How to Trade in Cryptocurrency | Crypto trading for beginners 2022


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Cryptocurrency trading is very popular nowadays because of its volatility, volume,24/7open, Margine and much more. So let’s check how to trade in cryptocurrency and make money from it. First, need to account in a professional crypto trading platform. Coin Base or Binance exchange have both futures and spot markets they have good support for cryptos. 

How to trade in Crypto

Choose Stable Coins for Cryptocurrency Trading.

What is the stable coin and why it’s so important in the crypto ecosystem. It’s more important really than bitcoin because without a stable coin we can’t do anything else. If you want to buy crypto like Bitcoin or Ethereum you have to spend money to do that and the way you do that in crypto is by using a stable coin. A stable coin is essentially a crypto version of a dollar, you take a dollar and you move it into a crypto version that some popular stable coins are usdt and usdc.

When you want to go ahead and buy Bitcoin on some platforms you can go ahead and deposit us dollars or pounds and you can do that directly but if you’re trading smaller cryptocurrencies or if you want to you know start trading professionally in a lot of different ways then a stable coin is going to be something that you want to get. So when you want to do cryptocurrency trading against something you’ll be looking at us dollar tether or USD pair.

Spot vs Futures Crypto trading

The next thing to decide though is whether you want to trade in the spot market or the futures market. There are pros and cons to both and there are different risks of doing both as well. 

What is Spot Market

A spot market means you use the money to buy something so very simple you take dollars and then you put that into a stable coin like usdt and then you can buy a cryptocurrency like bitcoin. You buy and own that cryptocurrency you can withdraw it into a separate wallet and that is yours. 

What is Future Market

Now what’s different is the futures market. Futures are very different in that you don’t actually trade the underlying asset. So with futures you take a hundred dollars and then what you do you can turn that into usdt and then what you do is basically fund your account with this collateral that you have.Now what you can do is basically bet on the price of bitcoin going up or down this is very different and then what happens is that your profit and loss basically goes into into your account whatever that may be. 

There’s some differences here with the spot market you obviously buy and then hold the crypto and then hopefully sell the crypto at a later date for a profit. With futures because the future that you’re buying is basically synthetic and you all you do is just bet on the price movement so you can actually bet on the price going up but you can also bet on the price going down and you don’t need any crypto in your account.

Benifits of Futures Crypto Trading

Futures also allow you to leverage so let’s say you put $100 into your account you can use 5x leverage right here and then you can trade trades that are worth around 500. now obviously a smaller percentage move of 500 is going to make your profit and loss much bigger than if you were trading only with your cash. Futures are way more risky because you use leverage you’re taking way more risk because a smaller percentage move in the price is actually a much bigger move in comparison to your initial capital. 

Futures have the advantage though of being able to go short which is betting on the price going down. Futures are definitely for more advanced users if you are a beginner we would stick to the spot market because you can only lose what you invested with futures you can lose a lot very quickly you can also gain a lot very quickly. The pros and cons of both but obviously more advanced traders do tend to go towards futures for short-term trading because of those advantages but for most people trading in the spot market is just going to be a lot easier especially for beginners.

How to use Take Profit and Stop Loss in Crypto Trading

If you’re day trading or trading over the short term have a specific strategy in cryptocurrency trading called a Tpsl or a take profit and stop loss. That’s very simply just going to be a price level where you’re happy and that you know what your risk is. For Example; you’re trading bitcoin at $40000 and this is where you buy. Based on our analysis we want to take profits and if the trade moves against us and we want to cut our losses down. This could be 42k and this could be 39k. So we need that specifically when you’re training short term as a strategy.

Choose Coin for Cryptocurrency Trading

First understand what type of trader you are and choose your crypto coin accordingly. If you just want to day trade and you know trade the wider market then most people will just concentrate on bitcoin or ethereum. Bitcoin is a much larger asset than everything else and so it really trades on macro economic factors. Most people day trade with bitcoin because the market is much more liquid and most of the information about bitcoin in fact all of it is pretty much publicly known and that means that bitcoin is a good barometer of how the market is feeding.

 if we go Coinmarketcap a lot of information about coins, is extremely difficult to understand or get hold of there’s not a lot of news sources for them a lot of the information is maybe something that the protocol team may know but the public doesn’t know. So that that becomes extremely more difficult to trade because you’re just unaware of a lot of things about these smaller tokens. 

Risk to choose Smaller coin for Crypto Trading

If you’re looking to get into some smaller coins and really become an expert in some certain coins then you may have an advantage over the rest of the market but smaller coins of course just have fewer people trading them and so they might not reflect some of the news that comes out about them because they might not have narratives that go along and get out into the public field where a lot of people are trading them.You can Also read Penny cryptocurrency that will explode in 2022/23.

If you are seeking to day change maximum human beings deal with the largest property due to the fact they may be liquid and they are able to pass round with plenty of liquidity. Just choose which type of trader that you want to be if a day trader most people choose bitcoin and ethereum. Or you potentially pick them up over the longer term because you think of you know some of the things that are going on with them are actually going to make the market re-rate them and change the price over time.

News and Events base Crypto Trading

Focus on some specific narratives for each coin and understand the market. Twitter is a great place for this follow people in the know ,follow people that are active in the industry because getting information from them can help you with your trade. A big narrative going on is that one of these projects namely Terra is basically going out and buying a few billion dollars worth of bitcoin. This is really important because they basically signposted this to the market on twitter and in other news sources saying hey we’ve got a few billion dollars worth of bitcoin to go ahead and buy over the next few weeks.

What happens when there’s a big buyer in the market for something well usually the price is going to go up right. You have to keep up with news and events in the industry not just looking at support and resistance levels looking at their chart and saying well i think it might go up here or i think it might go down here you’re pretty much guessing at that point. But if you understand that there are narratives that go around then you can obviously use those to trade and get a better probability of the outcome that you want.

Event base Crypto Trading

For exapmle in Ethereum news in Crypto Trading  .Ethereum is going they called to merge it’s a big update to its project one of the biggest in its history so there’s going to be a lot of hype a lot of news stories a lot of people trading it and buying in. That means there’s liquidity and price movements so if you understand some of these projects you can go to cardano solana you know polka dot. 

There is there anything happening in that ecosystem are they launching new products, are they launching new advancements to their chain that is obviously going to come out in in the news and be a narrative that people can trade off.If you know what’s happening and in your mind you can set specific dates where it’s going to happen you can then use those as trading events. 

A ton more hype come into ethereum as it moves through and updates and advances its blockchain and this means there could be a lot of trading opportunity moving into that event. You can swing trade this or buy this for the next three four months and ride a move up potentially. There are different events that happen in the industry but if you’re just going off charts you’ve got no chance whatsoever. You need to at least know one or two projects intimately and they’re the ones that you can trade and gain some advantage on.

Micro Analysis in Crypto Trading 

Micro analysis in Crypto Trading  which means understanding how the market is moving and this can dictate whether you have a buyers towards going long betting on prices going up or betting short prices on going down. The way it look this is really from a top-down approach. 

Monetary policy  in Crypto Trading 

So the first thing is Monetary policy. Monetary policy is going to affect asset prices the most is the central bank the fed in the states or the bank in the our country are they becoming looser with their monetary policy. They tightening when they’re loose asset prices go up when they tighten asset prices go down. In general we’re talking about crypto and stocks here so you have to know what part of the economic cycle we’re in and if they’re easing or tightening.

Economic Events

Next is economic events. What is happening in the world today that is affecting prices and how will prices move in the future moving out of that. These are going to reflect how you place your bets in the market.

Crypto Market News

 Crypto market news which means what’s happening in bitcoin is someone adopting bitcoin, is a country adopting bitcoin, is a company adopting bitcoin payments. What is happening to ethereum and how is it advancing its blockchain is there a specific news event for some other crypto project. This is going to be affecting how crypto moves in general if bitcoin is up on the day you can bet pretty much every other project. As long as there’s no bad news is also going to follow suit for the most part.

Specific News 

Then you get into specific news about each individual altcoin smaller coins have specific news that can really make them blow up. In a very short period of time they advancing the blockchain have they done something new that is obviously going to affect smaller coins more short term as well. You have to understand all of that and have a kind of running balance of where this all sits and then you can use that to obviously make your decisions very very complex. 

Conclusion

This is clear step by step guidence to trade cryptocurrency.We learn about How to trade in Cryptocurrency,Choose stable Coins for Cryptocurrency Trading,Spot vs Futures Cryptocurrency trading,What is Spot Market,What is Future Market,Benifits of Futures Cryptocurrency Trading,How to use Take Profit and Stop Loss in Cryptocurrency Trading,Choose Coin for Cryptocurrency Trading and News and Events base Cryptocurrency Trading.

To trade in cryptocurrency open free account in Binance and Coin Base for Future and Spot. And trade in Options in cryptocurrency open account in Delta Exchange and start crypto options trading.

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