Everything you need to know about cryptocurrency trading | by 36Crypto | Coins | February 2024
In recent years, cryptocurrency trading has become one of the most profitable forms of investment. With the emergence of digital currencies such as Bitcoin, Ethereum, and other altcoins, cryptocurrency trading The market has become increasingly accessible to experienced and new investors. However, for those unfamiliar with the cryptocurrency world, jumping into trading can be a daunting task.
Trading involves speculating on cryptocurrency price movements using CFD contracts or buying and selling native coins on exchanges.
There are two simple ways to purchase cryptocurrency. The first method can be compared to stock trading. Digital wallet for purchasing cryptocurrency At current speed. Once you receive currency, you can make money by selling it for more than you initially paid.
The second is a contract for difference. This is a contract between a buyer and a seller that requires the buyer to pay the seller the difference between the current value of the asset and its value at the time of the contract.
CFDs allow traders and investors to profit from price movements without owning the underlying asset. The value of a contract for difference does not take into account the underlying value of the asset, only the price movement between entry and exit.
trend trading This is the most common and intuitive strategy. Its essence lies in the fact that when the price of an asset rises, you need to buy it, and when the price of a cryptocurrency falls, you need to sell it. However, this method seems simple at first glance. Traders need to identify trends and use technical and fundamental analysis to do so.
Trading against the trend The most complex and risky strategy based on the prediction of an imminent reversal in price direction. This could be a global reversal, when a cryptocurrency falls after a long period of growth, or it could be a slight temporary deviation while maintaining its general direction.
scalping A strategy that involves making numerous quick trades to profit from small price changes. Traders try to profit from even the smallest price differences when the market rarely experiences major fluctuations, for example buying an asset at $100 and selling it at $101.
news trading strategy It involves trading based on news and market expectations before and after the news is announced. News can travel very quickly through digital media, so news trading can require a skilled mind. Traders must evaluate news immediately after it is published and make quick decisions about how to trade.
position trading A popular trading strategy in which traders ignore minor price movements and hold positions for long periods of time, typically months or years, in order to profit from long-term trends. Position traders typically use fundamental analysis to evaluate potential price trends in the market, but they also consider other factors such as market trends and historical patterns.
Technical analysis involves predicting future price movements in the cryptocurrency market by analyzing price charts and market data. Cryptocurrency trading indicators serve as a key tool to promote analytical understanding of the market.
It also helps in effective development. trading strategy. There is a wide range of TA indicators of varying complexity that traders can use to analyze the markets, some of them are:
Relative Strength Index (RSI)
that much relative strength index (RSI) is a momentum indicator used in technical analysis to measure the speed and changes in price movements. It fluctuates between 0 and 100 and is commonly used to determine overbought and oversold conditions. Traditionally, RSI values above 50 indicate overbought, and below 50 indicate oversold.
Key Features:
- It is effective in identifying changes in trend direction.
- Useful for determining support and resistance levels.
- A reliable validation tool for identifying trends
Moving average convergence/divergence (MACD)
that much Moving average convergence/Divergence (MACD) is a widely used technical analysis tool to assess momentum and trends in financial assets such as stocks.
It compares two exponential moving averages (EMAs): the short-term EMA (usually 12 days) and the long-term EMA (usually 26 days). The MACD line is calculated as the difference between these two EMAs, with the 9-day EMA of the MACD line acting as the signal line.
Key Features:
- Highlights potential trend reversals.
- Confirm rising and falling momentum
stochastic oscillator
that much stochastic oscillator Compares the closing price of a cryptocurrency with its price range over a specific period of time. It ranges from 0 to 100, with values greater than 80 indicating overbought conditions and values less than 20 indicating oversold conditions.
Key Features:
- It is similar to RSI, but it also considers the price range and serves as an indicator for cryptocurrency technical analysis.
- During market volatility, it is easy to receive false signals.
- Accuracy is improved when used with MACD.
Product Channel Index
that much Product Channel Index (CCI) is a technical indicator designed to identify cyclical changes in raw materials. It is a momentum-based oscillator that measures the current price level relative to the average price level over a period of time.
Key Features:
- It is used to determine overbought and oversold levels, identify emerging trends, and evaluate the strength of trends.
- It helps determine entry and exit points.
Ichimoku Cloud
Ichimoku Cloud A tool used in cryptocurrency trading to identify trend reversals, support/resistance, and momentum. It consists of five lines, including Tenkan-sen and Kijun-sen for trend identification and Senkou Span A/B for support/resistance.
Key Features:
- Provides a holistic understanding of the market.
- Provides parameters tailored to individual trading style
- Trend changes, support/resistance and momentum signals
Other tools in TA include:
- Horizontal line — A straight line used to indicate price levels on a chart.
- Trend line — A sloping line used to identify trends.
- Calculation lines are formed based on mathematical processing of user-specified key values (Fibonacci levels, Gann lines).
Technical analysis involves the study of market data to determine trading strategies, while fundamental analysis is the study of the underlying industries, technologies, or assets that make up a particular market. In the case of cryptocurrencies, the trading portfolio consists of Bitcoin and altcoins.
So how do you determine if an asset is based on solid fundamentals rather than all the hype, hype technology, or worse, nothing at all?
There are several factors to consider when performing basic analysis.
- Developers: You should consider their reputation, honesty, and past to avoid investing your money in fraudulent projects.
- Project roadmap describing mid- to long-term development plan
- Cryptocurrency market capitalization, trading volume, price volatility
- Trading volume and average commission
- What platforms the coin is listed on and whether the coin has been delisted popular exchangesSo why?
Trading is an inherently risky business. It’s almost impossible to get it right predict Future market activity. Ultimately, it is important to make your own decisions based on the information and judgment available to you and ensure that you have the appropriate knowledge.
Free tools: Our Simple Cryptocurrency Profit Calculator Calculate potential profits and returns for your cryptocurrency investments.<<