Like fiat currencies, cryptocurrencies function as a medium of exchange. Because it is based on cryptography, cryptocurrency is difficult to counterfeit. Cryptography protocols are used to make transactions safe and to control the process of new coin creation.
Because cryptocurrencies are not tied to any particular country or central bank, the value of the coin depends on factors such as usability, demand and supply. The more a cryptocurrency is used, the more its value rises. Contrary to bank transactions, Cryptocurrency offers faster, cheaper and an easier way to send and receive money worldwide.
Kishore M has launched his cryptocurrency workshop where he teaches how to buy and sell cryptocurrencies, how to store them and how to trade them profitably using cryptocurrency exchanges. Kishore M covers the entire cryptocurrency ecosystem where he teaches how to select the wallet and exchanges and how to handle your cryptos with safety and hot to trade them with proper risk management.
Lets Learn the Basics of Cryptocurrency Trading
How cryptocurrency trading works –
Trading currencies (whether fiat or cryptocurrencies) involves exchanging currency that you own into another kind of currency and then exchanging it back when the price changes – hopefully for a profit. In the world of fiat currencies, this is known as forex market trading. Trading cryptocurrencies works exactly the same like forex market trading, but instead of selling and buying fiat currencies, such as euros or US dollars, traders buy and sell cryptocurrencies, such as bitcoin, Ether (ETH) or Litecoin.
The advantages of trading cryptocurrencies –
Trading cryptocurrencies, while similar to trading fiat currencies on forex, comes with its own set of advantages.
- Cheap fees and fast exchanges. For each trade, the exchange platform you’re using will take a small percentage as commission for the service it’s providing. This is inevitable. Where cryptocurrency trades differ from their fiat currency equivalent is in the size of this fee. Because the fees for transferring cryptocurrencies (typically via wallet payments) are cheaper than credit card and bank transfer fees, cryptocurrency-trading fees are cheaper than forex-trading fees.
- Extreme volatility. Traders make profits when the price of the currency takes large strides upwards, and cryptocurrencies often experience large price movements. While this increases the risk (large price movements happen downwards as well), you can often make a lot of profit with a relatively small bankroll.
- Open all week. You can only trade stocks and commodities during business hours, and you can only trade forex during weekdays. Cryptocurrencies, on the other hand, can be traded 24/7, anytime and anywhere.
Things to be careful of –
If you’re not careful when it comes to cryptocurrency trading, you could find yourself gambling more than you’re trading, and eventually you might lose all your money. Trading is not a game, and just as there is real money to be made, there is real money to be lost. Doing your research and keeping the following concepts in mind when trading could help you avoid the pitfalls of cryptocurrency trading.
Limit your exposure-
Limiting your exposure comes down to two specific concepts:
- Never invest more money than you are willing to lose. You should consider any money you put into a trade as lost. If you’re uncomfortable with this notion, then you’re trading more money than you should be. Finding the point where you’re comfortable with this concept is key to helping you trade stress-free.
- Consider setting up “take profit” and “stop loss” orders. These limits are offered by many professional trading platforms and will help you avoid losing more money than you’re comfortable losing if the trade goes wrong, as well as help you avoid missing a cash-out opportunity.
Know when to cash out –
What market trading really comes down to is knowing when to close a trade. This is the crux of the operation. Getting into a trade is easy, knowing when to get out is hard, and that is where you should focus most of your learning. This again involves two different aspects:
- Closing a trade in profit. It is important to take your winnings out of a trade. Cryptocurrencies move faster downwards than they do upwards, and you don’t want to be late cashing out of a trade. You also don’t want to be too early and miss out on extra profits. There are a lot of techniques to help you make this decision that are out of the scope of this beginner’s guide.
- Cutting your losses. Similarly, you want to be ready to cut your losses if a trade goes wrong while also not getting out too early in case the cryptocurrency recovers.
In Kishore M cryptocurrency courses, you will learn all the above points and will be able to trade cryptocurrencies comfortably and profitably.