Trading cryptocurrency on exchanges. What you need to know and the main principles of cryptocurrency trading on exchanges

Trading cryptocurrency on exchanges. What you need to know and the main principles of cryptocurrency trading on exchanges

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Author: Robert Strickland (crypto-journalist)
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Trading cryptocurrency on exchanges. What you need to know and the main principles of cryptocurrency trading on exchanges.

We discuss the basics of trading Bitcoin and other crypto assets on trading platforms, the choice of strategy, tools, and risks.


 

Cryptocurrency trading involves buying and selling Bitcoin and other crypto assets on the market to make a profit. Depending on the trader's goals and strategy, cryptocurrency can be traded on various time frames, ranging from seconds to years.

It is important to note that cryptocurrency markets can be highly speculative and volatile. It will be helpful to study the situation, create a clear trading plan, and understand the basics of cryptocurrency trading. While cryptocurrency trading may look different for each trader, there are several basic principles common to all market participants.

  1. Choice of cryptocurrencies: Traders decide which cryptocurrencies they want to trade. Bitcoin (BTC) or Ethereum (ETH) are among the most popular options, but there are thousands of different crypto assets.

  2. Choice of trading platform: Traders use cryptocurrency exchanges or trading platforms to execute transactions. These platforms facilitate the buying and selling of cryptocurrencies.

  3. Registration on the exchange: On each traditional cryptocurrency trading platform, it is necessary to create an account. The process involves providing personal information, "know your customer" (KYC) identification, and creating a wallet for storing cryptocurrencies.

  4. Account funding: To start trading, funds need to be deposited to purchase cryptocurrencies on the exchange. This can be done using fiat currencies (dollars or euros) or stablecoins—cryptocurrencies pegged to the value of the dollar (USDT or USDC). Additionally, cryptocurrencies can be directly transferred to wallets supported by the exchange.

  5. Order placement: During trading, traders place orders on the exchange (buy or sell orders for cryptocurrencies). Various types of orders exist, including market orders (buying or selling at the current market price), limit orders (buying or selling at a specific price), and stop-loss orders (triggering an order to buy or sell when the price reaches a certain level).

  6. Analysis and strategy: Traders often use technical and fundamental analysis to decide when to buy or sell cryptocurrencies, applying various trading strategies such as day trading, swing trading, long-term investing, and others.

  7. Risk management: Cryptocurrency transactions on exchanges involve risk and sharp price fluctuations (market volatility). It is crucial to manage risks wisely through portfolio diversification, setting stop-loss orders, applying hedging strategies, and not investing more than one can afford to lose.

  8. Order tracking and execution: Cryptocurrency traders closely monitor the market and complete their orders when pre-determined conditions are met. Prices on the cryptocurrency market can change rapidly.

  9. Security: Measures should be taken to protect accounts on exchanges and wallets from hacking and fraud.

 


 

  • Choosing a Cryptocurrency Exchange -  When starting cryptocurrency trading, one of the first and most crucial steps is selecting a suitable cryptocurrency exchange. It opens up a market for the trader where buyers and sellers interact for cryptocurrency trading.

Different exchanges offer different sets of features, so their selection largely depends on the individual trading needs and goals of the trader or investor. Some may have a more user-friendly interface, while others offer more assets and higher liquidity. Additionally, when choosing an exchange, attention should be paid to security. Nowadays, most platforms employ robust security measures, including two-factor authentication and so-called cold storage for user funds.

It is also important to consider the fees that the exchange charges traders for trading, as well as fees for depositing and withdrawing funds. Before opening an account, it is advisable to check the availability of the exchange in the required region and its compliance with the regulatory requirements of the country of residence.

 
 
 

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