Trading cryptocurrencies

The cryptocurrency market can be highly profitable due to its high volatility – but also lead to you losing thousands of dollars in minutes.

It is vital to leverage accurate trading knowledge if you are to get the best out of it.

What is crypto trading?

Cryptocurrency trading speculates on the cryptocurrency price movement using a trading account or buying and selling coins via exchanges. The crypto trader should be armed with an in-depth knowledge of cryptocurrency and the cryptocurrency market.

If you wish to venture into the market and make profits from it, there is a learning curve like any other potentially lucrative venture. To get in-depth knowledge of crypto trading, you can enroll in an online course on Udemy.

Trading strategies

Assuming you are a beginner, here are a few strategies at the foundational level to help you make profits from the market.

• Buying the Dip: As someone who wants to venture into the cryptocurrency market, you should have heard the word ‘buy the dip’. It is common among crypto traders and investors. Buying the dip means buying a cryptocurrency when the price falls in the expectation that it will be followed by a march forward. Many cryptocurrency investors use this opportunity as an entry point or to get coins at a reduced price in the hope that they can make a massive profit if the price skyrockets. However, it is advisable to recognise cryptocurrencies with potential before buying their dips, as some dips indicate the end of a currency. Putting your money into these would result in a loss.

Platforms such as the Bitcoin Rush website allow you to buy their dip.

• Arbitrage: Arbitrage doesn’t focus on the ups and downs of the market but instead on the market’s mispricing. It is like buying at a low cost on an exchange and selling quickly on another exchange at a higher price. On a given day, there are numerous mispricing opportunities that you can’t catch manually. You will need an algorithm or an AI to detect and execute trades.

Types of trading

• Long-term trading: This is when an investor decides to hold the coin or token over the long-term with the hope that the coin will be more valuable in the future.
• Day trading: This is a trading type in which the trader takes advantage of the price fluctuations within a day. Day traders are mostly full-time traders.

For novices/beginners, long-term holding is recommended as it doesn’t need a wealth of knowledge to run. You need to do research on the coin, buy and hodl until you reach your target.

Conclusion

The cryptocurrency market can earn you profits beyond your imagination; however, you can also lose your money due to its volatility as a market. You must therefore study carefully before venturing into it.