Trading crypto involves understanding many crucial aspects. Learn the basics and become a pro in no time with this article!
Looking to find financial freedom by trading crypto? This article will help you in learning the practical aspects of trading crypto while also unravelling some hidden trading secrets!
Let us face it, crypto trading has become an in-thing and a great way to earn profits. The industry, however, is not for the faint-hearted. The volatile nature of the crypto market enables investors to win big. At the time of writing, the crypto market recorded a total trading volume of 87.2 billion in 24 hours based on data from CoinMarketCap.
However, the same volatility makes people often lose their entire investments in one big spill, if they are not careful. To milk the wealth in this industry, you have to understand the behaviour of the market and master a winning crypto trading strategy around it.
This article breaks down the complexities of cryptocurrency markets and teaches you how to become a profitable crypto trader from scratch.
Things to Know Before Trading Crypto
Diving headfirst into trading crypto is never a good idea. Before jumping to the step of funding a crypto wallet and trading away, you have to understand the basics first, then build your way up from there till you become a confident trader.
Given that crypto has only been around for a little more than a decade, it is still a fairly new industry with abstract concepts. And so, not many people understand its basics, let alone its nuances.
Understanding the Terminologies
It’s important that you learn some crypto technical jargon and slang now to avoid potential confusions that might stagnate or slow down your learning process later. Here are most of the frequently used words in the crypto trading community.
Bullish trend: A bullish trend occurs when price picks up momentum in an upward direction. It is indicated by price formations of higher highs and higher lows.
Bearish trend: This accounts for the downward movement of price. It is marked by price formations of lower highs and lower lows.
Support: A pivotal point in the market where price reverses from a downtrend to an uptrend.
Resistance: Resistance is the inverse of support. It is a pivotal point in the market where the movement of price changes from an uptrend to a downtrend. Support and resistance are represented in chart analysis as horizontal lines.
Breakout: A breakout occurs when the price of a coin pushes past previous support, resistance, or a range.
False Breakout: This occurs when the price of a coin pretends to break past a resistance/support but slips back almost immediately.
Rules of Thumb for Trading Crypto
While trading crypto coins, there are set guiding principles which guarantee a successful trading experience. For beginners, it is advised to follow these rules to the last detail. However, as your knowledge in crypto expands, you begin to understand the underlying factors that brought about these rules and modify them to suit your trading strategy better.
- Risk management: Safety comes first. It is advised to not put in more than 5% of your total trading account on a single trade. Always use stop-losses to protect your account from drawdowns. Although the volatility of crypto provides an attractive earning potential, it also makes this market dangerous to trade. Investors can either win big or lose everything quite quickly.
- Use a top-to-bottom approach for chart analysis: While studying the charts via a crypto trading website to make price predictions, start from the larger time frames, then work your way down to smaller ones.
- Avoid over-trading: Taking too many trades in quick succession kills accounts. In fact, it is advised for beginners to take only one trade a day. Discipline yourself to enter only one trade daily, irrespective of the outcome. The urge to enter another trade is especially strong after taking a loss – resist the temptation, close your crypto trading app and call it a day.
- Trade Calmly: Crypto trading is a logically demanding activity. You have to objectively observe available data and make decisions based on purely logical analysis. An emotionally charged person is prone to make bad decisions.
- Trade with Consistency: One of the reasons people fail to be profitable in crypto is because they don’t stick to one trading strategy. After discovering a strategy and back testing it to check out its winning rate, keep to the same strategy throughout your trading experience. Don’t doubt the strategy and crossover to another after a few bad trades.
How to Choose a Platform to Trade Crypto
Naturally, you’ll have to open an account with a centralized or decentralized exchange to trade crypto. There is a wide variety of exchanges in the market and choosing an exchange with the best services improves your trading experience.
While searching for good crypto exchanges, the most important things to look out for are security, variety of cryptocurrency alternatives, ease of use, transaction fees, and spread, amongst other things.
CoinField is a regulated European crypto exchange that checks all the boxes. With a generous selection of over 25+ cryptocurrencies, trading crypto on CoinField gives you a lot of trading pair alternatives.
CoinField has a global reach. The platform is available to crypto traders in more than 187 countries and supports fiat deposits and withdrawals in USD, EUR, CAD, GBP, JPY & AED. Being a regulated platform, security on the CoinField trading platform is guaranteed. Users can carry out secure transactions with little transaction fees, making the most out of all their winning trades. Besides the fundamental offerings of a crypto exchange, CoinField also offers ingenious products and services like an OTC Desk, White Label, and a soon-to-materialise NFT Marketplace. These varied services make CoinField a very impressive crypto ecosystem.
How to Pick the Right Coin for Trading
This is one of the most decisive aspects of trading crypto. The crypto market is flooded with over 10,000 coins, and new altcoins are still emerging daily. Some of the most popularly traded cryptos are BTC, ETH, XRP, SOL, and so on.
Besides the popular tokens, there are other startup coins favored by crypto traders. Some of the altcoins populating the crypto markets are MANA, SAND, LINK and of course CoinField’s native token, the CoinField Coin (CFC).
With so many trading options, several investors are caught in a spiral, wondering what is the best crypto coins to trade. Our next section will help you navigate this.
Pointers for Finding the Next Hidden Gem
Here are some of the things to consider while looking for the next coin to invest in:
The token’s trading price: Gunning for low-priced tokens is one of the best ways to go about skimming for the next big token especially if you have a small budget. In some cases, a cheap price could mean that the coin is still under development with a lot of headroom for exponential growth in the future.
Potential for Adoption: Keep an eye out for tokens that are likely to be integrated into major industries as financial service providers. These coins have an edge because they live beyond the hype that drives most altcoins in the market by providing tangible utility in the real world.
Supply: Usually, Cryptocurrencies have capped supplies, meaning people cannot mine new coins from the ecosystem beyond a predetermined limit.
As the number of coins in circulation reaches this limit, the price of a coin rises due to reduced supply. Doing the math on a coin’s current market capital and its maximum supply can help you identify some profitable long-term investments.
Altcoins to Avoid
When we think of the type of coins to avoid or the worst cryptocurrencies to trade, hype coins dominate this category. Luckily, these coins are easy to spot. Firstly, they have no utility whatsoever besides storing and transferring. Next, you’ll see most of the token’s team developers exhausting a lot of energy on generating buzz online with blog posts, press releases, and social media content. Try and keep a hype token out of your crypto portfolio. Buy for value, not for hype.
Choose the Right Trading Crypto Strategy
After finding the best exchange and crypto to trade, the only thing left to become profitable while trading crypto is a winning crypto strategy. Different trading strategies serve certain kinds of market behaviours-either trending or ranging.
A trading strategy determines how a trader intends to approach the market, where to make entries, how long they hold on to positions, and how they take profits. Considering how long a trader holds on to a position, there are two prominent trading styles: day trading and swing trading.
Day traders do not hold on to a position for longer than a day. On the other hand, swinging involves hanging on to a position for much longer than a day and can last for as long as weeks to months. Day trading is the common trading strategy. People that use this strategy are called Day traders. In day trading, people can make their expected profit mark in a few hours. There are a handful of trading strategies under the tenet of day trading such as scalping, high-frequency trading, range trading, and so on.
Start Trading Crypto with Confidence
After familiarising yourself with the basics of trading crypto, discovering a good exchange, and applying a winning crypto strategy, all that’s left is to get comfortable with trading and adjust your risk to reward ratio as you mature in your crypto trading career. Get started with trading crypto on CoinField today and create a new lucrative income stream.
Please note that this is not trading advice. We recommend you to carry out your own research before making any trading decisions. This article is for informational purposes only.