Choosing a digital exchange to trade cryptocurrencies is an easy task. Before doing so, there are several issues that you would have considered in order to get your investment exercise underway. One of the common criticisms about the crypto market is that it can sometimes be too technical.
Not as sophisticated as presumed
So, to help you understand better how the market works and the terms they use, we have simplified the lingo that is being used and dispels the perception that this is a complicated market. While it is not a simple exercise (so is anything that deals with money and finance), they are quite easy to understand and hence should not be too much of a problem to grasp.
Volatility is the key
This is a no-brainer and is always the ‘warning’ when it comes to cryptocurrencies. Bitcoin (BTC) and Ethereum (ETH) are 2 of the most popular cryptos in the market. There are other popular ones like Litecoin, Dash, Monero, Ripple and Zcash. One thing for sure, these are extremely volatile engines and that you must be ready when price change happens. BTC for one is among the most volatile with the price changing tremendously within days. This means you have the potential to make a handsome sum of profit in a relatively short time (and potential loss too!).
Blockchain is the mother of all cryptos
This is a list of secure records known as blocks which are constantly growing. To know how it works is to get down to the technicalities but you do not necessarily need to understand everything. However, having a basic grip on how it works will allow you to make a better forecast when it comes to the movement of price. News and announcements will usually come through this channel.
Digital Wallets for safekeeping
You might come across certain advice that you do not need any digital wallet. This is true if you are in for short-term trading or price speculation. But it would be safer to have one where you can own the crypto whether it is for your personal consumption or for future trading. Using the known platforms’ digital wallets would always be a safer option.
Strategies differ from other markets
Like any other money market out there, you will have a strategy in mind. This will be different as well. You might consider:
- Swing Trading – The most straightforward strategy where you want to bet there when there is a ‘swing’. What you want to look out for is a correction in a certain trend like a candle. That is when you catch the ‘swing’ back.
- Check news – Whether it is on the blockchain or on any finance site, take note of current news and updates. This could be new government regulation or a big investor buying cryptos. They will surely affect the market and that is the time for you to either buy or sell.
- Technical Analysis – A common strategy used not only in crypto but in shares too. This is by far one of the most reliable trend-forecast strategies based on the mantra that certain occurrences could repeat themselves. You want to find a pattern and base your future trades on that. However, this should not be your main strategy as you still need to know the market happenings.
- Know your metrics – Here, you want to study the number of wallets against the active ones. Put them with the current trading volume and you will somewhat get the current value of certain crypto.
- Trade On Margin – Huobi is one platform known to provide good margin platforms. What you do here is to ‘borrow’ extra funds when you trade on margin. This is a good way if you are confident of a certain price shift.