Peculiarities of cryptocurrency trading

Cryptocurrency trading has a number of differences from traditional markets (Forex and stock exchanges). For example, digital assets are highly volatile. It is also not uncommon for large projects to quickly drop in value and remain at the bottom. For these reasons, the analytics process also has its own peculiarities.

The nuances of trading in the cryptocurrency market
Before you start working with digital currencies, you need to choose a convenient and reliable exchange. It is necessary to pay attention to whether the platform has all the conditions for the implementation of the chosen trading strategy.

To do this, you need to study the following parameters:

The catalog of assets that are available for trading;
the amount and types of commission;
The minimum deposit, including for the selected coin;
methods of deposit and withdrawal;
the possibility of using margin trading in cryptocurrency;
minimum and maximum leverage;
availability of round-the-clock access to the market;
Stacking and farming functions;
types of order execution and others.

It is also important to follow the clients’ reviews about the withdrawal of funds. Some companies have problems with this.

$100 is enough to get your first experience with real crypto-trading. This amount will allow you to buy different assets and follow the key risk management rules at the same time.

Cryptocurrency has several characteristics that make it an attractive asset type:

Volatility. The value of cryptocurrencies is constantly and dramatically changing. Such spikes allow you to make quick gains or lose a significant portion of your deposit. It is important to clearly understand the market situation and possible risks.

Lack of high correlation with other types of assets. What happens on the financial or stock market often has no noticeable impact on the quotations of cryptocurrency. In most cases, demand for digital coins increases during a downturn in major stock indexes. However, there are also economic processes that encourage investors to quickly withdraw their funds from risky projects.

Growth Potential. While currencies and stocks often have maximum growth limits, cryptocurrencies can rise to the most unexpected values, but it must be remembered that the opposite happens.

Before you start trading, you should study the most popular coins, understanding their current state and the reasons why they can rise or fall. Work with those cryptocurrencies that are understandable. If the trader cannot explain to himself why a coin must go up or down, it is better not to choose it. If the amount of funds allows, it is advisable not to invest more than 3% of the total amount of the deposit into one transaction.

Keep in mind, however, that almost all altcoins depend on the exchange rate of the BTC. Therefore, it makes sense to buy Bitcoin for a larger amount to stabilize your portfolio. The rest of the money can be allocated between coins that are linked to other blockchains. Tokens from promising development-oriented projects on the Ethereum network would be a good option. It has a different consensus algorithm and is popular due to smart contracts.

As for directly topping up, you can use the Binance P2P exchange, or a built-in service to buy cryptocurrency through fiat gateways. In addition, it makes sense to create an external wallet. You can have several different ones – for small and large transactions.

Cryptocurrency trading strategies on the exchange
Depending on the strategy, all traders who trade in the digital asset market can be divided into four main groups.

“Hamsters.”
This is the name given to newcomers who have no experience yet and are constantly in doubt about the correctness of the decisions they make. They are often guided by the mood of the market crowd and forecasts of other traders. That is, they minimize the use of their own analysis.

“Whales”.
The main characteristic of such investors is that they possess huge deposits. Whales ways to create market situations themselves, leading to a significant own profit at the expense of losses of a large number of small traders (hamsters).

“Bulls and Bears.
Bulls are traders who raise the price by opening serious buy positions. Figuratively, this can be thought of as throwing their horns upward.

Having seen an impulse in the direction of increase of quotations, small inexperienced players also open the transactions for purchase and push the rate further. As a result, the bulls get the most profitable price to sell their asset and distribute coins to the enthusiastic hamsters.

Cryptocurrency is a highly volatile asset and things change very quickly. For this reason, it is better for beginners to simplify their search for entry points. It is hard to know at what stage the coin will go up. But by applying qualitative fundamental analysis, it is possible to forecast long-term trends for opening profitable positions.