Edited on Powerpoint by @rapharchick
Hello and steem greetings to us all. It's yet another new week in this season 4. It is the 6th week with our Amazing Professor, Professor @reminiscence01 who has taken us on a wonderful class and after going through the lecture, I’m here to answer the questions that follow

1. Explain the following stating its advantages and disadvantages:
   -Spot trading
   -Margin trading
   -Futures trading
   

As we all know, the crypto market is a very volatile market and the volatility of the market places different traders at different levels due to the understanding they have about the market. Some are beginners, some are intermediates, some are advanced and professional traders. Similarly, traders are classified into 3 types based on the trading structure they are in. We do have spot trading, futures trading, and margin trading. Let us look at these trading styles alongside their advantages and disadvantages.

i-SPOT TRADING

Talking about volatility in the market, we simply mean the upward and downward movements in that market. Traders (Especially beginners) can take advantage of these upward and downward movements and decide to buy an underlying asset when its value is low and sell it as its value increases. It is highly recommended for beginners into crypto trading.

Advantages of Spot Trading

Spot trading is advantageous in that;
• Once the trader buys the crypto asset at the spot price, He has ownership over that bought crypto asset.
• There isn’t any form of pressure to sell or close trades as is the case with other types of trading especially when the market begins to go against your predictions. This is possible since he can hold his assets until it appreciates to a given price where he can sell to make profits.
• It is also advantageous in that every trader can be part of the market. There isn’t any minimum capital requirement or restrictions so this gives every trader the advantage of making profits in the market

Disadvantage of Spot Trading

Talking about the disadvantages of spot trading, I will say that
• Buying a given asset at an inflated price can present so much risk to the traders’ capital.
• Traders who lack adequate trading knowledge on spot trading will not be able to better analyze the market and this can result in failed or wrong predictions which in turn will register losses
• Also, if the market goes bearish when the trader bought coins, then he will not be able to benefit from this bearish trend. Rather he will have to wait for the price to come back to its purchase price and even below before he will be able to make profits.
Now let us look at the second type of trading

ii-FUTURES TRADING

Futures trading is a trading structure where traders are able to analyze the price of an underlying asset then come out with predictions on the future price of that asset to carry out trades on a future date. It best suits Advanced traders who have mastery of the market because the futures market is associated with a high level of risk. Traders do not have the privilege of purchasing and owning the asset but they purchase future contracts at a price attached to the real value of the asset. This explains why it is risky for beginners.

Advantages of Futures Trading

Trading Futures is advantageous in that
• Traders can benefit from leverages that come in to increase their purchasing power and increase their possibility of making huge profits with their small initial capital. This implies that a trader taking a leverage of say 50X can make profit 50 times their initial capital
• Traders in the futures market also have the privileged of benefitting from bullish and bearish trends.

Disadvantages of Futures trading

It is disadvantageous in that;
• There is a possibility of the trading account losing its capital. Just as it is very easy to make huge profits when using a leverage, It is also possible to suffer huge losses and even account liquidation when trades go against your prediction
• Also, future traders do not do not have ownership over the crypto Assets as is the case with spots trading

iii-MARGIN TRADING

This is a trading structure that gives traders the possibility of trading crypto Assets at lot sizes greater than what their initial capital can take. Here, traders have the advantage of obtaining greater purchasing power by borrowing funds from a third party. This could be an exchange, a broker, or even other traders. Margin traders could also benefit from leverage. Leverage could be 2X, right up to 100X the initial capital even.

Advantages of Margin trading

It is advantageous in that;
• Traders who have small trading capital can take advantage of this opportunity and be a part of the market.
• Since margin trading gives traders a bigger purchasing power, traders can secure huge profits from their small capitals

Disadvantages of Margin trading

• A user can suffer liquidation especially when his/her capital cannot support the opened positions when the market is going against Him/Her. In other words leveraging exposes traders to loosing their entire trading capital when the market goes against them.
• Also, margin trading demands a lot of fundamental and technical analysis, working with news etc.… This doesn’t make it an ideal option for beginners.

2. a) Explain the different types of orders in trading.

When we talk about orders in crypto trading, we mean commands that tell a broker or an exchange what to do with a trade and how you as the trader you want to enter the trade. So, it is a request made by a trader to a broker or exchange demanding him to execute or open a given position when the trading requirements for the trader in entering that market are all met. Orders do exist in different categories. We have market orders, Pending Orders under which we have limit orders, stop-limit orders, one cancels another (OCO) orders, we also have Exit orders under which we are going to see stop-loss orders and take profit orders. Let’s ride on…

1. MARKET ORDERS

A market order is a request made to a broker to carry out an instant execution on the current market price for a given asset. It works for both buying and selling orders. Market orders are executed at the instance. For better understanding, let us see the chart below.

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The chart above is an instant market order which is already securing a profit of +$30. Upon execution, the market goes live and on.

2. PENDING ORDERS

From its name “Pending Order”, it is very easy to understand what kind of order it is. Pending orders are orders that are not executed instantly but will wait for the price to hit a given level or fulfill a given criteria before they are executed. These orders remain pending until conditions hold true before they can be executed. We have basically 3 types of pending orders. They are Limit Orders, Stop-limit orders, and OCO orders

i. Limit orders

These are orders that permit trading positions to be executed at a specific price. If for example we want to go long, but the price keeps taking the bearish trend or maybe has entered an oversold region, then we can place a limit order that will only permit the execution of the order if the market price goes below a given level. We have both sell limits and buy Limits.

ii. Stop limit orders

A stop-limit order is one that allows a trader to place a limit order on a given asset when it reaches the stop price

iii. One Cancels the Other (OCO) Orders

This is a type of order that allows traders to have 2 orders open but almost not at the same time. It is a conditional order. This implies that one order(Probably the second) comes in to and then other(Now the first) gets canceled. The opening of the second cancels the first. This is to minimize risk. Let us assume for example that the price of steem is going bearish and about hitting a support. An OCO order comes in to automatically execute an order meanwhile the other one is automatically aborted and profits secured. With OCO orders, when one of the pending orders is executed (whether stop-limit or Limit order), the other one is aborted as well as if an order is canceled then it neighboring order too will not only be canceled but deleted.

3. EXIT ORDERS

These are orders that will monitor the trade and close up open positions when the price hits a particular level. Exit orders exist in two types namely stop-loss orders and take-profit orders.

i. Stoploss orders

This is an Automatic order which is placed to exit a given position at a given price precisely when the market goes against the traders’ predictions. Stop-loss orders help traders to protect their trading Capital such that even in a losing market they do not lose completely everything.

ii. Take profit Orders

This is also another automatic order which is placed to close a given opened position when a particular profit amount has been booked or when a profitable trade has reached a given point which there is a possibility of it revering. Take profit orders automatically help traders to secure their profits in cases like this.

b) How can a trader manage risk using an OCO order? (Technical example needed).

OCO as we saw above stands for one cancels the other and is a special type of other that manages two other types of orders (Limit Orders and Stop Limit Orders). A trader can use an OCO order to manage risk, especially in a highly volatile market. When a trader is unable to sort out the next direction of the price or finds it difficult to know if the market will go long or will go short, He can use an OCO order which will open two pending positions or orders (Limit order and a stop-limit order). Here risk is minimized in the sense that once one works out, the other is instantly deleted. There is a rare possibility of the trader losing their funds. Let us consider this technical example. We are considering the case of our SBDUSD pair and from our chart below we are going to be seeing how our Price is approaching a point of resistance(8.01333270) and which has also been tested severally to prove the point of resistance.

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We could place our OCO order; This could be our stop limit order (8.07937284) with a stop price at 7.3046541 and our buy limit order will be triggered which will execute our trade commands as soon as the stop price is reached.

4. 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).

The steps below will guide us on how to open an order(Specifically a limit order) on Binance. Our chosen Pair is BTC

STEP 1Log into your binance account (In my case I will be using my pc)

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STEP 2 Next a page pops up like this then You select Margin where we are going to be able to place our limit Order.

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STEP 3 The next page that opens up takes you straight to the trading platform where you select what kind of Order

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STEP 4 We have selected our limit order and finally we enter the required parameters

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STEP 5 We then click the Buy button which places the order. With this we just need to wait for the required level to be reached then our limit order is triggered. We can see the progress of this order by viewing our orders pane

4. 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.
i)Why you chose the crypto asset
ii)Why you chose the indicator and how it suits your trading style.
iii)Indicate the exit orders. (Screenshots required).

I am going to be using my MT5 trading platform and I will be using the BTCUSD pair to carry out the task as assigned below

i)Why you chose the crypto asset

The reason why I decided to trade with the BTCUSD pair is because of the fact that I intended to carry out a short-term trade. This demands a crypto pair that has some degree of Volatility which the trader can make fast profits easily when well-studied like BTCUSD unlike TRXUSD which I attempted earlier and seemed to move at a very lesser volatility. I also decided to trade BTCUSD because it is a pair I have studied and I’m quite used to its movements so this makes it easier for me to scalp there better especially when working with my technical indicators and other tools. All these put together influenced my Decision to trade the BTCUSD pair

ii)Why you chose the indicator and how it suits your trading style.

For my trade above I used a couple of indicators to ensure that my entry into the market is safe. As we have learned in our previous lessons it is not very good and safe to use just one indicator in drawing up your analysis for a given market so in my case, I make use of the Allegator, the stochastic, the parabolic SAR the RSI, and the MACD. I have two moving averages on my main chart which comes in to confirm whatever indication I get from the stochastic oscillator and the relative strength index. The reason why I choose this indicator and even configured it the way I did is because I am fun of going in for short term trades. The indicators above are of different categories. When I get a signal from my Mas indicating a reversal or from my RSI indicating an over traded condition, I get into the market with very few positions while waiting for my Parabolic SAR and other Trend indicators to confirm the trend then I jump in fully with all my Risk Management tools too. So Using these indicators greatly suits my trading style and I am very confident using them.

iii)Indicate the exit orders. (Screenshots required).

Talking about Exit Orders, we have two major exit orders in trading which are the take profit order and the stop-loss order as we saw earlier. In my trading positions, we have our Stop-loss orders on as well as our Take profit orders on. This helps me as a trader to minimize my losses in cases that the trend goes against my prediction. Logically, the environment where I find myself in is one that has network breakages. Stoploss and take profits at times gives me confidence and takes away fear because I know even if the network fails, the orders will be exitted when they have entered the required price level. To set up Stop loss and Take profits on our trades we open our new order tab then fill in the stop-loss details and take profit details as seen on our chat below.

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When all this data has been entered we then place our order which is a sell order. The order gets executed as seen below

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From our chat, we can see our Exit orders When any of these levels are reached the market closes automatically

CONCLUSION

To conclude, I will say trading cryptocurrency is indeed an amazing deal, and getting such profound knowledge places you as a trader on a platform where you have a greater probability of making profits and mitigating Risk. We have seen how we can use our OCO order to Mitigate risk. We have also seen how to set up different types of Orders to manage different types of trading conditions. Special thanks to Professor @reminiscence01 for the lectures for it was indeed powerful and necessary. While hoping to get the next lesson, STAY SAFE!!!