How to trade cryptocurrencies
August 13, 2023
Cryptocurrencies are in demand, and every day, new crypto is introduced to the market, providing new investment opportunities. On the other hand, trading cryptocurrency is easy, and all you need is a connection to the internet and the computer or even a smartphone and, of course, an amount of money to invest that you are comfortable losing because let’s face it we are talking about an extremely volatile Market with lots of opportunities. So before digging into the market, make up your mind about how much risk you can tolerate. At Aron Groups, we want to introduce you to a new and lucrative investment opportunity. Trading cryptocurrency can be lucrative if you know the market’s ups and downs. And if you are planning to get into trading cryptocurrency, this article will tell you what you need to know.
Table of Contents
What is cryptocurrency?
Assuming you need to become more familiar with the term cryptocurrency, we should give you a definition; Cryptocurrencies are encrypted decentralized digital currencies that are stored on a blockchain. These assets are not tangible and exist in a virtual world. Using this type of currency, you can send money as easily as sending an email without using a bank. Minimal fees and no credit cards necessary, plus no middlemen adding on charges, are some of the benefits of using cryptocurrencies. The first cryptocurrency ever was Bitcoin, but now thousands of cryptocurrencies are out there, each of which pursues different goals and provides different functionalities. The demand for buying cryptocurrency has risen over the years, and now you will find big individual and institutional investors investing in cryptocurrencies which results in higher prices.
How to trade cryptocurrencies?
When trading cryptocurrency, buying or installing a valid crypto wallet is the first thing to remember. You can buy your favorite cryptocurrency and then sell it at a higher price and make a profit, or you can trade cryptocurrencies. When trading cryptocurrencies, you must use a broker with a marketplace to trade cryptocurrency.
So, first things first, you need to choose a platform on which to trade. A crypto broker or crypto exchange is a platform that matches buyers and sellers. You need to weigh different brokers’ features and fees and feel the various exchanges to choose the one that suits your priorities. For example, when dealing with Aron Groups Broker, you’re not only provided with Trading cryptocurrencies opportunities, but you can also invest in Forex and commodities.
The first thing to do is create an account to provide some key information about yourself. Once your account is approved, you must deposit using traditional fiat currency such as the dollar.
Depending on your account type, you will be required to deposit a set minimum amount of money before you’re ready to start training. And if you are completely strange to crypto trading, you should use the Aron demo account to test and feel the market.
Assuming that you have experienced the market firsthand and have enough knowledge of how cryptocurrency works, you have to pick a cryptocurrency to invest in and start trading. Which we will talk about in detail in the following.
Read more: How To Trade Gold
Pick a cryptocurrency to invest in.
Trading in cryptocurrency, you will find everyone trying to put their money into Bitcoin or Ethereum, but there are hundreds of other cryptocurrencies you can invest in. People prefer Bitcoin and Ether because they are more predictable than smaller altcoins, but at the same time, there are more expensive. You can find altcoins that are riskier to invest in but have potential.
What determines cryptocurrency prices?
The first and the most important factor determining cryptocurrency prices just like any other asset is supply and demand. Cryptocurrencies are limited in supply, so they are considered rarer than regular fiat currencies. The less cryptocurrency is available, the higher the demand for that cryptocurrency, so the higher its price will get.
On the other hand, the process of creating new cryptocurrencies in some projects is called mining, which is costly and demands a lot of electricity. The higher the cost of mining, the more the price of a currency increase.
Cryptocurrencies with more competition tend to have higher prices than those with fewer competitors.
Last but not least, blockchain technologies, regulatory attempts, news reports, and government policies can also affect the price of cryptocurrency.
Popular cryptos
Here we are going to talk about some of the most popular cryptocurrencies to trade on:
Bitcoin
Introduced in 2008, it is the first cryptocurrency that was ever introduced to the world and is today considered to be one of the most valuable Assets in the world.
Ethereum
Ethereum is the second big cryptocurrency based on market cap and one of the perfect platforms for creating decentralized applications that have become popular over the years.
Litecoin
Litecoin was originally introduced in 2011 to facilitate cross-border payments by providing faster verification of transactions compared to Bitcoin.
Axie Infinity
Axie Infinity Is a flight-to-earn platform created based on Ethereum in 2018.
Filecoin
This currency is a paid-to-pay cryptocurrency-operated storage Network that’s provided storage services for everyone who wants to store their files or help others to store their files on it.
Uniswap
Uniswap emerged in 2018 and is a fully decentralized crypto exchange based on the Ethereum blockchain that uses a small contract for trading the native currency of the platform (UNI).
Read more: CFD trades
Different ways to trade cryptocurrencies
You can trade cryptocurrencies in different ways. Generally, you’re supposed to monitor the market and see how cryptocurrencies are performing over the past days, weeks, months, and even years. It would be best if you considered your risk tolerance before entering the market and choosing your trading strategies. In the following, we are going to talk about different ways:
Day trading
Your risk tolerance will determine if you are a day trader or not. Through buying and selling tokens within the same day, you can take advantage of price fluctuations in the market.
Day trading is great for quick returns and reduces the risks of overnight price movement. But remember that day trading involves a lot of stress.
Swing trading
When trading this way, you hold coins for longer periods while monitoring prices to determine the best time to buy or sell the asset. Monitoring prices over a longer period of time allows you to make more informed decisions, but you need to be disciplined and avoid acting on impulses and emotions.
Position trading
When trading using positions, you need to observe the market for a longer period. In this case, you will buy cryptocurrencies in speculation that the price will rise over the long term, so you don’t need to worry about day-to-day volatility. Using this type of trading, you can build a portfolio over a longer period of time, start with a small investment, and increase it.
Advantages and disadvantages of investing in cryptocurrency
The pros and cons of trading cryptocurrency are different for every individual. Crypto fans claim that cryptocurrency can serve as a hedge against inflammation. On the other hand, there are investors claiming that cryptocurrencies are volatile, unpredictable, and unreliable as an asset.
As there is no regulation on cryptocurrency, some people fear entering the market because they fear being exposed to scams, platform collapses, and other risks.
Read more: Exchange Traded Fund
Important considerations while Trading cryptocurrencies
Remember that the cryptocurrency market is new and volatile; while trading on this market, you will witness new cryptocurrencies born and others disappear. Most Traders and investors driven to the cryptocurrency market to protect themselves against the devaluation of their own National currency. You will find institutional and retailer stores have started accepting Bitcoin and other cryptocurrencies as a form of payment. The number of businesses accepting cryptocurrency as a form of payment Forces governments and Banks to realize that this new product has the potential to change the financial award.
Trading in cryptocurrencies units to pay close attention to the demand and supply chain, you also need to monitor media reports and use headlines that might affect the price of a digital currency. The number of people learning what cryptocurrency is means the demand for buying cryptocurrency is on the rise, and more people will consider cryptocurrencies as an investment vehicle to add to their Investment Portfolio.
Start trading cryptocurrencies with Aron Groups.
First of all, we offer a demo trading account that allows you to trade cryptocurrencies in a risk-free environment. of course, we provide you with the best trading platforms available on the market. MetaTrader 5. By trading along Aron Broker, you can benefit from a falling market and profit from the price decreases by Short Selling. You can also use leverage Trading and borrow funds from the broker to trade them in much larger positions with minimal investment. Using the broker’s trading platforms, you can copy the positions And Trades of experienced Traders with a proven success record and make money.
Basic terminology of cryptocurrency trading
A cryptocurrency trade consists of a buyer and a seller that would agree upon a price, and the trade will be executed; as the number of buyers increases, the price goes up, and as the number of sellers increases, the price goes down. To be a successful Trader, you need to get familiar with the market through the following terms and considerations:
Reading the market
Before getting into the market, you need to understand whether the market is bullish or bearish. A bullish Market happens when the price is on the rise. On the other hand, the market is bearish when the price action appears to decrease steadily.
Learn technical and fundamental analysis
Before analyzing past Market data, you wouldn’t be able to speculate on the next move.
Using fundamental analysis, you will be installing the underlying industry of the market, and in doing so, you will be evaluating:
- The developers of a crypto project,
- The number of people believing in that currency
- The technical specifications, Including the Network’s algorithm
- Liquidity
- Infrastructure
Follow the whales
Accounts that Acquire large amounts of cryptocurrencies are called whales, individuals or groups with large investments to trade so they can make a market. When choosing your trading strategy, you need to be aware of their decisions because they tend to know what they’re doing. If you master anticipating the intentions of whales, you can’t trade in concrete with these market makers and make a profit.
Learn how to determine support and resistance
Just like any other Market. Support and resistance are the two price barriers that are important in the market. These two levels prevent the price action from going too far in a certain Direction.
If the price of a cryptocurrency surpasses the support or the resistant line, it indicates that the market’s overall sentiment is changing.
Final thought
let’s remember that trading cryptocurrency can be a lucrative investment, just like trading Forex, but it is also risky. So, it is necessary to think about using risk management tools. Determine how much you will be able to lose on a crypto trade if the market goes against you. Try to choose a trading strategy that suits your priorities, and remember there is no one-size-fits-always strategy; you need to choose any strategy based on your preferences, personality, trading capital, and risk tolerance.
Last but not least, you need to learn everything you can about trading cryptocurrencies before getting into the market. We recommend using our free demo account to experience the real situation and test your strategies before trading real money. Doing so, you will educate yourself in a risk-free environment without spending a dollar.
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