What's the best way to spot trade crypto currency?

The first digital asset, Bitcoin, was founded in 2009. Different projects then gave the world more and more alternatives, such as Ethereum, Litecoin, Ripple, Bitcoin Cash and others. According to Coinmarketcap, there are more than 2,000 cryptocurrencies. Active traders are spoiled for choice.

However, less active or new altcoins may have limited trading opportunities as they provide fewer buyers when it’s time to sell. Traders want to be sure of their success, so they only focus on some of the leading cryptocurrencies.

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What is cryptocurrency trading?

Trading is an extremely complicated activity. It’s not just about money and mathematics but also about stress, information processing, fast decisions and cool, collected actions. Warren Buffet, George Soros and Steven A. Cohen all build capital today because they understand how the market reacts to different facts. Therefore, they understand trading.

Michael Novogratz is one of the most successful cryptocurrency traders. He made his fortune on Bitcoin, Ethereum and different ICOs. How? He understood cryptocurrency trading. In 2013, he remarked that a trader could invest in Bitcoin, come back a few years later, and see their investment greatly increased.

How does crypto trading work?

If you want to earn as much as possible, you must know this. We can provide the theory and explain someone’s experience, but you’ll only see the full picture through practice.

Firstly, learn some main principles:

• Cryptocurrency trading is similar to real market trading, but it isn’t a fraction of a regular stock exchange.
• It’s a 24-hour market.
• The crypto market is especially volatile.

Secondly, you must understand the standard way of working with crypto exchanges:

1. Traders send their existing coins to an account on an exchange or use a platform to buy crypto.
2. They observe the prices of other assets available on the exchange.
3. They select their desired trade.
4. Traders then place buy/sell orders.
5. The platform finds a seller/buyer to match orders.
6. The exchange completes the transaction.

An exchange platform charges a fee for every trade. It’s usually around 0.1%, which is high. Why? Because daily trade volume is over $55 billion. The ‘lucky’ ones built significant capital doing this.

How to buy and trade cryptocurrency

You’re almost ready to start earning money. But if you want to get something, you have to give something. This rule applies to crypto trading, too. You should send fiat money (or crypto from your wallet) to the exchange.

1. Create an account on an exchange.
2. Verify it.
3. If your budget consists of fiat currency, you need to create a payment channel.
4. Verify your identity (if necessary). Usually, exchanges ask for this information because of anti-money-laundering (AML) policies. The other reason is security: they combat trading bots.
5. Deposit funds.

Short-term trading is about buying an asset to sell soon after. Usually, beginners think that it’s after a few minutes or hours. This can be anything from seconds to a few months. You may buy specific crypto because you think its value will grow shortly.

Pros

The main benefit is an excellent chance to make a high profit in a very (even extremely) short period of time. Why? Because the cryptocurrency index may triple overnight or within several hours. The fiat currency market can’t provide such opportunities because prices usually only change about 1% during a day.

Cons

Volatility is the biggest problem in the crypto world. If you perform short-term trades, you’ll need to spend a lot of time analyzing the market before trading. Because of that, you could lose all your money in just one second.