Cryptocurrency is currently on the rise; one of the most popular cryptocurrencies is Bitcoin. The price is high enough to make Bitcoin have many enthusiasts.
Users can benefit from cryptocurrency in several ways, the most common of which is trading. In this article, we will explain trading.
Definition of Trading
Trading is buying and selling financial instruments or currencies through an exchange or broker. There are many types of trading, including forex and cryptocurrency trading.
Forex trading
One type of trading is forex or foreign exchange trading. Forex trading is trading currency pairs from various countries to profit from the difference in exchange rates. Forex market participants consist of governments, corporations, banks, financial institutions, and forex brokers.
Cryptocurrency Trading
In addition, Cryptocurrency trading can also be done on a cryptocurrency exchange. Trading activities involve exchanging cryptocurrency for another, buying and selling coins, or exchanging fiat money for crypto. People who make trades are called traders.
These traders will conduct the trading process by looking at developing the crypto price they want to sell or buy. One of the advantages of trading crypto assets, including Bitcoin trading, is that you can get involved without the need to mine crypto. Of course, requires time, energy, knowledge, and computational tools that are not easy.
This trading is a way for traders to buy or sell crypto assets in a simple, easy, and fast way.
The trading principle is simple: buying when it is cheap and selling when it is expensive. This simple principle will make you profit. After we know what trading is, the next step is understanding how to trade.
How to Trade Cryptocurrency
Spot Trading
Spot trading is trading in buying and selling currencies or assets that are already owned on the same day.
1. Choose the Right Exchange
Platform An exchange platform is where users can buy Bitcoin or other crypto assets according to the current market price.
There are already many exchange platforms available, both domestically, one of which is Indodax and Binance, the largest in the world.
Each exchange platform has its advantages and disadvantages, ranging from the trading fees and withdrawal fees charged to the available crypto assets, the existing trading features, and the ease of operating them.
2. Register and Complete the KYC Process
After determining which exchange platform you will use, then you must register on that platform. After registration, you are required to do a KYC or Know Your Customer process.
In this process, you will need to upload a photo of your ID and your image. This process is necessary to avoid fraud or fictitious accounts.
After uploading the required documents, your account will be verified within 1×24 hours by the exchange platform.
3. Choose the Appropriate Payment Method
You are ready to buy Bitcoin with currency once your account is verified. Each Exchange provides different payment features, but generally, you can do this with your bank account via Bank Transfer.
You can transfer your money into your wallet account or your wallet in the Exchange. In addition to the bank transfer method, some exchanges provide payment features using a credit card.
After transferring, the nominal you deposited can be used to buy Bitcoin or other crypto assets. Usually, this deposit process also takes 1×24 hours to be verified by the Exchange.
4. Buy Bitcoin
After a successful deposit, you can choose to buy Bitcoin or other crypto assets. So how do you buy Bitcoin? You need to log in to the Exchange and select the crypto asset you want to buy.
You can buy the amount of Bitcoin you want. The purchase price charged also varies according to the Exchange used.
5. Sell Bitcoin
To profit from trading activities, you must set a target selling price at a higher level. To predict the movement of Bitcoin, you have to do a technical analysis that looks at the patterns on the price chart.
6. Set Buying and Selling Limits on the Exchange
To avoid a trading opportunity, you can set the buying and selling prices as desired in the features provided by the Exchange, such as the spot market or other exchanges. A stop loss function is also available on some exchange platforms, to prevent more significant losses.
7. Completed Trading Trading
activities can be completed if you have made a profit or buy crypto assets according to your needs. The profit funds and the amount of crypto you purchased will be automatically entered into the wallet.
Margin trading
You can do margin trading if you do not have the funds to trade. Namely trading with borrowed capital.
In margin trading, you can also use leverage or borrowed capital. Using both gives you more trading power because you have a more prominent position than the initial amount of money in your account.
It should be noted, however, that although margin trading has lucrative returns, it can also be risky. So, you must remain careful in using this one trade.
1. Create a margin trading platform account
You can choose an exchange with margin trading services and create an account by completing several procedures.
2. Determine the margin you want to use
After creating a margin trading account, you can determine how much margin you use. This margin is the initial capital that you borrow
3. Choose leverage
Suppose you have determined the margin rate and want a more substantial trade. You can double your borrowed capital by using leverage. You can choose how many times the leverage will be used.
4. Install stop loss . Next, you can place funds for Stop Loss (SL) so that when you lose using margin trading, your SL funds will be automatically liquidated or disbursed.
Analysis in Trading
In trading, analysis is needed so that trading results can be profitable. There are two types of analysis for trading that can be used by traders, namely technical analysis and fundamental analysis.
Technical Analysis
The first istechnical analysis; here, traders will analyze price trends by looking at graphic patterns, statistics, or charts of cryptocurrency movements.
This analysis does not consider a cryptocurrency’s value, quality, or characteristics. This analysis only focuses on price movements that are already on the chart. In addition, traders using this analysis will monitor statistics, price charts, and cryptocurrency trading volumes.
This method can predict crypto prices by looking at the direction of price trend movements, market sentiment, and others. One of the things that must be understood for this technical analysis is to be able to understand price charts such as candlesticks.
Candlesticks are a method for charting and reading the price movements of crypto assets. This technique can also be used for stocks, commodities, or forex.
This candlestick is a candle, as the name implies. It consists mainly of bodies or shaded areas representing open and closed prices. Then, some lines resemble the upper and lower candle wicks that can represent the high and low prices.
Many candlestick charts use green and red colors. If the color is green, then the price rises in an interval. If the color is red, then it is a sign of a decline.
To read this chart thoroughly, other indicators are still needed so that you can have the correct Bitcoin price calculation.
Therefore, understanding technical analysis and reading candlesticks is quite tricky for beginners and requires a process to understand and apply when trading.
Fundamental Analysis
Then the second is fundamental analysis. According to Investopedia, fundamental analysis is a method for measuring intrinsic value, namely the actual value of a company.
In the crypto world, this intrinsic value is measured from various aspects. For example, do crypto coins have excellent market capacity, have a good reputation, are developed by a reliable team, have strong community support, and so on?
Simply put, this method can predict the price movement of crypto coins by finding and studying all financial information related to digital assets and their technology.
You can learn this method by constantly updating the latest news, knowing the opinions of experts seeing trends on social media, and so on.
Every trader has a taste for doing analysis and can use both or one. In essence, technical and fundamental analysis have the same goal of predicting future crypto prices and making traders maximize profits.
Crypto Trading Tips for Beginners
For beginners, remember the principle “ don’t put all your eggs in one basket.”
Traditional investing also embraces this principle; you should not rely on one cryptocurrency currency because if one money works poorly, you still have other currencies that can protect your assets. Cryptocurrency is not only Bitcoin; there is Litecoin, EOS, Stellar, XRP, and others.
Trading, of course, requires capital. Use the money for trading capital according to your ability. Don’t spend more money than you can afford to lose.
The next tip is to research the increase or decrease in crypto prices in-depth. Because the cost of cryptocurrencies is very volatile, you can take the wrong step if you don’t know the price.
Don’t be emotional in buying crypto assets whose prices are falling; it does look tempting because the prices are low. However, no one can guarantee when the price will rise again, it could even go down, or if it goes up, it takes a very long time.
Finally, always check many times. These are simple tips that experienced traders usually forget. When setting up a buy or sell order, ensure your numbers add up because even the slightest typo can cost you a compelling number. Also, when dealing with exchanges, ensure you send your crypto assets to the correct address.
Trading is a way that you can do if you want to profit from the crypto assets you have, one of which is Bitcoin.
To get the proper profit and trade, you have to do research and understand analytical trading techniques, such as technical and fundamental analysis.
For beginners, keep in mind that trading is risky and requires knowledge, so don’t get emotional when trading. Don’t let your desire to profit from trading make you lose big.
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