Crypto Academy / Season 3 / Week 1/ Homework Post for Professor [@Lenonmc21 || What is Cryptocurrency Trading and on what platform can we do it?

(1) Define in your own words what trading is, what its function is and how it relates to the cryptocurrency market.

Trading

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Cryptocurrency trading is the process that involves the continuous temporary exchange of cryptocoins for the sole purpose of making profit. The main aim in trading is to buy when the coin price is low and sell when the price is high.
Trading is one of the major avenues by which one can make profit from cryptocurrency.

One thing to note is that it is impossible for one to begin successful crypto trading without a good knowledge and foundation of trading and so to be able to trade on cryptocurrencies very well, one must know how to;

• Analyse cryptocoins
• • open deals on cryto trading
• use quotations and charts

Risk Associated with Crypto Trading

It is vital that one understands the risks they he could encounter before beginning trading.
Some of the risks include;

Highly volatile

Unforeseen changes in the market sentiment could result to sudden or drastic move in price. This implies that it is a common event for cryptocoins price to increase or reduce by 50% or more.

They are unregulated

Cryptocurrencies at the moment are not regulated by any authority hence its decentralized nature. For this reason, people question the authenticity of it's market. This implies that you can't hold anyone accountable for any loss which you may incure.

susceptibility to error and hacking

There is no perfect means of preventing human error, hacking or technical glitches from the cryto market.

The function of Trading and How it relates to Cryptocurrency

The main aim of trading in Cryptocurrency is to make profit. It is important to note that the returns which you get from any trade is dependent upon the stake or amount of money which you have invested.

Trading affects Cryptocurrency in

Volatility & Liquidity

The term liquidity refers to the ease with which a digital asset can be converted without difficulty into cash. Cryptocurrencies, liquidity is the ease with which a coin could be converted to another coin or cash.
Low liquidity implies that there is volatility in the market and in turn causes spikes I the price of cryptocoins. Also, high liquidity implies that the market is stable hence the price fluctuations are few.
Since there is a large number of traders, there activities helps to increase the liquidity and also reduce very high volatility.

(2) Define and explain what are the tools used for trading ( Technical Analysis and Fundamental Analysis ) and at least one example of each. ( A screenshot is required )

Technical Analysis

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Technical analysis refers to that market price prediction strategy that uses market statistics and historical price chart to predict the price of a coin. It centers on the fact that if the previous market pattern of a coin is well identified by a trader, then he can be able to predict the nearest price of that particular coin in the future.

The main idea of technical analysis is simple; If you are able to analyze the historical data of a particular coin then, you can be able to identify the real time trends of the coin.

Below is a technical analysis of XRP coin

I can see the bullish trend/deep on the XRP chart. I can also see that the chart trend is going to that of a bearish. So at this time, I could buy some XRP to await the next price increase.

Fundamental Analysis

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Fundamental analysis is a strategy that involves the evaluation or measurement of the intrinsic value of an asset and studying closely the possible factors which could affect its price in a given time frame. This kind of analysis majors on external events, industry trends, influences and financial statements. Fundamental Analysis focuses on anything that could influence the assets value.

Below is the fundamental analysis of XRP

Price - $0.671
Market Rank - no. 7
Trading volume (24h) - $1,867,770,066.89
Market Dominance - 2.17%
All time High - $3.84
Circulating Supply - 46,146,927,647 XRP
Maximum supply - 100,000,000,000 XRP

With this information, I can see that XRP coin still has about 54,000,000,000 XRP that is yet to be mined into the circulating supply.
With this, I can deduce the there is still room for demand of XRP hence a possible appreciation in price.

(3) Name at least 3 cryptocurrency exchanges with the highest trading volume where we can buy our first cryptocurrencies and explain in your words the ways to buy cryptocurrencies on at least one of these platforms ( Do not use Binance )

Three Exchanges With High Trading Volume where one can buy cryptocoins include:

• BINANCE

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• KUCOIN

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• KRAKEN

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How to Fund your kucoin exchange account using your country currency.

• The First step I take is to open my kucoin app where I already have an account

• Next, I click on the buy crypto as can be seen on the picture above.

• On the next page, I wish to buy NGN20,000 with of bitcoin BItcoin . So I choose Bitcoin as the coin which I want to buy and input the NGN(Nigerian Naira) equivalent in the required space provided. I also input the medium through which I wish to complete the transaction. Then I click on confirm

• On that same page, a confirmation message pops up and I click on confirm as can be seen in the screenshot below

• Next, I am taken to a page outside of kucoin app( the website of the medium which I had earlier selected) where I follow the prompts to complete the payment.

Conclusion

• Cryptocurrency trading offers a good opportunity for increasing your portfolio. One good thing about crypto trading is that you could start your trading venture with small investment but toake successful trade, you must learn and understand the strategies that are involved in trading and more.

• Also in Trading, you should never invest more than you can afford to lose. This is because the crypto market is a very volatile place and so you could lose all your holdings in a 4 hours whale attack and more.

• Before investing in any cryptocoin, you must ensure to make all necessary findings (technical and fundamental analysis) about the coin before. Never invest or trade on any coin because of a friend's recommendation. This is because what works for your friend in the crypto market might not be what will work for you.

• Note that technical analysis, fundamental analysis and any other type of analysis is not a 100% gaurantee for a successful trading.

( All screenshots were taken from coinmarketcap and my KUCOIN exchange app)

Regards to professor @lenonmc21