Start trading cryptocurrency - how to start trading cryptocurrency

Introduction to the world of cryptocurrencies

Any exchange or brokerage platform poses the most important question to the trader from the outset. He should choose a few commodities that trade well on the exchange and try to make a profit on their trades. One such asset is crypto money. So what is it? In 2022, there are hardly any people left who have never heard of Bitcoin. Virtual currency, which began to conquer the world back in 2009, has already celebrated its tenth anniversary. But before, few people could have imagined that bitcoin would become so popular.

Bitcoin, like any other cryptocurrency, is a file that is stored in a digital wallet. Each transaction with a token is recorded in an open database - blockchain. Thanks to cryptographic protection, the maximum level of security is ensured, so the same coin cannot be spent twice or copied.

The concept of "digital currency" refers to digital types of currency. It is created and transmitted using cryptographic methods, mainly based on blockchain technology. "Coins" are issued initially in electronic form, literally due to mathematical calculations. In simple words, a virtual currency is an artificial payment system that is equated to real money and has an official exchange rate.

How to start trading cryptocurrency? It is better to start acquainting yourself with the currency sphere by choosing a strategy. The main ones are investing or trading. The first involves the acquisition of an asset and long-term storage. The second is short-term speculation. A trader makes many transactions with assets, trying to profit in a short period of time.

Cryptocurrency trading

Blockchain technology is at the heart of Bitcoin, Ethereum, Monero and other virtual currencies and has a wide meaning in exchange trading.

There are now both the most selective digital currencies on the market, which have already gained prominence, and the newer, lesser-known ones.

Here is a list of popular currencies that can be traded on the exchange:

Bitcoin is the "original" coin and still the most expensive digital currency by market capitalization.
Bitcoin Cash is a standalone asset that emerged from the first 'hard fork' of the original Bitcoin blockchain.
Ethereum.
Litecoin is a digital currency designed to support payments with fast transaction times.
Ripple is a virtual currency that solves the problems of international payment systems.

When a trader trades by speculation, he or she simply makes money from the fluctuations in the exchange rate. It is not necessary to have a wallet here, and since the trader speculates on price differences rather than owning the underlying asset, both long and short positions can be opened.

Digital currency markets are the most volatile (constant fluctuations in the value of a currency throughout the day) markets in the world, so they have large price fluctuations.

When trading on an exchange, you can apply the same risk management tools that work well on traditional exchanges.

Therefore, it is very important for a trader to properly start trading cryptocurrency by adopting an accurate trading strategy based on sound risk management.

How to start cryptocurrency trading?

You should start trading cryptocurrencies in Qatar when you make sure that you understand and understand how it works, what problems it faces and how it works in the long and medium term before opening a position.

Let's look at a few points where to start trading digital currency:

To get started, select the currency you wish to trade. Browse through the list of the most selectable currencies currently on offer.
Learn to perform the main action of a trader: long or short positions. The results of the research, analysis and knowledge of the market will help you decide which position to open to buy an asset (long) or to sell an asset (short). The direction of the position is decisive.

If you make a purchase of an asset in a long position, then you wait for its value to increase, then you sell it. In a short position, you sell an asset, and wait for it to fall in price, then you buy it for yourself. Therefore, it is very important to carefully research and analyze everything in order to accurately determine the entry point to the market with the maximum benefit for yourself.

Constantly monitor the digital currency market.

The situation on a crypto exchange changes frequently, so keeping up to date with what's happening in the market is essential for successful trading. As more and more crypto money becomes popular, information about price movements becomes more accessible.

Always keep a close eye on the news about the cryptocurrency you trade. It is also useful to communicate on thematic forums in order to be aware of possible news related to price fluctuations.

Since the definition of a trading strategy requires verified information from reliable sources.

As with any other asset you decide to trade, it is important to have a clear trading plan, in-depth study and analysis of the market in order to make the right decision.

Day trading on the cryptocurrency exchange.

Cryptocurrency can be volatile and this can lead to noticeable price fluctuations. Therefore, it is very important to be able to manage risks, keep positions open, as this has high risks.

Day traders identify market trends by trading at current rates until they reach a predetermined price level. Day trading can be a demanding process in terms of time, flexibility and the ability to quickly respond to market changes.

In day trading, you must use an intelligent risk management tool, such as a guaranteed stop loss, that is, do not sell assets below the price specified in the condition. This allows you to avoid unforeseen losses in case of volatility with a large amplitude.

Follow the news of the market. Even though there is not much data and recurring market trends in the world of cryptocurrencies compared to other long-standing assets, the research and analysis done on digital currencies is still of great value. Therefore, it is necessary to constantly monitor the news and user reviews regarding the exchange.

Cryptocurrency markets often change their strategy depending on external forces that influence traditional market trends, such as supply and demand.

On the other hand, new virtual assets may be particularly sensitive to issues such as new hard forks, hacker attacks on exchanges, and so on.

Indicators are a necessary working tool for a trader.

For an asset that suffers large price fluctuations on a daily basis, it is very important to have the right tools to track trends and predict major market movements. A set of powerful indicators will help you thoroughly analyze the crypto markets, identifying trends and changes in sentiment in real time. Be sure to use indicators such as MACD (Moving Average Convergence) and Bollinger Bands, a special chart that shows the direction and range of price fluctuations.

Effective cryptocurrency analysis tools

To build a profitable trading strategy, you can use various cryptocurrency analysis tools.

Trading is based on the analysis of two things: the current state of the price and the prospects for price change (trend) of a particular trading instrument.

Fundamental and technical factors are interrelated, but the mechanisms of influence on quotes are different. Therefore, analysis involves at least a few separate measurements:

fundamental - the main prospects of cryptocurrency against the background of news evaluation;
technical - through the search for patterns of changes in quotations under the influence of demand.

To analyse crypto-money rates, algorithms that have long been implemented in technical analysis indicators are used. They have already proven to be effective in the currency and stock markets.

Let's look at the most popular indicators for analyzing. Classic indicators include:

Moving averages;
Oscillators;
Ichimoku cloud.

Moving averages (MA)

Moving averages (MA) are considered the most popular and commonly used. This is the basis on which the list of other indicators and strategies is built.

In the foreign exchange market, moving averages were first introduced by Richard Donche in the 1950s. If many traders knew about all the advantages of the moving average, they would start earning more and much sooner.

MA is the average price of a currency pair over a certain period of time. The indicator allows the trader to see the smooth movement of the market. The moving average repeats the price movement, but does it more smoothly, without sharp jumps.

There are four main types of MA:

simple (SMA);
smoothed (SMMA);
exponential (EMA);
linear weighted (LWMA).

Ichimoku Cloud (IC)

The Ichimoku Cloud indicator, also called Ichimoku Kinko Hyo, is a popular and flexible indicator that helps to identify support and resistance levels, set the direction of the trend, measure the pace, create trading signals for maximum security.

The Ichimoku cloud indicator gives a more transparent and visual picture of the price movement. These signals help traders find the best entry and exit points. It is a crypto tool with five lines, each of which displays data based on leading and lagging indicators. When two lines intersect, the area between them becomes a cloud.

Oscillators

The next most popular technical indicator is the Stochastic Oscillator. SO compares the current closing price with the price range for the trader's chosen time period. The indicator is a graph with two lines: a solid line and a dotted line.

First of all, you should buy a asset when the oscillator falls below a certain level and then rises above it. When the solid line rises above the second line, then you need to make a purchase. But if it is below the dotted line, it is worth moving on to selling. Don't forget to watch for discrepancies.

How does this indicator work? The indicator uses four variables. Without this, the SO calculation would not be possible. The smoothing of the moments by solid lines is also carried out.

The Relative Strength Index (RSI) is a well-known momentum-based oscillator that is widely used to measure the speed (turnover) as well as the magnitude (amplitude) of directional price changes. RSI on a chart is a visual tool for monitoring both the current and historical strength and weakness of a particular market.

Bollinger Bands

In the trading systems of many traders, you can find a specially selected set of indicators. One of the most famous is Bollinger Bands or Bands.

At its core, Bollinger Bands are an indicator that is great at showing volatility.

It consists of only three lines, namely:

simple moving average (SMA);
upper band;
bottom band.

The basis of Bollinger is a corridor. It is he who is the essence of the indicator. And when the candle goes beyond the upper or lower limits of the corridor, then you need to look for opportunities for trading.

At its core, this is a typical oscillator. There are a great many of them, however, Bollinger Bands are one of the most popular oscillators in the world.

The more volatility, the wider the Bollinger Bands. Conversely, when the price goes up or down (low volatility), the bands narrow.

Trading indicator MACD

The MACD indicator is Moving Average Convergence Divergence and has become a very important tool for traders. The indicator can be used to obtain information about the general trend of the market, as well as a tool that will mark entry and exit points in the market.

This tool is used both in simple strategies for novice traders and in advanced systems for professionals.

The MACD (Moving Average Convergence/Divergence) indicator is a technical market analysis tool based on assessing price movements by analyzing the smoothed difference between the convergence/divergence of two moving averages.

The logic of the MACD is that the slow moving average shows the long-term market trend, while the short moving average shows what will happen on the trading floor now or in the near future. If there is a strong difference between these two indicators, we can talk about a state of strong overbought or oversold. Also, moving averages can, on the contrary, converge, which indicates the formation of a state of price equilibrium in the market.

So after analysing the indicators, one main conclusion can be drawn: a trader needs cryptocurrency instruments.