means your profits could be up to 100 times more than your initial investment.
Crypto futures act like a profit amplifier, significantly increasing your potential gains from each trade.
Plus, you can make money whether the price goes up or down, achieved through long or short positions.
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โCrypto Perpetual Futures Contracts
Crypto perpetual futures contracts work just like regular futures, but they don’t have an expiration date.
They use a funding rates mechanism to ensure the contract price stays in line with the current spot price.
This guide unravels the secrets of crypto perpetual futures.
You’ll earn their functionalities, pros and cons, and 6 effective trading strategies.
โCrypto Options
In a futures contract, both parties are bound by an agreement to execute the trade at a predetermined price on a specific date, no matter what the market price is at that time.
On the contrary, with options, traders hold the power to decide whether or not to exercise their rights, depending on the prevailing market price.
Crypto options essentially grant you the privilege, without mandating an obligation, to transact an asset at a set price within a defined period.
In essence, it’s like having the flexibility to strategize your moves based on anticipated market fluctuations.
The risk for options traders is inherently capped at the initial premium paid to obtain the option.
To enhance your success in crypto trading, these top 12 crypto options trading strategies are for you.
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7 How to Trade Crypto?
โ1. Developing a Trading Strategy
Think of it as your roadmap that will guide you through market volatility and help you achieve your goals.
A trading strategy is not a one-size-fits-all approach.
It should be tailored to your individual goals and risk tolerance.
By formulating a strategy based on your unique needs, you can mitigate potential losses and maximize your chances of success.
A well-defined trading strategy allows you to analyze market trends, identify entry and exit points, and manage risk effectively.
It helps you avoid impulsive decisions driven by market emotions and instead rely on a pre-determined plan.
For instance, your strategy could include a mix of on-chain analysis and technical analysis to identify trends.
Remember, a trading strategy is not set in stone.
It should be adaptable to changing market conditions and be regularly evaluated and refined.
With hundreds of trading strategies available, you may find it challenging to identify the most suitable ones.
There are 3 articles that guide you in finding your right and effective trading strategy.
- 14 Best Crypto Futures Trading Strategies for 2024
- Top 12 Crypto Options Trading Strategies To Amplify Profits (2024)
- Top 13 Strategies To Make Money in Crypto Bear Market (2024)
โ2. Pick a Cryptocurrency
It’s generally best to start with more established and liquid cryptocurrencies like Bitcoin and Ethereum before moving on to lesser-known altcoins.
These are known for their relatively stable markets and are a good starting point for beginners.
We highly recommend reading our comprehensive guide, “Is Bitcoin a Good Investment?”
This resource will provide you with all the necessary details to explore and understand Bitcoin in depth.
After you feel more at ease with the market and understand it better, you might want to explore altcoins.
While these options can be riskier than the big-name cryptocurrencies, they could also lead to bigger returns.
โ3. Choose the Right Crypto Exchange
Look for exchanges that offer security, a user-friendly interface, responsive customer support, and a wide selection of cryptocurrencies.
Make sure that they are regulated and comply with industry standards.
This ensures that your funds are protected and reduces the risk of fraud or theft.
Bitget and Pionex are standout crypto trading platforms in the crypto market.
They offer a wide range of trading pairs and ensure excellent liquidity, creating a reliable environment for trading various cryptocurrencies.
One fantastic feature of Bitget is the option to copy trades from experienced experts.
By following their strategies and insights, you can learn from the best and potentially boost your profits.
Additionally, Bitget and Pionex provide auto bots that can trade crypto on your behalf, giving you the opportunity to earn potential profits non-stop, 24/7.
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โ4. Sign Up and Pass KYC
After creating an account, it is typically necessary to undergo the KYC (Know Your Customer) process.
You’ll need to share personal details such as your address, date of birth, social security number (if you’re in the US), and email address.
The process is similar to setting up an account with a traditional stock brokerage.
โ5. Fund Your Account
After signing up with a crypto trading exchange, you’ll need to link your bank account to deposit funds.
Most cryptocurrency exchanges, including Bitget and Pionex, accept bank deposits via debit cards and wire transfers.
Wire transfers are typically the most cost-effective method to load your account.
Exchanges allow deposits in traditional fiat currencies like USD or EUR and in cryptocurrencies like Bitcoin or Ethereum.
Be sure to check for any deposit fees or minimum deposit amounts on your chosen exchange before proceeding.
โ6. Practice Trading
Begin by defining your goals and assessing your risk tolerance, then select a few strategies that align with your personality and practice them.
By trading with small funds and avoiding or limiting leverage, you can keep the risks under control.
Additionally, it is important to set up stop-loss orders, and trailing stops to protect against sudden and extreme price changes.
โ7. Diversify Investments
Don’t put all your eggs in one basket!
It’s vital to mix up your crypto investments.
That means spreading your money around different cryptocurrencies, not just pouring everything into one.
In addition, you may consider allocating a portion of your funds to fixed-income platforms like Bincentive, which provide stable income streams.
For instance, Bincentive offers a Net APR of 7% – 8.25% for USDT and 5.5% – 7% for USDC.
This strategy helps you manage risks since different types of crypto can behave differently when the market changes.
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โ8. Monitor the Market
Keep a close eye on market trends and news that may impact cryptocurrency prices, particularly the macrocycle – the bull and bear markets.
A big part of staying updated is learning how to analyze the market.
Technical analysis, fundamental analysis, sentiment analysis, and on-chain analysis are the four methods commonly used by traders to predict price movements.
To monitor on-chain activity, Glassnode provides the most comprehensive and real-time market data.
You can register with Glassnode through the exclusive link and get 10% off on any plan.
โ9. Learn from Mistakes
Crypto trading is highly volatile and unpredictable.
Don’t let losses discourage you.
Instead, view mistakes as learning opportunities and continuously refine your trading strategy.
Join GoRichFIRE’s Telegram group and engage in discussions with fellow members to improve your crypto trading skills.
8 4 Best Crypto Trading Bots For Beginners
Crypto trading bots, automated programs that execute trades based on pre-set parameters, are ideal for beginners.
Most auto bots are designed to be beginner-friendly and extremely easy to use.
They offer you hands-free options to potentially grow your wealth with ease.
Here I introduce 4 beginner-friendly crypto trading bots that are worth trying.
โGrid Trading Bot
A grid trading bot lets you make money from price fluctuations.
It sets multiple price levels inside a given range.
As the crypto price moves up and down within this range, the bot automatically buys low and sells high, generating profits.
Setting up the grid trading bot is super easy, the bot is tailored to be beginner-friendly.
It’s worth giving it a try!
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Here’s a simple example of a grid trading bot:
Let’s say Bitcoin is currently trading at $35,000, and you believe it will remain between $30,000 and $40,000 for the next few weeks.
You set up a grid trading bot for this range.
The bot will then divide this range into smaller grids or segments, say 10.
Each grid will therefore represent a $1,000 price movement.
Now, the bot will place buy orders at lower levels of each grid and sell orders at higher levels.
If the price drops to $34,000, the bot will execute a buy order.
If the price rises back to $35,000, the bot will sell, making a $1,000 profit per Bitcoin traded.
The bot will keep doing this for all the price movements within your set range.
It’s like making many small profits while waiting for a significant price move.
Both spot and futures are available for grid trading bots, where futures bot allows you to leverage and engage in short selling to potentially increase profits.
Here is the ultimate comparison to spot and futures trading.
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โDCA (Dollar-Cost Averaging) Bot
Dollar-cost averaging (DCA) is a smart strategy to mitigate market volatility.
If you believe the price of a certain cryptocurrency will eventually go up, you accumulate it by buying at an average low price.
This strategy allows you to spread your investments over time, reducing the risk of buying at peak prices.
A bear market is the best time to implement this strategy, as the price trends are often going down.
Since the investing process can take from months to years, investors often use the Auto DCA bot to invest on their behalf.
The bot tirelessly works 24/7, making your investment journey smooth and hands-free.
The DCA Bot may have different names on various platforms.
In Bitget, the DCA Bot is referred to as ‘Spot auto-invest’ and can be found within the ‘Trading bots’ section under ‘Spot Trading’.
In Pionex, it is called ‘TWAP’.
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โSpot-Futures Arbitrage Bot
The spot-futures arbitrage bot is a relatively safer tool that enables you to earn stable profits from the unpredictable crypto market.
Here’s a simple way to understand how it operates, using Bitcoin as an example:
The bot buys Bitcoin in the spot market while simultaneously selling Bitcoin in the perpetual futures market.
This means the bot locks Bitcoin‘s price at a certain level, making it immune from price volatility.
Consequently, you can earn from funding rates, which is a special mechanism of crypto perpetual futures contracts.
Furthermore, the bot has an aggressive mode that uses leverage (1-3x).
This allows for bigger positions in the futures market, potentially leading to greater returns.
You can find this bot on the web version of Pionex by navigating to ‘Trade’ and then selecting ‘Spot Bot’.
To create the aggressive mode bot, unfold the ‘Advanced settings’ of ‘Spot-Futures Arbitrage Bot’ on the web version of Pionex.
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โMartingale Bot
The martingale bot implements an advanced crypto reading strategy of laddered buying and selling all at once.
It’s designed to buy more as prices drop, thereby reducing your average buying cost.
The setting of the bot is very easy for beginners.
The bot uses a clever sequence (1, 1, 2, 4, 8, 16, etc.) to double the investment as prices fall.
For example, if the price drops to 95%, your average cost is 95.97%.
So, a minimal 1.02% rise puts you back on track.
You can set the profit percentage at which you want to sell all at once.
The bot then automatically repeats the cycle of buying more and selling at once for you.
However, if prices continue to fall, you could face significant losses due to the doubling-down approach.
You can find the ‘DCA bot (Martingale)’ under ‘Trade’ in both the app and web versions of Pionex.
If you’re using the web version, you’ll need to select ‘Spot Bot’ after clicking ‘Trade’.
Additionally, an advanced version of the Martingale Bot called the ‘Trailing DCA’ is available.
This enhanced bot provides better timing for both buying and selling.
In the Bitget APP, you can find the bot by clicking ‘More’, then ‘Spot Martingale’ in the services section.
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9 Why You Should Trade Crypto?
โGrowing Potential
The cryptocurrency market is not just burgeoning, it’s demonstrating explosive growth and constant innovation.
The increasing global acceptance of cryptocurrencies creates a vibrant and potentially rewarding environment for crypto traders.
According to data from Triple-A, between 2015 and 2023, the price of Bitcoin has soared by over 173,000%.
Bitcoin alone reached an annual growth rate of 60% in 2021.
Furthermore, the entire cryptocurrency market is anticipated to grow at a compound annual growth rate (CAGR) of 56.4% from 2019 to 2025, According to Triple-A.
This level of growth reveals new opportunities as fresh coins are introduced, technologies evolve, and the growth potential of prices of cryptocurrencies, particularly for Bitcoin (BTC) and Ethereum (ETH).
You can read this article to explore the pros and cons of investing in crypto.
โPotential for High Returns
Cryptocurrencies can have big price changes within short periods, which is different from things like stocks or bonds.
This can be risky, but it can also open up opportunities for substantial returns, since the trading profits from price changes.
Trade crypto with leverage, and your profits can be potentially magnified.
Let’s say you use $1,000 to buy Bitcoin at $40,000.
If the price hits $50,000 and you sell, your profit is $250 (25% return).
With 10x leverage, you could make a $2,500 profit (250% return).
But remember, losses can also be magnified with leverage.
โAccessibility and Flexibility
Cryptocurrency markets operate 24/7, giving traders the freedom to trade at any time.
This is a marked difference from traditional financial markets, which have fixed trading hours.
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10 What are Crypto Bull and Bear Markets?
Bull markets are characterized by rising prices and an overall sense of optimism.
They often coincide with strong market growth and increasing investor interest.
On the other hand, bear markets are marked by falling prices and a pervasive pessimistic outlook.
In these periods, market conditions tend to be challenging, and traders often face significant losses.
The factors that cause bull and bear markets can be diverse and complex.
Understanding them is vital to your success in crypto trading.
โBull Market
A bull market signifies an upward trend in prices.
Positive market trends, such as technological advancements, increased adoption, or improvements in regulatory frameworks, can fuel the bullish sentiment.
For example, Bitcoin in February 2021, when the price surged from about $33,000 at the beginning of the month to roughly $58,000 by the end.
This increase reflects a bull market.
The atmosphere is one of optimism, as everyone expects the prices to climb further.
This period saw a surge in prices across various cryptocurrencies, attracting an influx of new traders and investors.
โBear Market
However, after reaching its peak in April 2021, Bitcoin entered a bear market phase.
bear markets may stem from factors like market corrections, negative news, or a decline in overall market sentiment.
For example, the price dropped from about $65,000 to approximately $28,900 in June 2021, embodying a bear market.
A bear market may seem challenging to find opportunities.
However, you can still make profits by employing strategies like short-selling through derivatives such as crypto futures, perpetual futures, and options.
There are 13 effective strategies to make money in a bear market.
โHybrid Market
Market trends, whether bullish (rising) or bearish (falling), don’t always follow a linear path.
They can have smaller opposing trends within them, depending on the timeframe you’re looking at.
For instance, within a larger bullish trend, there could be smaller, temporary bearish trends.
Generally, an uptrend sees the price creating higher peaks and higher valleys, while a downtrend has the price making lower peaks and lower valleys.
โConsolidation
There’s also a market state known as “consolidation”.
This is when the price isn’t drastically moving up or down, but is instead trading sideways within a certain range.
You can often identify consolidation phases on longer time frame charts (like daily or weekly charts).
This typically happens when an asset is stabilizing after a big price jump or drop, before a potential trend reversal, or during times of lower demand and trading volumes.
In this state, prices essentially remain within a certain range without significant movement.
A grid trading bot is perfectly suitable for the “consolidation” market since it capitalizes on these small price movements.
The bot buys low and sells high within a predefined price range, generating profits from the fluctuations that occur during the consolidation phase.
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11 What Are Crypto Exchanges?
A crypto exchange is a platform where you can buy, sell, and trade various cryptocurrencies.
These exchanges act as intermediaries, facilitating transactions between buyers and sellers.
There are 3 main types of crypto exchanges: centralized, decentralized, and hybrid.
Centralized exchanges (CEXs) are operated by a company or organization and require users to deposit their funds into the exchange’s wallets.
These exchanges provide a user-friendly interface and offer a wide variety of trading pairs.
On the other hand, decentralized exchanges (DEXs) operate on a blockchain network, allowing users to trade cryptocurrencies directly from their wallets.
DEXs provide a higher level of privacy and security, as they do not require users to deposit their funds into a central entity.
Hybrid is a mix of both features of CEX and DEX.
Before choosing a crypto exchange, it is important to consider factors such as the exchange’s reputation, trading fees, supported cryptocurrencies, and security measures.
โCentralized Exchanges (CEXs)
Centralized crypto exchanges serve as intermediaries for buying and selling cryptocurrencies using fiat currency.
They provide a user-friendly platform where you can easily trade both traditional and crypto assets.
With these exchanges, you can convert your fiat currency into cryptocurrencies and vice versa, allowing you to participate in the crypto market without much hassle.
One advantage of centralized crypto exchanges is the wide variety of trading pairs available, giving you the opportunity to trade a vast array of crypto assets.
Additionally, these platforms often offer advanced trading features, such as margin trading and futures contracts, which can enable you to maximize your trading opportunities.
Moreover, there is always a concern for the security of your funds since they are held centrally on these exchanges.
It’s essential to choose a reputable exchange that prioritizes security measures, such as cold wallets and two-factor authentication, to mitigate potential risks.
โDecentralized Exchanges (DEXs)
Decentralized exchanges provide direct peer-to-peer trading without the need for intermediaries.
One major advantage of DEX is increased security.
Unlike centralized exchanges where your funds are held on the platform, DEX allows you to maintain control of your crypto assets by trading directly from your wallet.
This eliminates the risk of hacks or thefts associated with centralized exchanges.
Lower fees are another significant benefit of DEX.
Since there is no intermediary involved, DEX platforms generally charge lower fees compared to their centralized counterparts.
This means more of your trading profits stay in your pocket, allowing you to maximize your gains.
Moreover, DEX offers faster transaction speeds.
Without the need for a middleman to facilitate trades, transactions on DEX occur directly between buyers and sellers.
This eliminates the delays often experienced on centralized exchanges and ensures that you can quickly execute your trades.
Hybrid Exchanges
Hybrid exchanges combine the features of both centralized and decentralized exchanges.
These platforms aim to offer traders the benefits of liquidity, security, and anonymity.
By integrating the advantages of centralized exchanges, hybrid platforms ensure high liquidity, allowing for seamless execution of trades with competitive pricing.
This means you’ll have ample opportunities to buy and sell crypto assets without experiencing delays or slippage.
At the same time, hybrid exchanges prioritize security.
They adopt decentralized elements such as self-custody wallets, where users maintain control of their funds.
This eliminates the risk of hacks or thefts often associated with centralized exchanges.
Anonymity is another crucial aspect offered by hybrid exchanges.
You can trade without revealing personal information, ensuring privacy.
It’s also advisable to check if the exchange provides insurance for your funds, offering an extra layer of protection.
12 How to Get Rich Trading Crypto?
Wealth in crypto trading can come from consistent strategies, smart risk management, and a solid understanding of market trends.
Long-term holding, leveraging trading bots, and diversifying your portfolio can also contribute.
However, ensure you never invest more than you can afford to lose.
Here are some of the best crypto trading tips for you to get rich via crypto trading:
โKeep Trading Journal
A trading journal allows you to review past trades in detail, including entry and exit points, reasons for entering a trade, trade duration, and emotions experienced during the trade.
It enables you to identify what worked and what didn’t, and identify recurring mistakes.
Furthermore, it serves as a reference point to evaluate the effectiveness of different trading strategies and helps you refine your approach.
โDon’t Risk All Your Savings
Crypto trading can be highly profitable, but it also carries significant risks due to its volatility.
A key rule is not to bet all your money on it.
The prices in this market can go up and down very fast.
So, if you invest all your savings, you could end up losing a lot if the prices go down suddenly.
It’s a smart move to spread your money across different investments, not just crypto.
This way, if one investment doesn’t do well, you have others that might be doing better.
โDo Your Own Research (DYOR)
Before you start trading crypto, it’s important to do your own research.
This isn’t limited to just understanding the basics of cryptocurrency and how the trading process works.
You should also study the specific cryptocurrencies you’re interested in crypto trading.
Take the time to understand their price history, market sentiment, and any news or events that might affect their value.
Analyze market trends and price charts, and get a feel for how the crypto markets operate.
โStick to Your Trading Plan
Getting rich with crypto trading doesn’t happen overnight.
It requires patience, discipline, and a lot of hard work.
Having a well-thought-out trading plan is essential.
Your plan should include your investment goals, risk tolerance, and specific criteria for entering and exiting trades.
Once you’ve made a plan, be disciplined and stick to it.
Don’t let the market’s volatility sway you into making impulsive decisions that don’t align with your plan.
โManage Risks
Risk management is a crucial aspect of successful crypto trading.
Only invest money you can afford to lose, and consider using stop-loss orders.
Diversifying your portfolio across different cryptocurrencies can also help to balance risk and reward.
โStay Up-to-Date
The crypto market is dynamic and changes rapidly.
Staying current with the latest news and trends is essential.
This includes not only market news but also regulatory developments, technological advancements, and macroeconomic factors that could impact the crypto market.
These factors can significantly affect prices, and we’ll go deeper in the section titled ”8 key Factors Impact Crypto Prices’. (Click to jump)
Follow GoRichFIREโs Twitter account and Join the Telegram group to keep your knowledge up-to-date.
โTry Crypto Trading Bot
Crypto trading bots are like automatic pilots.
They make trades for you based on rules you set, utilizing AI strategies.
They work all day, every day, and can make trades faster and more accurately than a person.
Think of it like setting up a money-making machine with AI programs.
These bots aim to help you earn as much as possible based on your goals.
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โStore Cryptocurrency Safely
Security is paramount when trading cryptocurrencies.
Ensure that your coins are stored safely in a secure wallet, not just on the exchange where you bought them.
Cryptocurrency wallets come in two main forms – software wallets and hardware wallets.
Each one is secure, but hardware wallets offer the highest level of safety.
This is because they store your cryptocurrencies on a physical device that’s offline, protecting them from any online threats.
Be aware of phishing scams, always use two-factor authentication, and never share your private keys with anyone.
โDon’t Let FOMO Control You
“FOMO” stands for “Fear Of Missing Out.”
It’s a feeling you might get when you see the price of a cryptocurrency shooting up and you quickly buy it because you’re afraid of missing the chance to make money.
But this can backfire.
You might buy at a high price and then the price drops. This means you’ve now lost money.
It’s better to make trading decisions based on research and a solid plan, not just because the price is going up.
Remember, prices that skyrocket quickly can also crash quickly.
So, don’t let FOMO make your decisions for you.
Stick to your plan and your understanding of the market.
13 Crypto Trading Strategies You Need To Know
These strategies mainly represent a range of trading periods, encompassing both short-term and long-term approaches.
The shorter time frame requires a higher level of time commitment and trading skills.
The longer time frame provides a more relaxing approach, while carrying special risk profile due to the volatility nature of crypto market.
โDay Trading
Crypto day trading is a short-term trading strategy that buying and selling cryptocurrencies within a single day to make quick profits.
Unlike long-term trading, which is more focused on holding assets for an extended period, day trading aims to take advantage of short-term price fluctuations.
Volatility plays a crucial role in crypto day trading.
Day traders closely monitor market conditions and use various technical indicators to predict price movements and make timely buy and sell decisions.
In crypto day trading, speed and precision are key.
You need to act decisively and take advantage of small price differentials within short timeframes.
Leverage is commonly used in day trading, allowing you to control larger positions with a smaller amount of capital.
Day trading carries risks and requires careful planning, risk management, and constant monitoring of the market.
Here is the ultimate guide to crypto day trading.
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โScalp Trading
Crypto scalping focuses on making small, quick profits from frequent trades.
As a day trading strategy, crypto scalping requires traders to enter and exit trades within short time frames, often minutes or even seconds.
The key features of crypto scalping include high trading volume, closely tracking market volatility, and utilizing tight stop-loss orders.
Traders who employ this strategy closely monitor the market for small price fluctuations, taking advantage of these micro movements to accumulate profits.
To effectively execute crypto scalping, you must rely heavily on technical indicators to identify optimal entry and exit points.
While scalping can be profitable, it also carries risks, as market conditions can change rapidly.
Here is the ultimate guide to crypto scalp trading.
โTick Chart Trading
Tick chart trading is a method of analyzing price movement in smaller increments of time, such as ticks or trades.
Unlike traditional time-based charts, tick charts focus on the number of transactions that occur, rather than the duration of time.
Tick charts are especially useful for identifying short-term trading opportunities and tracking market volatility.
Tick chart trading can capture sudden price fluctuations and pinpoint ideal entry and exit points for trades.
This strategy is particularly popular among day traders and scalpers who aim to profit from short-term price movements.
For example, if the tick chart shows a high volume of trades occurring in a short period, it indicates increased market activity and potential opportunities for short-term gains.
On the other hand, a low volume of trades suggests lower market activity and may signify a more stable or stagnant market.
Tick chart trading allows you to capture real-time market data based on the current market conditions.
This method provides a more detailed and accurate depiction of price movement, increasing the potential for successful trades.
Here is the ultimate guide to crypto tick chart trading.
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โSwing Trading
Swing trading also takes advantage of short-term price fluctuations in cryptocurrencies.
Unlike day trading, which focuses on making quick profits within a single day, swing trading aims to capture larger price movements over a slightly longer time period, typically ranging from a few days to a few weeks.
Due to the longer time-frame interval, swing trading has the potential for higher profits compared to day trading.
Comparing to day trading and scalping, swing traders have a more relaxed approach, they don’t need to constantly monitor the market.
Moreover, swing traders also use technical analysis to identify potential price reversals or trends.
However, swing trading also comes with its own risks.
The cryptocurrency market can be highly volatile, you have to carefully manage risk and set trailing stop orders to limit potential losses.
Here is the ultimate guide to crypto swing trading.
โTrend Following
Trend following focuses on following the momentum instead of predicting specific price levels or timing market reversals.
By analyzing historical price data and technical indicators, trend followers aim to identify and ride the waves of upward or downward price movements.
When a bullish trend is detected, you may enter a long position, expecting the price to continue rising.
Conversely, during a bearish trend, you may enter a short position, anticipating further price declines.
The significance of crypto trend following lies in its ability to potentially generate significant profits by riding the momentum of established trends.
By avoiding the need to predict precise entry and exit points, you can take advantage of extended price movements.
Although no strategy is foolproof, the systematic nature of trend following allows you to stay objective and avoid emotional decision-making.
By following the overall market direction, you can reduce the impact of short-term fluctuations and focus on capturing long-term profit opportunities.
Here is the ultimate guide to crypto trend following.
โCopy Trading
Copy trading enables beginners or traders with limited time to replicate the trades of successful traders.
It involves following and automatically copying the trades made by experienced traders.
It allows inexperienced traders to benefit from the expertise of others and requires less market knowledge and analysis.
You can freely choose a wide range of traders with different trading styles.
However, success relies on the performance of the copied trader, and there is no guarantee of profitability.
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โMargin Trading
Margin trading is the practice of using borrowed funds from a broker to purchase an investment.
This can amplify both profits and losses, making it a risky but potentially rewarding strategy.
One key aspect of margin trading is leverage, which is essentially the ratio between the amount of money you borrow and the amount of money you actually have in your account.
Leverage allows you to trade larger amounts than what you have in your account, amplifying both profits and losses.
For example, if you have a leverage of 10x, it means that for every $1 you have in your account, you can trade with $10.
This can be advantageous if the market moves in your favor, but it can also lead to significant losses if the market moves against you.
It’s important to carefully consider the risks involved and use appropriate risk management strategies.
Here to read the ultimate guide to crypto margin trading.
โPosition Trading
Position traders hold positions in cryptocurrencies for an extended period, aiming to profit from long-term price movements.
You might hold positions for months or years.
Unlike day trading or swing trading, which focus on short-term price fluctuations, position trading takes a more patient approach.
Position traders primarily rely on fundamental analysis and on-chain analysis to make trading decisions.
They study factors such as on-chain data, news events, and development updates to assess the long-term potential of a cryptocurrency.
Technical analysis may also be used on longer time frames such as week and month, to identify optimal entry and exit points.
One key benefit of position trading is the potential for higher profits.
You can potentially capture significant price increases and multiply your initial investment.
Additionally, position trading requires less time and constant monitoring compared to day trading.
However, position trading also comes with increased risk exposure.
It requires a thorough understanding of the cryptocurrency market and the ability to weather market volatility.
14 On-Chain Analysis in Crypto Trading
On-chain analysis refers to the investigation of blockchain data.
This type of analysis provides insight into the overall health and potential growth of a cryptocurrency.
There is a plethora of charts and data available for ordinary traders and beginners to analyze.
I have listed some useful charts below for your reference here.
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โWhales’ Movement
‘Whales’ are the big players in the cryptocurrency world, holding large amounts of capital for trading.
They are influential in the market, with their sizable transactions often causing notable changes in market liquidity and price.
Among these whales, some act as market makers.
They are like the conductors of the market orchestra, constantly placing buy and sell orders to ensure the market flows smoothly.
If you’re a cryptocurrency trader, it’s beneficial to watch these whales closely.
Their activities can hint at upcoming market movements.
Think of a whale as someone holding a large amount of Bitcoin – say, from hundreds to thousands of Bitcoins.
Just as whales make waves in the ocean, these ‘crypto whales’ can stir up the market.
Following their lead could give you insights into potential profit spots.
Their actions can be a helpful guide, showing you when might be a good time to buy or sell your cryptocurrencies.
Glassnode offers various charts that track whale activity, such as ‘Bitcoin: Whale Address Count [Balance >1k BTC]‘ and ‘Ethereum: Whale Net Position Change [Address 1k to 10k ETH]‘.
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โNumber of Active Addresses
The count of unique active addresses includes successful transaction participants, both receivers and senders.
A high number of active addresses is considered a bullish signal.
For instance, a surge in active addresses might indicate a wave of new or existing users transacting, thereby increasing demand.
On the other hand, a decrease in the number of active addresses could be seen as a bearish signal.
However, this indicator should not be used in isolation.
It’s important to consider other metrics and market news while making trading decisions.
Furthermore, spikes in active addresses could also be due to airdrops or single addresses making multiple transactions, so the context should always be considered.
The chart below is โBitcoin: Number of Active Addressesโ, as an example for you.
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โTransaction Volume
Transaction volume refers to the total number of transactions completed on the blockchain within a given timeframe.
High transaction volumes often suggest significant network usage and could be associated with increased demand for the token.
Conversely, low transaction volumes might indicate a lack of interest.
For example, here is โBitcoin: Total Transfer Volume [BTC]‘ available.
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15 Technical Analysis in Crypto Trading
Technical analysis is like weather forecasting for trading.
It’s a way of trying to predict future prices of things like stocks or cryptocurrencies by looking at their past prices and patterns.
It helps you to identify market trends, determine potential price levels, and establish optimal entry and exit points.
Here are some common and effective indicators that are suitable for both beginners and experienced traders.
โTrendlines: Uptrend and Downtrend
Trendlines in technical analysis are simple lines drawn on a chart that connect a series of highs or lows.
They help you understand where the price might go next.
If the price keeps going up over time, you can draw an ‘uptrend line’ under the increasing lows.
This line shows that there are more buyers than sellers, pushing the price up.
If the price keeps going down, you’d draw a ‘downtrend line’ above the decreasing highs.
This line shows that there are more sellers than buyers, pushing the price down.
When the price breaks through these lines, it might be a sign that the trend is changing.
The more the price touches the line without breaking it, the stronger that trend is considered to be.
โMoving Averages (MA)
MA comes in two primary forms: the Simple Moving Average (SMA) and the Exponential Moving Average (EMA).
The SMA provides the average price over a set number of periods, giving equal weight to each period.
Conversely, EMA gives more weight to recent data, making it more responsive to new information.
Generally, when the price is above the MA (whether SMA or EMA), it’s considered an upward trend, and vice versa for a downward trend.
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โRelative Strength Index (RSI)
The Relative Strength Index (RSI) is a momentum oscillator used to identify overbought or oversold conditions.
It measures the speed and change of price movements on a scale of 0-100.
Typically, an RSI value over 70 indicates an overbought condition (potential downward trend), and a value below 30 signals an oversold condition (potential upward trend).
โCandlestick Patterns
Candlestick patterns are a way to read and predict price changes in a market.
The ‘body’ of the candle shows the opening and closing prices for a certain period, and the ‘wick’ or ‘shadow’ at the top and bottom shows the highest and lowest prices.
If you’re looking at a daily chart as above, one candlestick shows you what happened with the price in one day.
The top of the upper wick shows the highest price of the day, the bottom of the lower wick shows the lowest price, and the body of the candle shows the opening and closing prices.
Certain arrangements of one or more candlesticks form a ‘pattern.’
Candlestick patterns can represent different time periods.
This means a single candlestick could show price changes that happen over a minute, an hour, a day, or even longer.
The shape or pattern of these candlesticks can change depending on how long you’re looking at them.
โMoving Average Convergence Divergence (MACD)
The Moving Average Convergence Divergence (MACD) is a trend-following momentum indicator.
It’s calculated by subtracting the 26-period EMA from the 12-period EMA, and a “signal line” (9-period EMA of the MACD) is plotted on top of the MACD.
A MACD cross above the signal line signals a bullish trend, while a cross below the signal line suggests a bearish trend.
โSupport and Resistance Levels
Support and resistance levels are like invisible floors and ceilings for the price of a cryptocurrency you’re trading, like Bitcoin.
The support level is like a floor, representing the price doesn’t usually fall below.
So, if every time Bitcoin drops to $30,000 it starts going back up, that’s a support level.
The resistance level is like a ceiling. It’s a price that Bitcoin doesn’t usually go above.
So, if Bitcoin can’t seem to get above $40,000, that’s a resistance level.
Traders often aim to buy when the price is near the support level (the floor) and sell when it’s near the resistance level (the ceiling).
This is a strategy called ‘Range Trading’, which is one of the best crypto futures trading strategies for 20224.
As you’ve read earlier, consolidation is a market scenario when the price isn’t clearly going up or down but is moving sideways, often bouncing between the support and resistance levels.
During consolidation, it’s like the market is taking a break, trying to decide what big move to make next.
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It’s designed to place buy and sell orders at multiple levels within the range defined by the support and resistance levels.
The grid trading bot enables you to profit from these small price movements that happen during the consolidation phase, making it an excellent strategy for a market that’s moving sideways.
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โVolume
Volume means the total number of crypto(s) or contracts traded.
It provides clues about the trend’s strength: high volume typically accompanies strong price moves, confirming the trend.
For instance, an upsurge in volume during an uptrend implies a bullish sentiment, while increased volume during a downtrend might suggest a bearish sentiment.
โRound Numbers
In trading, “round numbers” are like big, easy-to-remember numbers such as 10000, 20000, 30000, 40000, and so on.
Traders often view these round numbers as price thresholds because they’re simple to remember.
For example, if a Bitcoin is currently priced at $49800, traders might watch closely as it nears $50,000 because that’s a round number and it’s a major milestone.
The same thing can happen when prices fall.
So, these round numbers can act like invisible walls or stepping stones that help shape the direction of market prices.
It’s as if the market takes a pause at these points before deciding whether to continue up or down.
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16 Sentiment Analysis in Crypto Trading
Sentiment analysis is a predictive tool that gauges the general feeling or mood in the cryptocurrency market.
It’s like weather radar, scanning social media, news, and market trends to identify investor sentiment, which can help forecast potential price changes.
When sentiment is overwhelmingly positive, we might see price increases.
Conversely, a surge of negative sentiment could signal price drops.
It’s essential to combine this with other analyses for effective decision-making.
โCrypto Fear and Greed Index
The Crypto Fear and Greed Index is a thermometer for investor emotions in the crypto market, ranging from 0 (Extreme Fear) to 100 (Extreme Greed).
This tool is based on the idea that high fear can push prices down (as people sell), and high greed can inflate prices (as people buy).
When the index shows fear, it might be a good time to buy.
When it shows greed, it could be time to sell.
โPsychological of a Market Cycle
The cycle describes how people feel at different stages of investing, from when prices are rising to when they are falling.
Imagine you’ve started investing when prices are climbing.
You feel optimistic and excited, which grows into a thrill when prices keep going up.
This feeling can become euphoria, a high of happiness because you’re making a lot of money.
FOMO (Fear Of Missing Out) can fuel a frantic journey from hope to euphoria.
However, that’s usually when prices are at their highest, and they’ll start falling soon.
As prices drop, people feel complacent, thinking it’s just a brief slump.
But if prices keep falling, people start feeling anxious, then go into denial, then start panicking, and finally feel depressed when they sell their assets for less than they bought them for.
Remember, it’s important to keep your feelings in check when trading crypto.
In simple terms, knowing that feelings of euphoria often mean the market is at its peak might convince you to sell and make a profit.
On the other hand, realizing that people are very scared or depressed usually means the market is at its lowest point and it might be a good time to buy.
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17 Fundamental Analysis in Crypto Trading
We’ve talked about on-chain, technical, and sentiment analysis.
These are different ways to look at the crypto market, like using different lenses.
But there’s another important lens we haven’t put on yet – it’s called fundamental analysis.
This one is a bit different.
Instead of looking at the charts and what people are feeling, it looks at the real value of a cryptocurrency.
This could be things like how it’s used or the team behind it.
You may be able to identify undervalued cryptocurrencies whose prices are poised to skyrocket.
Let’s put on this new lens and take a closer look.
โTokenomics
Tokenomics is the economic structure surrounding a token.
It includes things like the rewards the system gives for using the token, such as high incentives for staking, which can make people want it more.
Some tokens even let you vote on decisions, which could make them worth more.
Sometimes, tokens are destroyed, or “burned,” on purpose.
When there are fewer tokens, each one can become more valuable.
A clear future plan for the token can also add value.
If a token is expected to be used more in the future, people might see it as more valuable.
There can also be rules about when you can sell tokens.
If you have to hold on to a token for a while before you can sell it, that can make fewer tokens available and affect the price.
How well a token works with other tokens or systems can also matter.
A token that’s more versatile might be more useful and valuable.
Lastly, tokens that follow government rules might look better to some investors.
Understanding all these rules and features, or the tokenomics, can help you figure out if the token might be a good investment.
โStakeholders and Infrastructure
It’s crucial to identify the key stakeholders involved in its infrastructure.
This includes developers, validators (those who verify transactions), miners, and businesses that accept the cryptocurrency, and everyday users.
Moreover, you should also check out the project’s network performance in terms of speed, scalability, and security.
A crypto network with a robust and scalable infrastructure can handle more transactions, which is beneficial for its growth and acceptance.
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โDevelopers
Before you put money into a cryptocurrency, it’s important to look at the people who made it.
You should find out if they’ve done good work before, and if they’re still working to make their cryptocurrency better.
You can see their work on websites like GitHub, where people work together on projects.
โCommunity
A community is like the heart of a cryptocurrency project.
It’s made up of people using cryptocurrency, people who own some of the cryptocurrency, and people who are excited about it.
This group of people can show how well a project is doing and how successful it might be in the future.
An active and positive community can help the project grow, keep its network secure, and increase demand for its cryptocurrency.
A healthy and happy community can make a project much more successful.
โInnovation
Innovation is at the heart of the cryptocurrency world.
When Bitcoin first came out, it was designed as digital cash.
But since then, clever developers and entrepreneurs have found all sorts of other uses for the Bitcoin blockchain.
For instance, Ethereum came along and introduced the world to smart contracts, which are like automatic agreements that live on the blockchain.
This innovation opened up a whole new world of possibilities, including decentralized finance (DeFi) and non-fungible tokens (NFTs).
Then there are newer cryptocurrencies like Polkadot and Cardano, which are working on solving some of the issues faced by earlier cryptocurrencies, such as scalability and interoperability.
So when considering a cryptocurrency for investment, it’s worth looking at how innovative it is.
Does it bring something new and exciting to the table? Or is it just trying to copy what’s already been done?
The more innovative a cryptocurrency is, the more potential it might have for future growth.
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โBasic Technical Aspects
These include the network’s algorithm (which ensures safety, smooth operation, and consensus), as well as key features like how frequently new blocks are created, the maximum number of tokens that can be generated, and how these tokens are spread out.
For instance, Bitcoin (BTC) uses a proof-of-work (PoW) algorithm, generates a new block roughly every ten minutes, and has a maximum supply of 21 million coins.
These features contribute to Bitcoin’s appeal and value.
By knowing these tech details, you can decide if a cryptocurrency makes sense for you to invest in.
โLiquidity
Liquidity refers to how easily a cryptocurrency can be bought and sold without impacting the overall market price.
High liquidity means it’s easy to trade the cryptocurrency, while low liquidity might mean the cryptocurrency is more volatile.
One key aspect of liquidity is the presence of ‘whales’ – these are large stakeholders who hold a significant amount of cryptocurrency.
As we discussed earlier, their trading activities can have a huge impact on the market and can cause dramatic price changes.
You’ll also want to check if a particular cryptocurrency is supported by reputable exchanges and what trading pairs are available.
If the trading volume is low and there are only a few trading pairs, it might be harder to buy or sell the cryptocurrency.
Also, keep in mind that while a new cryptocurrency might have a promising protocol, it might not have much liquidity at first.
Investing in such cryptocurrencies could be risky.
โMarket Cap
Lastly, it’s important to consider the market cap of a cryptocurrency.
The market cap gives you an idea of the size of a cryptocurrency in relation to others.
Generally, larger market-cap cryptocurrencies will have more liquidity, while smaller market-cap cryptocurrencies might have less.
You can check the market cap of all cryptocurrencies on CoinMarketCap.
โBranding and Marketing
Effective branding can increase recognition and trust, while marketing can attract potential users and investors, leading to increased adoption and potentially a higher price.
Most cryptocurrencies don’t have a central entity driving their branding and marketing.
However, this doesn’t mean that marketing and branding aren’t happening.
Over time, branding and marketing messages can emerge from various sources like core developers, founders, foundations, and even community members.
These different voices can help spread the value and potential uses of the cryptocurrency to a wider audience.
When looking at a cryptocurrency, consider how effectively its value is being communicated.
Does it have a unique selling proposition that’s easy to understand? Is its branding consistent and does it appeal to its target audience?
Lastly, consider how the community is involved in marketing efforts.
A strong and engaged community can be a powerful marketing tool.
They can help spread the word about the cryptocurrency and attract new users.
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18 8 Key Factors Impact Crypto Prices
Crypto prices are impacted by various factors including supply and demand, market sentiment, technological advancements, regulatory news, and macroeconomic trends.
Also, significant price volatility can occur due to large market orders, also known as ‘whales’.
Keeping abreast of these can assist in making informed trading decisions.
โSupply and Demand
The fundamental principle of supply and demand drives market movements.
When there is a higher demand for a specific cryptocurrency compared to its available supply, the price tends to rise as more people are looking to buy rather than sell.
โTechnological Innovations
Any changes to a cryptocurrency’s underlying technology can influence its price.
This might include updates to the blockchain’s protocol, the introduction of new features, or even the announcement of upcoming updates.
โRegulation
Regulatory actions, such as those taken by government bodies like the Securities and Exchange Commission (SEC), can strongly affect cryptocurrency prices.
For instance, the SEC’s decision on approving or rejecting Bitcoin ETF applications, or its actions regarding the classification of certain cryptocurrencies as securities, have had significant impacts on the market.
Moreover, policies can vary greatly among countries, with some embracing cryptocurrencies and others banning or restricting them, which can lead to volatile price changes.
โNews
Beyond regulatory news, general news events can also impact the price of cryptocurrencies.
This could be anything from a major hack, a hard fork, or the launch of a new cryptocurrency platform, to announcements from influential companies endorsing or adopting blockchain technology.
Good news, like improvements to technology or new partnerships, can make the price of the cryptocurrency go up.
But bad news can make the price go down.
So, it’s really important to stay informed and know what’s going on.
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โMarket Sentiment
It is often measured by the Crypto Fear and Greed Index, and plays a critical role in price movements.
During periods of fear, prices may drop as investors sell off, while during periods of greed, increased buying can drive prices up.
โMacroeconomics
The macro-environment refers to the larger, overarching economic and political conditions that can influence the entire crypto market.
For example, in March 2020, when the US Federal Reserve reduced interest rates, Bitcoin’s price was roughly $5,000.
As more people invested following the rate cut, Bitcoin’s price soared by around 500%, reaching nearly $30,000 by year-end.
This is because when central banks cut interest rates, more money circulates in the economy, which often leads to a rise in investments in assets like Bitcoin, ultimately driving up its price.
โKey Opinion Leaders (KOL)
Public figures and influencers can impact cryptocurrency prices significantly.
For instance, Elon Musk’s tweets have famously caused price spikes and drops for cryptocurrencies, most notably Dogecoin.
โMarket Manipulation
As with any trading market, the cryptocurrency market can be subject to manipulation.
Tactics like “pump and dump” schemes can cause artificial price inflations followed by dramatic crashes.
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19 Is Crypto Trading Right for Me?
Crypto trading might seem like a lucrative way to make money.
However, it requires a substantial time investment, an understanding of market trends, and the ability to deal with volatility and uncertainty.
Here are a few considerations that can help you decide whether crypto trading is right for you.
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โRisk Tolerance
Crypto trading involves high risk due to the market’s high volatility, which also offers huge potential for astonished returns.
Prices can fluctuate widely in short periods of time, meaning you could potentially lose a significant portion of your investment.
You need to assess your risk tolerance and decide whether you can handle these swings.
โTime Commitment
Effective crypto trading involves constant monitoring of the markets, staying updated with news, and regularly researching different cryptocurrencies.
If you can’t commit the required time, you may want to reconsider.
โKnowledge and Skills
Successful trading requires a good understanding of the market and various crypto trading strategies.
If you’re new to crypto trading, you’ll need to spend time learning and understanding the crypto market, and keep crypto trading journal.
โEmotional Control
Crypto markets can be stressful.
It’s not uncommon for the price of cryptocurrencies to swing by over 20% in a single day.
You need to be able to control your emotions and make rational decisions, even during times of high market volatility.
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20 Crypto Investing vs Crypto Trading
In short, investing is a slower, more patient approach, while trading is a fast, more active approach.
Both can make you a fortune, and both can be good gears for beginners to use, but they need different skills and levels of involvement.
โCrypto Investing
Crypto investors usually base their decisions on a coin’s fundamentals, like the technology behind it, the team driving it, the problem it solves, and its potential for future growth.
When you invest in crypto, it means you buy cryptocurrencies like Bitcoin or Ethereum and then keep them for a long time, maybe several months or years.
The idea here is to buy and wait for the price to go up over time.
People who invest this way believe in the future of the cryptocurrency they’re buying, and they don’t need to watch the prices all the time.
They often use dollar-cost averaging (DCA) to average out the buying cost, there is an automatic DCA bot available for beginners.
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โCrypto Trading
Crypto trading, on the other hand, is more like a fast game.
Traders buy and sell cryptocurrencies more frequently, trying to profit from price changes that happen within weeks, days, hours, or even minutes.
To predict these price changes, traders often employ technical analysis, on-chain data, and sentiment indicators, which are the analytical methods we discussed earlier.
Crypto trading also involves more sophisticated trading strategies, such as leverage trading and the use of futures and options, which can provide higher potential profits in a short time but also carry higher risks.
21 Crypto Trading vs. Stock Trading
Crypto trading differs from stock trading in round-the-clock market access, higher volatility, and fewer regulations.
However, it shares similarities in trading fundamentals like technical analysis.
Crypto trading’s potential for high returns comes with increased risk.
โSimilarities
Market Analysis
Both types of trading require a sound understanding of market trends and technical analysis to predict future price movements.
Trading Platforms
Both are conducted on online platforms, where traders can buy and sell assets, view charts, and use various trading tools.
Potential for Profit
Both markets offer the potential for a significant profit, especially if you’re skilled or lucky enough to buy low and sell high.
However, crypto trading can offer better opportunities for boosting wealth for ordinary investors.
For example, If you had bought $1000 worth of Bitcoin in June 2015 and sold it in June 2021, your profit would have been approximately 15440% in just 6 years.
โDifferences
Market Opening Hours
The stock market operates during set hours, typically Monday to Friday during business hours.
On the other hand, the crypto market operates 24/7, allowing for trading at any time.
Volatility
Cryptocurrencies are typically more volatile than stocks.
While this means crypto trading has a greater potential for profit, the risks are also higher.
Regulation
The stock market has been around for centuries and is heavily regulated.
In contrast, the crypto market is relatively new and has less regulatory oversight, which can make it more risky.
Dividends
Some stocks pay dividends to their owners, giving them a regular income without having to sell the stock.
This is not a feature of cryptocurrencies, which you must sell to realize any profit.
However, there are more ways to make money with cryptocurrency, such as fixed-income strategies, where you can lend your assets in return for regular, stable interest payments, turning your digital coins into a source of consistent income.
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22 Final Thought
This article covers all the topics you needs to know about crypto trading.
It can be a great way to make money.
For a beginner, it’s essential to understand how crypto trading works and to use analytical methods to potentially predict price changes.
For example, you can look at past price data, study market trends, or analyze transaction data on the blockchain.
Crypto trading bots can also be helpful.
These are programs that can trade for you automatically, 24/7.
The bots can follow different strategies to potentially grow your wealth even when you are not actively trading.
Bitget and Pionex offer these bots with easy-to-set interfaces that are worth trying.
However, crypto trading can be risky because prices can change very quickly.
So, it’s important to start with a small amount of money, learn as much as you can, and be patient.
It’s also a good idea to spread your money across different cryptocurrencies, not just one.
As the world of digital currencies continues to grow, there will be more opportunities for making great returns by trading crypto.
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23 Frequently Asked Questions
What is crypto trading for beginners?
Crypto trading for beginners involves buying and selling digital currencies on a trading platform with the aim to make a profit from market fluctuations.
How do you make money in crypto trading?
In crypto trading, you make money by buying cryptocurrencies at a low price and selling them when the price increases. Profits are made from the price difference.
Can you lose money on crypto trading?
Yes, you can lose money in crypto trading due to market volatility. Prices can decrease rapidly, leading to potential losses.
Can I make a living trading Crypto?
Yes, some individuals make a living trading crypto. However, it requires substantial knowledge, experience, and risk management skills. This whole website is designed to make you become a professional trader.
Is crypto Trading safe?
Crypto trading can be safe if done responsibly. It’s crucial to use secure platforms, apply risk management strategies, and stay informed about market trends.
How do you become successful in crypto trading?
Success in crypto trading comes from understanding market trends, mastering trading tools, building effective strategies, and managing risks wisely.
What to avoid in crypto trading?
Avoid impulsive decisions, overtrading, and investing more than you can afford to lose in crypto trading. Always do your research before making trades.
Which crypto is best for beginners?
Bitcoin and Ethereum are often recommended for beginners due to their high liquidity and established market presence.
How do I learn crypto trading?
Learning crypto trading involves studying market trends, understanding trading tools, practicing with demo accounts, and continuously learning from experienced traders and reliable resources.
Is Crypto Trading a Good Idea?
Absolutely! Crypto trading, especially with a focus on crypto futures trading strategies, can be a profitable venture. However, it’s essential to understand the volatility and risks involved. Always do your homework before jumping in!
Is Trading Crypto Legal in USA?
Yes, crypto trading is legal in the USA. However, it is regulated and certain rules apply, such as reporting capital gains on your tax returns. Always check local laws for the latest updates.
Which crypto will explode in the future?
Ethereum (ETH) holds great promise. Thanks to its innovative use cases like smart contracts and DeFi, ETH is poised for substantial future growth.
*Note
1. Profits are not guaranteed. Providers may change any terms at any time.
2. It’s crucial to note that regulations may vary, and users from certain countries might not pass KYC requirements. Always check your local regulations before participating in any program.
3. Currently, the 20% off on transaction fees on Pionex is only available on spot trading. Please note that terms may be subject to change without notice.