It is important for the owner of any of the existing coins to understand what cryptocurrency trading is and how to trade on exchanges with the least risk.
The term “trading” refers to active trading of cryptocurrencies. To carry out purchase and sale transactions, special virtual platforms have been created – digital asset exchanges. Having figured out how to create an account on the exchange and what cryptocurrency trading is, you can immediately start trading using a tool such as btc avage. Let’s look at the basic terms and definitions that are useful for every novice trader to know.
What is cryptocurrency trading in terms of risks?
Compared to holding coins (staking), the degree of risk in active trading is much higher. When choosing a successful trading strategy, the high rate of profit is well worth the increased risk. In addition, one should take into account the fundamental difference between trading digital assets and similar transactions with company shares.
The stock market punishes traders who use insider information. The actions of such unscrupulous players are interpreted as criminal. The situation is different in the cryptocurrency market, where such sanctions are completely absent.
This is easy to notice by the sudden jumps in the quotes of certain digital assets on trading exchanges. When some news becomes known to the general public that could cause the rate of a digital asset to rise, it often turns out that the rise had already occurred several days earlier.
What affects cryptocurrency quotes?
News about the conclusion of lucrative contracts by companies involved in the development of a particular coin has a huge impact on the digital asset market. As a result, such messages increase the level of confidence in altcoins and contribute to the growth of their quotations.
Experienced traders, who become aware of such information from insider sources before others, are in a hurry to buy cryptocurrency. It is profitable to do this before the price reaches its peak.
As a result, after the coin’s rate soars to its maximum value, those who managed to buy this asset in time begin to hastily sell. As a result, in a few days, through timely buying and selling, it is possible to earn colossal sums only from fluctuations in quotes.
How to distinguish true information from fictitious information?
Insider information, such as where to look for new low-risk cryptocurrency projects, is almost impossible to find out from the media. No open source, for example, in a telegram channel, will share such valuable information. On the contrary, the appearance in the public domain of information important for traders indicates something completely different.
The dissemination of “insider” information often indicates that they are trying to manipulate traders. For example, this is done in order to raise the coin quote. The second possible scenario: to scare off weak players with the risk of a possible collapse of an asset that has risen in price. At the right time, all that remains is to buy a coin that has fallen in price at a bargain price.
For example, when an interested person or company urgently needs to sell a large amount of a digital asset at a higher price. If the company simply starts selling, the coin’s rate will quickly go down. A simple technique of disseminating “accurate information” about the upcoming rise in cryptocurrency prices helps keep the price from falling.
To summarize what cryptocurrency trading is, we can safely say: the key principles of trading coins differ little from trading funds.