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Hello to everyone in this wonderful community today. I greet you all in good spirit and I hope we all are doing just fine. Today I welcome you all to yet wonderful week of the steemit crypto academy contest that has been brought forward by the steemit community team to improve interaction among users in the steemit community.
Today I will be engaging in the contest that has been brought forward by this community which has been titled understanding crypto trading. I urge you all to relax and stay put as I drop my entry regarding this contest today.
What is trading?
Trading is the exchange of a particular thing for money. It is a scenario by which things are bought and sold in the market and as such it is concerned with the purchase and demands of items.
It is the buying and selling of various items in particular location known as market. Trading is done to acquire profits, although losses are inevitable but the profit making is the major concern in every business. the exchange of goods and services is also called trading in general terms.
Trading generally entails the physical presence of both parties, the buyer and the seller come together in a meeting point to trade and as such, the buyer always go to the seller to purchase certain items and after negotiation, the trading is done. so it involves presence of the purchaser and the supplier for trading to be completed.
What is crypto currency trading ?
Cryptocurrency trading can be seen as a particular type of trading that deal with cryptocurrency. Here users who are into cryptocurrency trading do not go to any physical location to trade rather this trading is done via cryptocurrency exchanges trading market.
It is done in such way that users can use their asset(cryptocurrency) to trade in the exchange platform such as Binance, Poloniex and so on.
In Cryptocurrency trading, users can equally sell their asset for another asset by placing a market order in the exchange market and they can equally buy other assets in the market.
It is a kind of trading that deals with selling and purchasing of various cryptocurrency in the crypto trading market. The essence of crypto trading is to gain profits and there are several ways to trade your crypto currency in the trading market, I will be explaining the basic two types of crypto trading and they are the Spot and futures trade.
We have what we call Sport Trading. The spot trading is part of the various trades whereby an individual purchase a particular asset and then leave it for a long time so that the said asset can rise in price and then when the individual has noticed some amount of profits which he or she wanted, that same individual will then sell off that asset since profits has been made.
This kind of trade is mostly a long time trade. In spot trade, we can only include our target price regarding take profit. that is to say, one can only set the price target which he or she wanted and when that target hit, the asset will then be sold off.
While the futures trade is a particular trade whereby a users makes all the necessary input to analyze the market and then set his or her market orders alongside the stop loss and take profit orders after which he or she executes the trade and hope that the trade goes towards his or her favor.
This kind of trade is done using USDT against a particular portfolio and this trade is done in both long time and short time.
The reason for the stop loss and take profit orders is so that if the market is going against our prediction and began to take the opposite trend which will then result to we losing funds, the stop loss helps to exit the trade and stop the loss, and the take profit helps us to exit the market after which our target is achieved.
What are the trading principles to always keep in mind as a Crypto Trader and how can you build your own crypto trading strategy
In trading cryptocurrency, there are certain principles that traders are expected to keep in mind before or while trading cryptocurrency. Some of these principles are as follows.
- TRADE WHAT YOU CAN AFFORD TO LOSE - This is the number principle that a user is expected to known. It is very vital that you trade what you can afford to lose because crypto trading is so volatile and it is hardly predicted so this should be kept in-check before trading in the cryptocurrency trading.
Always trade what you can afford to lose in the crypto market just in case things go south ways.
- DO NOT TRADE WITH EMOTIONS - This is also another principle regarding trading. Trading with emotions is wrong as though cryptocurrency is highly volatile and as such the trend can not be determined.
There are tendencies whereby the market may not go according to our analysis, so in that case there are tendencies that we can lose money. So in this case, you do not launch the market with anger just to get back the money you lost. So trading with emotions is wrong when trading cryptocurrency.
- GOOD MARKET ANALYSIS - This is also an important factor we are to consider. before executing your trade, it is advisable that you make proper analysis of the particular portfolio you are wanting to trade.
Know the market movement of the asset, the purchasing power, the demanding force of that asset and also the price of that asset.
Always check your browser for the basic information of that asset before making a decision to go for it. determine the asset all time high and low, carefully notice the trend of the asset in the market before executing your trade.
- GET OTHER ASSETS TO TRADE TOO - Do not focus on a particular crypto asset in trading. we were taught in this community to diversify our asset and this is to manage losses that can be incurred to the lowest form.
Relying on just an asset is dangerous and as such, one can loss funds if that is done. focusing on a particular asset is totally not good because eventualities may occur that will result to losing of your funds especially when the price of that asset decline.
Get many asset as you can to help you manage losses, for when there is a fall in price regarding an asset, there may be a rise in price regarding another asset and that medium will balance the equation.
Explain how you can use Fundamental analysis to generate your own Crypto Trading Ideas
In this scenario you can use the above fundamental analysis of a particular asset to generate your own crypto trading ideas and some of these ways are seen below.
Certain information are to be kept in check regarding developing your crypto ideas. the knowledge of knowing the people behind the particular portfolio is highly recommended.
It is not advisable to just start your trading of a particular asset without knowing the respective individuals behind it. so it is important to get a better understanding regarding the portfolio's ownership, it partnership and so on to avoid eventualities.
We have seen many crypto asset that has turned out to be orchestrated by scammers. So with you knowing the ownership information and other vital things is very necessary.
Knowing the market trend of the asset is very important. this serves as a guide to users who are into crypto trading to known the major movement of a portfolio before executing a trade regarding that portfolio.
It could be that the trading volume of that asset is low and as such, users trading it may be less. So this information will guide you and also give you an understanding about certain crypto asset in the market. with this guide, an idea has been established regarding opting for the asset or not.
The CoinMarketCap gives the needed information about an asset in the crypto world. With the coinmarketcap, you can develop your own trading idea regarding a particular portfolio.
The coinmarketcap has a well detailed trading information about a portfolio so this helps user s trading cryptocurrency to know more about the portfolio alongside it trading history.
The coinmarketcap covers the whole trading history of a portfolio and that is why it is reccommeded to always look at what the coinmarketcap is saying regarding an asset before trading the asset.
Explain how you can use Technical analysis when trading on Crypto
Technical analysis is very vital to determine certain market trend and helps one to determine the next market movement. So here I will be explaining how to use technical analysis when trading crypto currency and they are as follows.
Chart analysis indicators helps you to know what the market is doing when you look at the movement of the particular crypto you want to trade. first of you, you have to log into the market and then determine the movement of the asset. Using TRIMA also known as Triangular Moving Average is an indicator that depict what the market is doing and what it has done.
It also help a trader to point out the over sold and over bought region regarding an asset. we can also make use of the RSI which is known as the Relative Strength Index indicator as though it also gives signal before the next trend movement occur in the market.
we can see from the above chart regarding what the said asset has done and what it is currently doing using the TRIMA indicator, and with this we can now see the oversold and overbought region of this asset. Hence we can now predict the next movement of the market and then initiate the market orders.
The Support and Resistance level can also be used to determine or predict the next market trend movement regarding a particular portfolio. It helps to reveal the support level of a portfolio in the crypto market, the support level indicates that certain crypto traders are purchasing the portfolio immediately it's been sold off.
So they hold the portfolio up by purchasing it to stop the selling order or the fall in price value of the asset.
The resistance level shows a pull down in market price as users are selling off the asset in the crypto market. So when the price of an asset is going up and immediately it takes a down trend, then crypto traders are selling the portfolio off.
It will continue that way until we see a strong support level regarding the asset.
As we can also see, we have employ these technical analysis on our chart to determine the movement of the asset in the market and hence know the particular market order that is expected to be placed.
So with these technical analysis we can now decide to place a buy order trade of the WAVESUDST since we have seen the movement of the asset through the indicators and also with the help of our support and resistance levels regarding the movement of the asset that is is a sure buy order.
From our analysis, we can now see with the aid of the below image that the trade is actually moving as predicted using our technical analysis.
The price value is being supported by a strong volume and that is why the price has not gone down below the previous support level as such this indicate a strong buy entry judging from the fact that we are already making profit from the activities seen in the market regarding WAVESUSDT.
Timeframe is also essential when making technical analysis when trading. It is recommended that when making analysis, it is always advisable to checkmate the activities done by the said asset in the crypto market using 3min, 5min, and 15min timeframe
This will tell you what has happened in the market already and with the necessary indicators, you can then employ them to predetermine the next market movement of the said asset you are about to trade.
So I make use of the 15min timeframe to analyze my chart before executing the trade.
There are many more to talk about but I will be stopping here for now. Using confluence trading analysis can also help to give a clear information about the market activity.
It entails using of different indicators to validate or give a better description regarding the movement and activities of a particular portfolio in the crypto trading market.
Explain the 3 key concepts of Risk management every new Crypto Trader Should Know?
Risk management is very necessary to put in use especially for new Crypto traders who are too new i the crypto trading market.
Risk management helps a lot especially to minimize losses when trading in the crypto market and when this is employ, it will certainly help us to control and managed losses that can be incurred when trading. Below are some of 3 key concepts of risk management.
I always emphasize on this particular concept of risk management especially to the new crypto traders.
Cryptocurrency is very volatile in such a way that even with the technical analysis, we are never 100% sure of the trade going towards our favor.
Anything is likely to happen at any time and that is why it is always advisable to trade what you can afford to lose. This will help you to minimize the ratio of loss when trading incase things go south during your trade in the crypto trading market.
This is another risk management concept to hold or keep in mind. Greed has caused a lot of bad decisions in the life of many traders and this is certainly the reason why most traders lost their funds and currently finding it hard to return back to trading.
When trading with greed, you tend to lose your funds in the crypto trading market. As soon as you noticed that you are already in profit regarding your asset in the crypto trading market carefully exit the market and rest for a while. I have seen many traders that were affected by this scenario.
Because they noticed that the trade they executed was going toward their favor and was almost getting to take profit, they quickly removed their stop loss and take profit order.
Immediately the trade got to their supposed take profit, a breakout was noticed and the trade went south. that was how losses were incurred after the trade, at long last they have to cancel the trade because it was already draining them off and that was as a result of greed.
Always wanting more in the crypto market should be eradicated from your mind. when your take profit hit, kindly exit the market to manage your risk and reward.
As a new crypto trader it is advisable to always diversify your trade because this will help maintain an equilibrium regarding your risk and reward.
Do not rely solely on a particular asset, get other assets too in other to balance your trade in the crypto trading market. just like in the case of FXT, LUNC and a lot more, we have noticed that these crypto assets have a terrible experience resulting to a drastic fall in value.
Now any crypto trader who only have either of these currencies in their possession can attest to the fact that they actually lost their funds during the fall in price value of these currencies.
This is where diversification of your trade comes in play. With you having other crypto assets, It will help you to balance the risk and reward ratio because when there is a fall in a particular asset, there is likely to be a rise in another asset and this balance the whole situation.
CONCLUSION
Understanding crypto trading is not that easy but with dedication and learning of several important things such as, fundamental analysis, technical analysis, concept of risk management in the market, and other important aspect regarding crypto trading will give us an edge in the crypto market when trading.
Thank you all for reading from me today. I will like to invite certain users to also drop their take regarding this contest topic today and they are, @badmus-official, @skilocy, and @v-brainer.
You have presented yet another beautiful piece here my friend. You have explain trading as the act of buying and selling and you went further to explain crypto trading as a special type of trade that has to do with the buying and selling of cryptocurrency. You have also given a detail review of what you understand by the term fundamental and technical analysis stating examples as well. The 3 concepts which you want every trader to be aware of are trade what you can afford to loss, don't be greedy and diversify your portfolio.
Indeed you have mention the needed when it comes to successful trading. With these concepts, traders will minimize their losses and maximize their profits. I wish you success in this contest my friend.
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Congratulations, your comment has been successfully curated by @lavanyalakshman at 7%.
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You have presented a very beautiful post as always and you have expressed very great ideas about the desired topic. Your understanding about the crypto trading is quite appreciated.
Crypto Trading is not only the selling and buying of the cryptocurrency assets but it actually deals with the process of taking advantage of the high volatility of market on either sides.
Diversification of the portfolio is very much important for the risk management in the crypto space and it can also lower the chances of the get involved in the crypto scams.
Thanks for sharing and good luck for the contest.
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Great post @solexybaba! Your explanation of trading and cryptocurrency trading is clear and easy to understand. I especially appreciate the emphasis on the importance of trading with what you can afford to lose and not letting emotions guide your trades. These are key principles that all traders, not just those in the cryptocurrency market, should keep in mind.
I also found your explanation of the different types of crypto trading, spot and futures, to be very informative. The use of stop loss and take profit orders is a smart strategy for managing risk and maximizing potential gains. It's clear that you have a solid understanding of the crypto market and the strategies needed for successful trading.
I also appreciated your advice on diversifying one's assets. This is a crucial aspect of managing risk and maximizing potential returns. By diversifying your portfolio, you are spreading your investments across different assets and markets, which can help to mitigate the effects of volatility and uncertainty in any one particular market or asset.
Overall, a great post that provides valuable information and insights for anyone interested in trading cryptocurrency. Keep up the good work, and best of luck in the contest.
Yours, @fabiha
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Greetings @solexybaba
You have explained the concept of trading and crypto trading very well. Your knowledge about crypto trading is very good.
You have mentioned four principles to follow that can make us successful in trading.
Yes fundamental and technical analysis are very important to get 60-80% idea of what will be next move of the coin. But still it is not 100% guaranteed that the coin will move in that direction.
Overall, you have shared quality content and presented in good format with all details.
I wish you success my friend in this contest and all others :)
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I must commend that your article is top notch, and I enjoy reading from you. Trading Cryptocurrency as you have mentioned can lead to lots of profit if given the necessary attention and approach.
To become a successful Investor in the world of Cryptocurrency exchange, it's important to follow some principles, some of which you have detailed above (Trading only what you can afford to lose, paying good attention to market analysis, diversifying your portfolio, and my personal favorite "don't trade with your emotions).
It is equally important to take both technical and fundamental analysis very serious, as they could help tell what the future holds for a particular asset or coin.
Thanks for sharing such an educative and interesting content for us boss, I would appreciate if you equally engage in mine.
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TEAM 5 CURATORS|
Curated by: @heriadiTeam 5 curation-Guidelines for December 2022
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Some people would argue that it’s better to trade just one asset pair till you master it however, mastering a pair isn’t always as easy as it’s imagined.
Now here’s what trading just one asset pair can do to a trader on his journey to mastery. The sunk cost effect….this will definitely set in at some point when the trader feels he has invested too much time on the asset to give it up and therefore keeps on shoveling funds into a furnace to that effect.
It’s advisable to always have options in the case of cryptocurrency trading. Nice publication here
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