Cryptocurrency trading is inextricably linked to technical analysis. Therefore, we would immediately like to dispel one myth. A lot of fiat traders say technical analysis doesn't work.
The cryptocurrency market is not yet that big when compared to the fiat asset market. There is a certain delay between the processing of all orders, which is very predictable.
Due to the small market, the amplitude of the noise will always be lower, and the psychological factor among users will be higher.
It is for these reasons that mathematics in the cryptocurrency market works much more efficiently than in the traditional finance market.
One. How to choose the right cryptocurrency exchange?
If you are going to become a serious trader, your choice inevitably falls on CEX (centralized exchanges) solutions. Why? First of all, CEX exchanges have more liquidity. In addition, fees are much lower there than on decentralized exchanges.
Two. Risk management.
Risk management can be characterized by the following five rules:
- Never invest all your funds in one asset
- The exchange is a place where you can both earn and lose. Therefore, only invest the money that you can afford to lose.
- Keep a diary of transactions. Write down successful and unsuccessful decisions.
- Do not trade altcoins with low liquidity and a dubious reputation.
- Don't take unnecessary risks. Control your emotions. Better to make less profit than to lose everything.
Three. Technical analysis.
Technical analysis focuses only on previous market data. Thanks to him, as already described above, you can very accurately determine the behavior of an asset using mathematical methods. Technical analysis does not have a large number of strategies, and you need to know them since this is the basis. In addition, bots can be used. They will greatly simplify your life.
Four. Arbitration.
Arbitrage is a method of making a profit when you earn on the difference in the price of a cryptocurrency on various exchanges. How does it work? For example, on exchange A, ETH is worth $ 1,700, and on exchange B, it costs $ 1,750. You take a loan of $ 17,000 from a broker, buy ETH on exchange A and sell on exchange B. The difference of $ 500 is left to you. From it, you can deduct commissions and take profits.
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