In the wake of the explosive growth in the popularity of cryptocurrencies day trading and the abundance of news in the global media related to digital money, many people wished to play and earn millions on the exchanges trade bitcoin. However, most of them suffer losses simply because they do not comply with the fundamental rules of a dangerous game.
You can play only for the money that you do not mind losing
In no case should you invest in cryptocurrency trade bitcoin all the savings or take loans that, sooner or later, will have to be given back. Playing for the last money cannot be calm, confident, and long-term. So it leads to hasty decisions and inevitable losses.
How to trade on a cryptocurrency exchange
In addition to the cloud and mining of their equipment, which is the original way to create cryptocurrencies, bitcoin exchanges are the only way to get them. Also, only with the help of exchanges, you can exchange them for real money.
The separation of the entire list of exchanges can be carried out conditionally according to one of the most important criteria:
- Exchanges on which bitcoin, altcoins, and part of the main forks can be exchanged for national currencies (fiat money).
- Exchanges on which they trade exclusively with BTC and altcoins, i.e., exchange some cryptocurrencies for others.
Using trading volume in analysis
Trade volume is represented as the total number of units of the traded cryptocurrency, which passed from hand to hand based on executed orders for a specified period. Naturally, there is no talk of direct transmission of something material. For analysis, it is essential to measure the volume that arose when the price reached a certain level. This can be a strong signal to start Bitcoin trading in anticipation of further price movement.
Various software platforms for cryptocurrency Bitcoin trading use the vertical and horizontal volume representations. The most significant prevalence of exchanges was vertical volume.
In this case, a list is formed with information about the size of all transactions concluded for a certain period and is displayed in the form of columns under the price chart in time relation. The time interval for constructing one column is the same as on the price chart. That is, if an hourly chart is used, then the volume is presented in the form of columns, each of which indicates the total amount of trade Bitcoin for the past hour. For the daily chart, it is calculated for the entire Bitcoin day trading.
The most practical option for using the volume may be to determine the end of the corrective movement in the trend. A sharply increased amount at a price going against the primary trend may signal its end. This moment is advantageous to start trade Bitcoin in the direction of the trend.
Strategies Based on Technical Analysis
The use of the mathematical approach in trading on exchanges is still the subject of heated debate. Some traders believe that they do not apply to cryptocurrencies, while others claim that it was here that they found their correct application.
The most straightforward strategy is to use the so-called moving averages, which help determine the average value of the price at given time intervals. If the cost, according to the chart, is above the moving average, then the price rises; if lower, it falls. However, moving averages cannot be called the best tool when trading bitcoins and other currencies.
The cryptocurrency trading strategies such as trading on pullbacks, trading on impulses, and also trading on breakouts are considered optimal today. Based on these strategies, you can even write a small manual: “Trading on the cryptocurrency exchanges for dummies.” They give a virtually guaranteed profit. Using a tool called “Japanese candles” is also a mechanism that can be named one of the best when it comes to how he proved to be in trading for the entire time of its existence.
Cryptocurrency Trading Principles
Exchange transactions and speculation on cryptocurrency exchanges are identical to any other. To make a profit, you need to buy cheaper, sell more expensive. That is, in the same way as with investments in ordinary currency. Naturally, the tool base and the principle of determining goals for trade bitcoin are set in the same way as in the securities or forex markets. Making a profit trade bitcoin virtual money will not be a problem for those who know the basics of trade bitcoin in the stock market, securities, and national currencies.
The following list can represent the main components that a trade bitcoin participant operates on a cryptocurrency exchange:
- sell, buy orders for sale and purchase;
- history of transactions;
- trading volumes held on the exchange (s).
To understand the basics of a cryptocurrency exchange, it is worth considering all of these elements in turn.