Cryptocurrency trading is capable of making or breaking individuals. In late 2017, many crypto traders made millions when market soared. But in 2018, many lost their fortune when the market declined. To know how to trade a cryptocurrency is an art. With practice and some skillful techniques, you can master the art of cryptocurrency trading.
Learn the basics
Crypto trading is quite similar to trading stocks or forex. It is an exchange of cryptocurrencies at a market set rate. There are two approaches to invest in cryptocurrencies: buying and trading. You can buy a coin with fiat money and store it. Some buyers hold the coin or trade it with another coin on an exchange. The coin which is brought with fiat currency is called base pair. Most base pairs are well-known cryptocurrencies. Their daily trading volume is higher too: eg. Bitcoin. While learning how to trade cryptocurrencies you must pay heed to:
- The circulating supply of coins
- The usefulness of crypto coin
- General market perception
These parameters determine the success of a cryptocurrency. A coin with limited supply and good market sentiment will cost more. Similarly, a coin with real-world application like Ether is less likely to fail. Good basic knowledge and some market research will give you a great head start on cryptocurrency trading sites.
The ability of a cryptocurrency to be sold or bought without affecting the price is its liquidity level. Higher liquidity indicates a higher trading volume. Traders prefer trading cryptocurrency with higher liquidity. Liquidity of a cryptocurrency can be determined by an order book. An order book is the number of orders for a cryptocurrency (both buying & selling) at a particular price. It updates in real time.
Long term and short term trading
Crypto traders trade either for long term or short term. In short term trading, the buyer holds the coin for a very short period. Someone could hold a coin for a few minutes, others for a few days. Short term trading is for quick but smaller gains.
Long term trading involves holding a coin for a longer period, like a year. Long term trading is to receive maximum profits from the price rise of a coin. Buyers can start small and purchase coins with some spare money and watch them grow. Long term trading may not require daily chart analysis. Periodic research is sufficient to extract gain from the investment.
Cryptocurrency trading for beginners
Cryptocurrency trading is profitable as well as risky. Newbies should take excessive care to not suffer huge losses. Before you learn how to trade cryptocurrency you must ensure that you aren’t falling for a scam. Check if established and well-known exchanges list the coin you are interested in. Research the team, look for an active GitHub community and prompt customer support. Create a new email account with two-factor authentication to minimize the risk of hacking. Limit usage of mobile wallets, mobiles are susceptible to tampering.
Cryptocurrency Trading Sites
There are many ways to trade a cryptocurrency. There are trading platforms, direct trading sites, and brokers who can help you in trading cryptocurrencies. Cryptocurrency exchanges are the most popular option for trading cryptocurrencies. These exchanges connect buyers and sellers and charge a fee for facilitating the exchange. There are many reputed exchange sites such as Coinbase, Bitsquare, Binance, and Bitstamp. Picking the right cryptocurrency trading site can be a long process. One can even use more than one cryptocurrency exchange for trading. Some parameters to look for are:
- Good user interface
- Good customer support
- Official buying limits
- The credibility of the exchange
- Trading Fees
- Payment methods
- Verification procedure
- Exchange rate offered
- Geographical restrictions(if any)
Last but the most important factor while picking a suitable cryptocurrency exchange is custody of coins. This February million lost their fortune to a custodial crypto exchange when the owner died. You must pick a reputed non-custodial exchange for securing your coins.
We at Switchain help people make better decisions with cryptocurrency. Switchain is a secure non-custodial exchange operating since 2012. We consider floating rates as a scam and offer fixed exchange rates only. That is, the rate you see is the rate you will get. Switchain processes the transactions instantly. All coins available in Binance like BTC, LTC, and ETH are available on Switchain for you to trade.
Switchain is an instant non custodial cryptocurrency exchange. Our user user-friendly platform makes trading crypto easy and fast. We work with different cryptocurrency trading partners to guarantee the best cryptocurrency rates to our clients.