Сrypto trading: how to make money on the cryptocurrency exchange

Сrypto trading: how to make money on the cryptocurrency exchange
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Cryptocurrency provides those who invest in it with huge potential.

It is especially profitable to trade virtual money on online markets specially created for this purpose. Let’s figure out what you need to know in order to be trained in trading on a cryptocurrency exchange.

Cryptocurrency earning opportunities

Cryptocurrency exchange is a specialized Internet platform for the process of trading and exchanging digital coins among themselves, as well as for ordinary money online. Thus, thanks to crypto exchanges, you can replenish the supply of coins and, if desired, cash them out.

Modern major cryptocurrency exchanges can be divided into three types:

  • intended for exchange operations between cryptocurrencies and world currencies, that is, digital for real banknotes;
  • allowing you to exchange different types of cryptocurrencies among themselves – one for another;
  • performing exclusively certain forks of bitcoin.

How to make money on the cryptocurrency exchange

The principle of exchanges, regardless of their type, is the same – to get income from your coins by selling them at a higher price, and buying them at a lower one.

Cardano (ADA) – a new round of cryptocurrency development
Cardano (ADA) – a new round of cryptocurrency development

This principle applies to all operations performed on these Internet resources. The exchange can provide a profitable exchange if the user has time to analyze and receive a profitable offer.

Cryptocurrency trading on the stock exchange

First of all, it must be emphasized that the exchange is not officially regulated by any laws and documents, unlike other currency markets. This is not an obstacle to the possibility of their functioning, but to participants in earning money on it. Its main difference is that it has a high volatility.

Сrypto trading
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This means that over a certain period of time, the value of the currency being sold can change significantly. For example, we can take 2013, when the Bitcoin exchange rate increased by 5,000 percent. This level of movement is not possible in other financial markets.

In exchange trading, when the commodity is securities, in order to receive a decent income, it is necessary to have solid financial resources and put them into circulation. On crypto-exchanges, under fortunate circumstances, you can invest several thousand dollars, and as a result, acquire capital that exceeds the invested amount by a tenfold increase.

Everything about cryptocurrency from “A” to “Z”
Everything about cryptocurrency from “A” to “Z”

Of course, along with the possibility of making a quick income, high volatility also carries a high percentage of unfavorable outcomes. The basis of the correct strategy for earning money on the cryptocurrency exchange should be the need for objective rate forecasting. Otherwise, you can mine cryptocurrency.

Operations on the cryptocurrency exchange

An exchange transaction of purchase and sale is identified as a standard one. With its exception, participants are provided with additional:

  1. A futures contract is a contract for the future concluded between a buyer and a seller on the subject of an asset for a specific time. This means that if the user has entered into a contract for the purchase of a cryptocurrency at a certain price, then regardless of how much the currency will cost in 3 days, the buyer must purchase it at the contract price.
  2. Option contract or option – an agreement on the basis of which one of the parties receives the right to buy or sell an asset or refuse to execute a transaction.
  3. Margin trading is trading with own funds and borrowed funds in order to obtain maximum profit. That is, a trader, in order to make a successful transaction, takes a loan, receives a profit, and returns the loan with a specified interest.
Cryptocurrency: basic principles and features
Cryptocurrency: basic principles and features

This small number of operations opens up great real opportunities and diverse approaches to tools for trading on the cryptocurrency exchange.

The reason for profitable cryptocurrency trading

It is thanks to the huge fluctuations in the value of tokens that you can seriously increase your capital in a short time.

Knowledge to help you earn

In order not to suffer losses, but to receive income with small investments, a participant in exchange trading must first make an objective forecast of the exchange rate based on:

  • analysis of financial and production indicators;
  • monitoring news bulletins;
  • technical analysis.
Сrypto trading
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Oddly enough, expert recommendations indicate that it is not effective to create any systems or take into account long-term directions. The most reliable forecasting method is a systematic assessment of news information, the source of which is blogs and numerous forums, the main topic of which is cryptocurrency. In this case, they say, for example: “The bitcoin rate froze (or fell) in anticipation of news.”

When making a forecast, you need to focus on active users of exchanges who carry out transactions with a significant number of coins, thereby affecting their value. At the same time, there is no need to react to the creation of a situation of purposeful artificial increase in the price of coins.

Stock market: basic principles of work
Stock market: basic principles of work

The policy of states that influence their development plays a role in changing the course of cryptocurrencies, in particular, legislative acts aimed at supporting bitcoin and its forks – independent cryptocurrencies.

How to make money on the cryptocurrency exchange: strategy

Exchange transactions and various speculative processes on exchanges, on which crypto money is a commodity, are similar to any similar resources. The tools and principles of goal setting are the same. To have real profit when trading virtual coins, you need to know the basics and operate with important concepts:

  • graphics;
  • orders;
  • history of concluded transactions, activities of whales (the largest participants in the cryptocurrency market);
  • trading volumes.

Charts

The graph of cryptocurrency rates reflects graphically the process of exchange rate development of a cryptocurrency in relation to any other or to real money.

Who Invented Bitcoin?
Who Invented Bitcoin?

The charts are interval graphic images that are a technical indicator because they convincingly and informatively reflect the development in time space of the divergence between the proposed maximum values ​​for selling and buying a currency. Therefore, in order to trade successfully, you need to learn how to decipher charts, understand when the course is being corrected, what leads to a fall and rise.

Orders

Orders for selling or buying are implemented in the form of a list or a tabular form listing requests from all users to buy or sell one type of cryptocurrency for another or for real money, close in value to the value at a particular moment, at which two currencies are traded.

The table, which is an order to buy or sell, is called “glass”. It carries information about the rate at which bidders wish to trade.

Token – a unit of account that is not a cryptocurrency
Token – a unit of account that is not a cryptocurrency

If there is a counter offer on request, then the transaction will take place promptly, and the price of the currency participating in the auction changes in the direction of the transaction. If there are no response offers, then the order remains unchanged. At any time, a bidder may give a command to cancel his order.

Market Analysis by Depth of Market

The data of the glass of quotes will allow making analytical conclusions about making a decision on the application of the appropriate strategy for playing on the cryptocurrency exchange. A parameter that can be calculated based on a quotation list is the spread for a pair of currencies traded among themselves at a specific point in time. It is equal to the difference between the first two values ​​from the order.

Сrypto trading
Picture: Dušan Zidar | Dreamstime

Based on the order data, you can make an objective forecast for the further behavior of the price chart:

  1. If large buy orders are placed, this is a reason to expect an increase in the rate soon.
  2. The discovery of a large sell order indicates a decline in the rate.

Long-term analysis, taking into account only quotes, cannot be counted on. It is more efficient to monitor the list only to find solid requests and make a decision based on them.

Value of orders

An order is classified as passive if it is placed for execution not at the current rate, but at a level that counts on support or strong resistance. Such orders influence the formation of the strength of the resistance and support levels.

Cryptocurrency halving – feel free to divide by 2
Cryptocurrency halving – feel free to divide by 2

Aggressive orders are intended for trading on the exchange only at the current level. They have another name, instant, as they are implemented at the first appearance of an offer in response to a request. It is aggressive orders that make up the main part of the movement on the chart of a pair of cryptocurrencies.

During the execution of a large aggressive order, the rate on the cryptocurrency exchange can change significantly upwards and, thereby, execute a large list of passive orders pending indefinitely.

Accounting for resistance and support levels

The price of the course is constantly changing both up and down. The resulting motion chart displays highs and lows corresponding to the highest price and the lowest price.

Investments – keep multiply
Investments – keep multiply

The maximum dips are called extrema. Extremums located at significant time intervals are called absolute. By drawing a conditional line on continuously located points of top and bottom, you can determine the level of resistance and support. These quote levels prevent the active growth of the rate of digital coins.

History of trades

The history of completed transactions on the platform makes it possible to talk about the full volume of trading on the exchange and a specific currency pair. The history shows the demand for the price among the majority of participants in trading operations.

Efficiency of trading volume in the analysis

Trading volume – the total number of units of cryptocurrencies transferred from one participant to another participant in cryptocurrency trading on the exchange during the execution of orders for a specific time period. For analysis, this indicator, which occurs when the price reaches a significant level, is important. It can be an impetus to start trading with the next price movement.

Сrypto trading
Picture: Dušan Zidar | Dreamstime

Two definitions of volume are used: vertical and horizontal. Significantly popular on Internet platforms is the vertical volume, which is a list of data on the value of all deals made for a certain time period.

For analysis, the most effective is the volume, which indicates the completion of the changed movement as part of the trend. A large volume at the cost of quotes going against the main trend may indicate its completion. This is a good time to start trading in the direction of the trend.

Trading: types and strategies
Trading: types and strategies

Not always the presence of a large trading volume may indicate a continuation of price changes upwards. An exceptionally general analysis of the order book and volume data can allow you to make the right decision on how to trade on the cryptocurrency exchange correctly.

Rules for success

These rules for working on the exchange will help beginners mentally prepare before starting to play on the cryptocurrency exchange:

  • don’t be greedy – don’t wait for the perfect moment, you need to be able to stop in time or perform an operation on acceptable terms;
  • to cultivate patience so as not to make erroneous impulsive actions;
  • control insights and compare them to each other;
  • Predict quotes clearly based on volume and capitalization characteristics.

Is it possible to store cryptocurrency on the exchange

At first glance, it seems that storing cryptocurrency on the site is convenient and profitable: it saves time and transfer fees.

Ethereum cryptocurrency is a great alternative to bitcoin
Ethereum cryptocurrency is a great alternative to bitcoin

But given the unreliability and the possibility of fraud, it is necessary to take as a rule the answer to the actual question: “Is it worth storing cryptocurrency on the exchange?” According to experts, it is not recommended to store, due to the high probability of negative consequences.

Which exchange is the best place to trade cryptocurrencies

When choosing between platforms for trading crypto money, you need to know their characteristic features. Important parameters are:

  • trust and control;
  • location;
  • commission amount;
  • degree of liquidity.

Best cryptocurrency exchanges

We present the top cryptocurrency exchanges, trading on which leads to real income:

  1. EXMO – ranks first in Russia in terms of bitcoin turnover.
  2. Binance is the leading exchange in China and works with a variety of digital currencies.
  3. Kucoin – has a large trading volume of cryptocurrencies with low interest rates for transactions.
  4. Bter is a Chinese platform for selling more than 40 currency pairs.
  5. Tradingview is an exchange located in Russia with great opportunities and convenient options.

Interesting facts about cryptocurrency

  • The event of 2010 that became the starting point for the emergence of cryptocurrency exchanges – the purchase of two pizzas, the cost of which was $ 25, for 10 thousand bitcoins.
  • The volume of bitcoin sales for the national currency of Russia is only 0.14%.
  • Since the launch of the Ethereum cryptocurrency in 2015, its value has increased by 2800%, so those who invested in it and waited for time received income several hundred times higher than their investments.