What is cryptocurrency and cryptocurrency trading, how to begin trade? 

Technology has changed the way people work, how they communicate, how they shop, and even how they pay for goods. Companies and customers are now far from always choosing cash, preferring contactless payments such as Apple Pay. The use of smartphones allows consumers to pay for goods digitally. Now a new payment unit is gaining popularity - cryptocurrency.

Probably everyone has already heard about bitcoins. It was the first cryptocurrency to go mainstream. But over time, other digital coins have emerged and are growing in popularity. There are over 2,000 different types of cryptocurrencies, and new ones are being developed every day.

Research shows that most people have heard of cryptocurrency, but do not fully understand what it is.

So, what is cryptocurrency, is it safe, how to invest in it and how to start trading cryptocurrency? In this article, we will answer these questions.

Cryptocurrency is a digital currency that uses decentralized payment systems to verify and secure transactions. Those banks or other familiar financial institutions are not involved in confirming transactions.

It is a peer-to-peer system that allows anyone, anywhere, to send and receive payments. It is not physical money that is carried and exchanged in the real world; Cryptocurrency payments exist exclusively in the form of digital records in an online database that describe specific transactions. When transferring funds in cryptocurrencies, transactions are recorded in open registers, and the cryptocurrency is stored in users' digital wallets.

The cryptocurrency gets its name because encryption is used to verify transactions using it. This means that extended coding is used to store and transfer cryptocurrency data between wallets and to open registers. The purpose of encryption is to provide security.

Against the background of the rapid growth in popularity, the cost of cryptocurrencies has grown sharply, which attracted a huge number of investors into this area. Against this background, exchange exchanges and other platforms using cryptocurrency began to appear on the market.

The high volatility of digital coins has attracted attention only from long-term investors, but also a huge number of speculators who previously worked in traditional markets. Now derivatives from cryptocurrencies are traded even on traditional financial platforms such as CME.

The FOREX market is the most popular among private traders. Many forex traders at one time switched to trading cryptocurrency on specialized exchanges. But now brokerage companies are trying to return clients by adding cryptocurrency CFDs to the list of trading instruments. The vast majority of cryptocurrency exchanges do not work directly with fiat (traditional) money, so it is not so easy for a beginner to start trading cryptocurrency.

The most popular coins
The most popular coins

What do you need to trade cryptocurrency? 

To start trading cryptocurrency, only two things are needed - knowledge and money. Moreover, the first factor is more significant. Without knowledge and skills, you will never earn, and you can also lose.

With knowledge and even a small amount of money, you can eventually turn it into a lot of capital.

How to get this knowledge? How to start trading cryptocurrency? And most importantly, how to properly start trading cryptocurrency?

It is necessary to start by studying the basics of the functioning of the financial market. The cryptocurrency market certainly has its own characteristics, but you can easily take them into account if you know how the financial market works in general.

But even having received this information, you will not be able to immediately start trading profitably in the market.

The next step is to gain experience. This is an attempt to apply the knowledge gained in practice. Properly start trading cryptocurrency is trading on a demo account. It will allow you to learn how to trade without the risk of losing your own funds. In this case, you will actually work in real conditions.

Cryptocurrency exchanges are not very well suited for demo trading. Many of them don't even have this feature. Therefore, properly start trading cryptocurrency by opening an account (demo account) with a brokerage company. Here you will receive competent technical support, you can easily and quickly open an account and start trading. Moreover, many brokerage companies provide free training for newbies.

Only after achieving a positive result on a demo account, you can start trading on a real account.

Litecoin Moving Average Deviation
Litecoin Moving Average Deviation

Main tradable cryptocurrency 

Obviously, the most commonly traded cryptocurrency is Bitcoin. It is the world's first cryptocurrency and remains the most popular and demanded.

At the same time, not only is direct purchase or sale of this asset popular, but also derivatives trading. The first futures appeared on Bitcoin.

Bitcoin Cash Stochastic Oscillator
Bitcoin Cash Stochastic Oscillator

How to analyze cryptocurrencies? 

There are many different methods of market analysis. Most of these methods were developed on traditional financial instruments and were gradually transferred to the cryptocurrency market.

Traditionally, there are two main approaches to the analysis of the market situation:

  • technical analysis.
  • fundamental analysis.

Technical analysis - a set of tools for predicting the likely price changes based on the patterns of price changes in the past in similar circumstances.

This is a very broad concept, and in fact, technical analysis means a very large number of different strategies and methods of trading and analysis. Therefore, here you need to be guided by the main principle - technical analysis is the analysis of prices in the past. This or that method of analysis is based on the price movement in the past, then this method can be safely ranked as technical analysis.

Bitcoin MACD indicator
Bitcoin MACD indicator

Fundamental analysis is a term for designating methods for predicting the market value of an asset in the future, based on the analysis of some financial indicators, statistical data, current market conditions and other information.

Fundamental analysis of cryptocurrencies implies a deep dive into the available information about a financial asset. For example, you can consider its possible uses, the number of users, or the team behind the project. The goal is to conclude whether an asset is overvalued or undervalued. After that, the information obtained can be used when opening trading positions.

Which of the market analysis methods to use for start trading cryptocurrency is up to you. We recommend that you try both methods and choose the one that works best for you.

If you don't know how to start cryptocurrency trading? Start by learning the basics of fundamental and technical analysis. This knowledge will be useful when trading in any market.

Ethereum Bollinger Bands
Ethereum Bollinger Bands

Trade planning 

The source that allows you to understand the market situation and make decisions easily is the very trading plan of the trader. In the absence of a trading plan, a trader opens all trades at random. That is, trading turns into roulette (lucky or not). This is definitely not the correct start cryptocurrency trading.

Every trader who wants to achieve a positive result in the market must have 4 things:

  • Trading strategy (trading rules).
  • Trade entry rules.
  • Money management.
  • Trading plan.

Remember these things if you don't know how to start cryptocurrency trading. You must work on each item in detail in order to achieve a good result.

Trading strategy (system). It should contain specific rules for entering and exiting the market. In particular, points such as:

  • selection of a cryptocurrency pair;
  • timeframes;
  • trading time;
  • elements of market analysis;
  • other points related to opening and closing orders.

Trade entry rules. A trader should always have a short list of conditions for the sale or purchase of a particular asset. It is better if this list is presented in electronic and written formats. During trading, a trader must put plus signs in front of each point, if this or that point is fulfilled. When at least one of the conditions is not met, the deal is not opened. If all conditions are met, then you can start cryptocurrency trading and open a trading position.

Money management. Having a proven trading strategy is half the battle. The main thing is not to forget about the laws of money management, since drawing up a trading plan will not work without it. You must clearly define the rules for calculating your trading position size, risks, etc.

Trading plan. A trading plan can be safely called a plan of action for any case that may occur during trading on the market. Usually, they try to include money management rules and so on in the preparation of a trading plan. This is all good, of course, but a novice trader will only get confused in such a plan. Therefore, each of these points should be prescribed separately.

Bitcoin Relative Strength Index (RSI)
Bitcoin Relative Strength Index (RSI)

General trading strategies 

Currently, there are a huge number of different markets and trading instruments. They all have their own characteristics and certain similarities and differences. But there are basic rules that work in almost any market. Therefore, many points that we will consider below will be relevant not only for the cryptocurrency market.

An important distinctive feature of the cryptocurrency market is its high volatility, which is not typical for traditional pheophanic instruments. This carries significant markets. Therefore, it is very important to properly start trading cryptocurrency.

In cryptocurrency trading, you cannot rely on chance. To effectively open positions and generate income in the future, you need to have a clear strategy.

It is also important to consider where and what you are trading. For example, if you are trading on a non-spot market, then you will not be able to open positions in both directions. You can only buy an asset and then close this position with a sale. If you trade derivatives, CFDs, futures, etc., you can always open both buy and sell orders.

Asset quotes always move according to a trend, which can be upward or downward. In theory, a trader can open positions in any direction (when trading derivatives), but the most profitable and safe, especially in the cryptocurrency market, is trend trading. A trader should always strive to open positions in the direction of the trend, i.e. buy when the trend is up and sell if the trend is downtrend.

The most difficult moment for novice investors is the definition of the trend, for this it is necessary at least to determine the key local lows and highs.

For an uptrend, each next point must be higher than the previous one, and for a downtrend, local highs and lows must be below the previous ones. Then we can safely talk about the presence of any trend and the priority direction of opening a trading position.

There are ways to trade a change in trend when a trade is opened at the peak of a trend wave, trend movement. But this method is more complicated and requires much more knowledge, practice and experience. For beginners, this method is more complicated. Therefore, for start trading cryptocurrency, you should first of all pay attention to trending strategies.

The easiest way to start investing in cryptocurrency is long-term accumulation of digital coins with regular purchases in equal parts.

The advantage of this strategy is that it is possible to buy an asset regardless of the market situation. If the price of the cryptocurrency begins to fall, then subsequent purchases at a lower cost can average the entry point.

While the cryptocurrency market is globally in a bullish trend, such a strategy will always bring profit in the long run.

Look at the gold chart to support these words. At a long distance, it has a strictly upward motion vector. In this situation, over a long period of time, buying a tool at any level will ultimately bring you a profit.

But even applying this strategy, trading in the cryptocurrency market must have certain knowledge and experience. An inexperienced trader may panic when the market goes down and close positions at a loss.

Therefore, properly start trading cryptocurrency on a demo couple, after studying additional information and literature on trading.


Is crypto trading safe?

Any trade, investment and operation in the market carries a certain risk. You cannot completely remove it, but you can minimize the risk.

By speculating on short-term changes in the price of an asset, you make a profit. By buying an asset at one price and selling it at a higher price, you get a profit.

In theory, you can start trading cryptocurrency for free on a demo account. To trade on a real account, you will need funds to fund your trading account.

It all depends on your knowledge and skills. Experienced traders receive substantial income from trading and investing in cryptocurrency.

It all depends on your individual characteristics, preferences, trading strategy, money management rules, etc.

The most popular cryptocurrencies are Bitcoin (BTC), Ethereum (ETH), Ripple (XRP).

At the beginning of December 2017, it became known about the first billionaires who received their fortune thanks to investments in bitcoin. They turned out to be brothers Tyler and Cameron Winklevoss. In the future, the list of millionaires who got rich on cryptocurrency only grew. 

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The financial services provided by this website carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose