Trading Cryptocurrency - Crypto Academy / S4W6- Homework Post for @reminiscence01

hello steemians we meet again on homework for the 6th week in this 4th season of Steemit Crypto Academy. This time I will make a post for the homework of @reminiscence01. The task this time is to answer several questions that have been given by the professor about Trading Cryptocurrency.

Homework list:

Explain the following stating its advantages and disadvantages:
a)Spot trading
b) Margin trading
c) Futures trading
a) Explain the different types of orders in trading.
b) How can a trader manage risk using an OCO order? (technical example needed).
a) Open a limit order on any crypto asset with a minimum of 5USDT and explain the steps followed. (Screenshots needed from any cryptocurrency exchange).
Using a demo account of any trading platform, carry out a technical analysis using any indicator and open a buy/sell position on any crypto asset. The following are expected.
a) Why you chose the crypto asset
b) Why you chose the indicator and how it suits your trading style.
c) Indicate the exit orders. (Screenshots required).

Explain the following stating its advantages and disadvantages

Spot Trading

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Spot trading is a type of trading with the principle of buying low and selling high, which means that in order to gain profit from trading with spot trading, traders must buy a crypto asset at the lowest price they can get and sell it when the price of the crypto asset purchased has become higher than at the time he bought. Usually, traders will hold the crypto assets that have been purchased for a long period of time. A trader can only buy crypto-assets according to the balance in his wallet, for example, a trader wants to buy TRX using 15 USDT in his wallet, the trader can only get around 165 TRX on the transactions made but if he wants more than 165 TRX with the same amount of USDT capital then the order he placed will not be valid.

No	Advantages	disadvantages
1.	don't rely on liquidity for-profit	can only make a profit when the price goes up
2.	there is no minimum amount to trade	can't make profit with hedging trade technique
3.	there is no time limit to hold assets until you get a profit	need an exchange wallet in order to trade

Margin Trading

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Margin trading is a type of trading using funds provided by a third party, namely a broker. As a type of trading, margin trading is used in buying and selling stocks, crypto, and forex transactions where the funds used to buy these shares come from loans provided by brokers to traders.

Margin trading allows traders to buy stocks, forex, or crypto in more quantities than the amount of capital the trader has, at the time of the transaction the orders placed will be in the form of lots, the number of lots that can be traded by traders depends on how much leverage is used. It should be noted that if the leverage is greater, the risk of loss if it is wrong to analyze the price movement of a cryptocurrency pair, will be greater than the loss obtained from smaller leverage.

No	Advantages	disadvantages
1.	margin trading provides very good profits for traders with small capital	Traders rely heavily on liquidity in the market
2.	traders can borrow more to open position with less capital	Requires good price analysis and risk management to minimize losses
3.	More flexible in opening orders and even hedging techniques
4.	still recommended for beginner traders

Futures Trading

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Futures trading is a type of market with a very high risk that even exceeds the margin trade. The futures market is not recommended to be traded by beginners who are new to the exchange market, traders who trade in this type of market are traders who already have a lot of trading experience and know-how to properly analyze price movements. This type of market is also very closely related to leverage, traders can get very large profits and also with the same possibility of losses. without good money management and trading psychology, traders who are just trying this type of market can even lose all their capital.

No	Advantages	disadvantages
1.	Traders can trade more than the amount of capital they have	Traders rely heavily on liquidity in the market
2.	With large leverage, traders can make a huge profit with less capital	Requires good price analysis and risk management to minimize losses
3.	More flexible in opening orders and even hedging techniques	Not recommended for the beginner trader
4.	Huge profit can be made in a single order	Requires high win-rate trading strategy

Explain the different types of orders in trading

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In the cryptocurrency market, there are several types of orders that can be used by traders according to the trading style they use, the following types of orders exist in the exchange market:

1. Market Order

2. Pending Order

Limit Order
Stop-Limit Order
OCO Order

3. Exit Order

1. Market Order

Market orders are the fastest type of order to be executed when a trader buys/sells using this type of order, the order will be executed immediately at the closest price in the order book at the price ordered by the market makers, while traders who use this type of order are referred to as market takers.

2. Pending Order

Limit Order

A limit order is an order that is not executed immediately, if a trader wants to place a buy/sell order but not at the current price but at a higher or lower price, the trader must use the pending limit order type and the limit order will be in the order book list, the order will be executed when the price reaches the limit order that has been placed in the order book.

Stop-Limit Order

Stop-limit orders are also a type of pending order such as limit orders but are slightly different when using a limit order a trader only places the price they want to buy/sell, then in a stop-limit order the traders do not only determine the limit order price but also have to determine the stop price. When a trader uses this type of order, the pending limit order will only be executed when the price reaches the stop price that has been placed, if the price only reaches the limit order then the pending order will not be executed.

OCO Order

OCO order (One-Cancel-Other) this type of order combines two other pending types (limit orders and stop-limit orders), this is a very useful type of order to minimize the risk of losing trades. When placing an order using this order type the trader will place two types of orders, limit orders and stop-limit orders, when the price reached one of the two orders the other order will be canceled.

3. Exit Order

When a trader places an order, the trader not only thinks about when is the right time to enter the market but also the trader has to think about when is the right time to get out of the market. For this reason, there are two types of orders to exit the market, take profit and stop loss. take profit orders are when traders decide to get out of the market in a profit state, while stop-loss orders are when traders limit losses if the market movement does not match their predictions.

How can a trader manage risk using an OCO order

As in the explanation in the previous question, we can see that OCO orders are one type of order that is very useful in minimizing losses when traders open orders. for example, I have shown an illustration as shown in addition to this I use OCO orders on the Binance application to anticipate price reversals on TRX/USDT cryptocurrency pair. Here I have 165 TRX on BINANCE, now the TRX/USDT market is at 0.099 and I want to sell 50 TRX against USDT if the market reaches 0.108, if the price does not reach that price but reverses to 0.093 my sell limit order at 0.108 would be canceled.

Open a limit order on any crypto asset with a minimum of 5USDT and explain the steps followed. (Screenshots needed from any cryptocurrency exchange)

Open the Binance app on your mobile and log in to your Binance account.
After logging in you will see a screen as shown in the first screenshot, I immediately chose the trade icon because I already have USDT in my Binance Wallet.
In the second screenshot you can see the features that have been marked in the image.
I selected a limit order and placed my buy limit order for the cryptocurrency pair TRX/USDT at the price of 0.094 for 10.99 USDT.
After I finished placing the buy limit order, then I just have to wait until the price hit and executes the limit order that I have made.
Orders that are open or waiting to be picked up by market takers can be seen as in the screenshot I have shown on the side.

Using a demo account of any trading platform, carry out a technical analysis using any indicator and open a buy/sell position on any crypto asset

To answer this question I went straight to the Tradingview platform because I already have an account on that platform and also I am familiar with the features that have been provided.

I chose Ethereum because it is one of the cryptocurrencies that has lasted a very long time in the exchange market and is proven by Ethereum as one of the cryptocurrencies with high enough liquidity.

There are two technical indicators that I use, the stochastic and the alligator. I chose these two indicators because they fit my trading style very well, pullback traders will usually use two indicators like this, one indicator as a compass that shows the direction of the trend and the other as an alarm if the momentum at the time of the pullback has weakened which indicates the possibility to resume the trend in accordance with the indicator that served as a trend compass. take a look at the screenshot below.

As we can see in the screenshot above, the alligator indicator shows that the market is in an uptrend, so because I trade using multi timeframes to read pullback movements, I go down from the 30-minute timeframe to the 5-minute timeframe.

in the 5 minute timeframe, I see a divergence between the price and the stochastic indicator which indicates that the pullback will end soon and the price may continue the uptrend from the 30-minute timeframe. so I opened a buy order at the price of 3863.24. The exit order method I use is a take profit target of 1:1.5 Risk/reward at 3899.66, my stop loss is at the closest support price at 3839.71.

CONCLUSION

Learning the science to analyze market movements in the world of cryptocurrencies is very important and this week there was a lot of useful knowledge from the homework I did, even before I didn't understand what OCO orders were now so I know how to use them and when to use these types of order.

CC: @reminiscence01

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reminiscence01 (74) · 3 years ago

Hello @imankrnfx , I’m glad you participated in the 6th week Season 4 of the Beginner’s class at the Steemit Crypto Academy. Your grades in this task are as follows:

Criteria	Ratings
Presentation / Use of Markdowns	2/2
Compliance with topic	1.5/2
Spelling and Grammar	2/2
Quality of Analysis	1.5/2
Originality	1.5/2
*Total*	*8.5/10*

Observation:

need an exchange wallet in order to trade

This is not a disadvantage of spot trading.

Recommendation / Feedback:

The student have completed the assignment for this lesson.
The student also answered all the questions in his/her own words.
Your overall presentation is good.
You have answered every question in detail.

Thank you for participating in this homework task.

$0.00

imankrnfx (60) · 3 years ago

Thanks for the review prof