Trading Cryptocurrency is now a much talked about topic. Every reasonable person is continuously looking for other ways of making money. Cryptocurrency comes with a lot of opportunities for interested people to increase their earnings.
The only problem with this method is that it requires capital, unlike the previous techniques that I have discussed. This post will focus on introducing you to Crypto trading and some basic terms in the sector.
At the end of the post, you should be able to know a little about Crypto trading and how you can earn something from it.
What is cryptocurrency trading?
Trading is one of the oldest profession known to man. Years ago, people practiced a trade by barter system. A lot has changed ever since money was now introduced into the system. Unlike trade by barter, cash users don’t go through the stress of searching for people who had what they needed and were ready to exchange it with what they had.
Method of trading might have evolved, but the main idea behind trading remains. Trading is still the exchange of goods and services.
Just like the typical day to day real-world trading, Cryptocurrency trading can also be seen as the exchange of one Cryptocurrency with another.
In a layman’s definition, trading is the process in which Mr. A has Bitcoin and is willing to exchange it with Mr.B who has Ethereum at an agreed price. It is the exchange of coins/tokens between two individual.
Just like in the era of trade by barter, finding someone that has what you want and is ready to exchange with what you have is a problem that exists. However, this problem has been reduced to the barest minimum by the invention of world-class exchanges.
Types of Cryptocurrency Trading
There are different ways for an individual to to undertake Cryptocurrency Trading. Some people still argue that they are not traders, but yet they buy when the price dips and sells when it rises. They fail to understand what trading is.
So let me correct the general impression which says that traders are only those that trade as a full-time job. Once you successfully execute a trade (buy and sell), then you should consider yourself a trader.
There are three types of trades in cryptocurrency. They include:
- Short term trade
- Medium-term trade
- Long term trade.
Short term trade
Day traders and few professionals mostly practice this method in Cryptocurrency Trading. It involves the buying of coins for a short time for a quick profit. Let’s say a coin’s price is moving up, a short term trader with a target might jump into the trend. He will follow the trend and would likely exit the trade immediately the price starts looking downward. The case usage of tokens in this category does not matter to the trader. It is advisable to use a stop loss in this type of trade to avoid stories that touch the heart.
In Cryptocurrency Trading, these types of trades are carried out by people who mostly have done their analysis on a particular coin and predicted a positive price movement. The trader in this type of category must have sufficient bankroll because some of the predictions might take days and sometimes weeks to actualize. This kind of category is filled with technical analyst and people who research thoroughly on coins.
Long term trade
These are the hodl gang in Cryptocurrency Trading. I know you might be thinking why I keep using hodl instead of hold, I’ll leave you to research that. Some of these crypto slangs are cool anyways.
Long term traders are people who believe in the said project and are willing to hold their token until a target price is reached. They are the ones that enjoy from most loyal promos and are always quick to defend the project.
In this era, it takes a lot of courage, belief, and determination to hodl some coins even when your portfolio is heading to zero.
The best way to enjoy this category is to invest in some promising new projects. For example, people that bought Binance coin as at when it was a dollar made thirty times their investment when the price got to thirty dollars per coin. Always use your spare money in this category to avoid selling pressure.
Make sure to do your own research before investing in any token.
Where to trade
When you finally decide which type of trader you want to be, the next question that comes into your head is where to trade.
Cryptocurrency trading are mostly carried out in exchanges. An exchange is a platform that enables its users to trade cryptocurrency in a safe and convenient environment.
There are several exchanges available. It is left for you to decide which best fits your plans.
Some big exchanges might not have some new small coins, and you might have to get an account with one of the smaller exchanges.
I made a post on the best exchanges available, click on this link to visit the post.
How to execute your first Cryptocurrency Trading
After deciding on which exchange to use in your Cryptocurrency Trading journey, go ahead, and create your account with the exchange.
After your account creation, Deposit your crypto and start trading.
For successful trading, you need to:
- Locate your trading pair first.
- Decide either to buy/sell at the current market price (market order) or your specific price (limit order).
- Input the price.
- input the quantity.
- click on the buy or sell button.
Either way, do well to make the stop loss option your friend if you don’t want to be sent to the village.
I’ll be glad to write on the step by step process of trading in any given platform at your request.
It is worthy to note that some exchange allows you to buy Crypto with your ATM card while others don’t.
Keep greed very far from you when it comes to short and medium-term trading. Set your targets and exit once you meet it. The same way you can make a lot in a day, you can also lose a lot in minutes. In cases of severe loss, you can convert your short term trade into a long term trade.
You can avoid a lot in Cryptocurrency Trading if you have a principle and stick to it.
Remember to turn on a 2fa in your trading account to avoid loss of funds.
In whatever you do, don’t forget to make the stop loss feature your friend.
I hope you’ve gotten an idea on How To Earn Money Trading Cryptocurrency.
Feel free to get across to us.