In this simple guide, we will go through different trading markets. You will see the answers to the most FAQ in the cryptocurrency trading market.
You will understand what makes crypto trading unique, how it works, and how you can benefit from it. Let us get started in understanding more about these markets.
About Trading Markets
A trading market is a process of acting per the market or exchange where common stock is listed for trading on the date in question. There are different types of trade markets depending on trading strategies. The basic trade markets include stocks (equity), forex, bonds, physical assets, and cryptocurrency.
Cryptocurrency
A cryptocurrency is a digital currency. A cryptocurrency is fully online and you can make your transaction life easier. The word crypto states that the currency exchange is encrypted. Most people have a wallet to keep their money. But now you can access your crypto using the digital weight.
Cryptocurrency started way back in 2009 with the first cryptocurrency being Bitcoin. It works by using blockchain technology. Blockchain technology is an archive for different transitions and has the whole history of exchange and transactions of the owner.
The majority of the people are still new to the cryptocurrency world. And many experts have said that cryptocurrency is the future.
Let’s see the most common and widely known types.
- Bitcoin
- Ethereum
- Ripple
- Letocoin
Let’s say now you have an idea of what type of crypto you want to buy.
Your first new step is going to be choosing a platform. There are two ways you can choose from. You can buy through a traditional broker or use a cryptocurrency exchange.
A traditional broker is an online broker that goes through the process of buying and selling crypto. It has fewer crypto features. But they have low trading costs. And this is perfect for beginners.
Funding Your Account
After you have chosen a platform, the next step is to invest in it. You can begin to trade then. You can pay for your account by using currencies like the US dollar, Euro, or British pound. But it varies for every platform. So make sure to check if the platform you’re buying on accepts your currency.
A debit card or credit card may be used. But using a debit card is better. Because of the instability of cryptocurrencies, some credit card companies do not let you exchange crypto. This is to help you avoid investing a big amount of money on an asset that doesn’t bring you constant profit.
One last and important thing to keep in mind, fees are different for every platform and every currency. Research the amount of fee you will be required to pay and the type of currency to use.
Placing an Order
This is the time to begin trading. You can either use the web or the mobile platform to place an order. To place an order, you choose the order type, set the amount, and confirm the order. You will follow these rules when you want to sell also. But make sure to thoroughly understand the market demand of the crypto you are buying or selling before doing any transaction.
Unique Features of Crypto
Cryptocurrency markets never close, including on holidays. But the stock market runs during business hours. In North America, the stock market is open at 9:30(EST) in the morning and is closed at 4:30(EST) in the afternoon. The crypto market’s main goal is to bring simplicity and availability of trading regardless of time and living area. And holidays, not every holiday is celebrated around the world.
The ability to trade crypto directly with each other by using trading pairs. This is not available on the stock market. You trade by using currencies like the US dollar, British pound, or Euro. The availability of trading pairs means you can exchange two currencies with each other. Bitcoin and Ethereum are the most commonly used cryptocurrencies.
Crypto Trading FAQ
In this segment, we will try to cover the most frequently asked questions connected to the cryptocurrency market specifics.
Does the Crypto Market Work 24/7?
Yes, it is. And this is what makes it convenient for global traders. It works non-stop including holidays. But not every time is good to trade. There are times when global market activity is at its peak. As a result, this is what differentiates successful traders. They can exchange and trade at this time to gain high profit or at least maintain no loss.
To satisfy every trader around the globe there is something called Market Time Converter. The use of this tool is to inform traders like you which time is best to trade. It does this by converting the opening and closing time of the global market to your local time. This way it will be easier for you to follow the market level.
Where Crypto Trading is Handled?
Cryptocurrency tradings or transactions go through centralized exchanges. These exchanges are platforms that control the process of buying and selling crypto. These exchanges work for fiat currencies and also digital ones.
These platforms serve as intermediaries in trades. And almost all cryptocurrency trading is handled through centralized exchanges.
Why Does the Crypto Market Have High Volatility?
4 major reasons contribute to the volatility of the crypto market.
Crypto Trading is New
The idea of familiarity in the human mind is undefeatable. Most people buy and use the same things over and over again. For people to start using new things, we need to see that a lot of people are using them.
Crypto Trading is new and it fluctuates a lot. This is one of the effects of it being highly volatile.
It is not Controlled by an Agency
Crypto trading is controlled by the market, there is no central agency that controls everything. This makes investors have two different views on crypto trading. Some investors like it being anonymous and volatile. And some are skeptical about it. This dramatically different view affects the decisions of the investors. As a result, it affects the volatility of the market.
Attitude of Investors
This reason can show you how investors see crypto. This means a lot of investors have different attitudes towards cryptocurrency trading. Imagine if most of the big billionaires start investing in crypto. This influences other investors to start trading also. Even the investors who are planning to invest in crypto are waiting for other investors to invest in it until it becomes fully accepted.
Unmatched Supply and Demand
Bitcoin and Ethereum are the most common and also the most preferred by investors. But the amount of Bitcoin available doesn’t match the amount of demand. Other cryptocurrencies are available in billions but those play a minor role in the market or even worse no one has heard of their names.
Supply and demand is the deciding factor that determines the price. This affects the volatility.
Why Are There so Many Cryptocurrency Trading Pairs?
The amount of trading pairs depends on the demand of the market. At first, Bitcoin was the major cryptocurrency that was in demand. But now other currencies like Ethereum and altcoin are being traded in the market.
The more a currency is on demand the higher the number of trading pairs there will be.
Who Creates the Liquidity for the Cryptocurrency Market?
Liquidity is the term used to define the ability of a digital asset like cryptocurrency to be converted to cash when in demand. Cryptocurrencies are less liquid than forex and stock markets.
The liquidity of the crypto market is decided by A bid-ask spread. A bid-ask spread is when the ask value/price surpasses the bid price of the asset in the market. A lower ask-bid price indicates higher liquidity.
How to Benefit from Crypto Trading
There are two ways you can follow to start crypto trading. You can trade manually. This involves the process of buying at a lower price and selling it high later. This may need deep research on the market and the type of cryptocurrency you own.
The other way is to start trading using crypto trading bots. These bots decrease the time you spend navigating and understanding the market. You insert the required inputs and the bots take care of buying and selling for you.
Do Cryptocurrency Trading Bots also Work with no Breaks?
Yes! That is what makes trading with bots more efficient. Trading bots navigate the market 24/7.
Traders and Investors Know that Markets Change Regularly
Now that you have an overview of the markets, it is important to note that diligence and caution is necessary. Remember that there are a wide variety of events that can take place within the markets.
There are various factors that can affect the morale and psyche of investors and traders. In some situations, significant moves can act as a catalyst that creates seismic ripples within the market.
At present, we are not aware of bots that can read the market and predict what is going to happen.
That tool seems like it would be incredibly expensive. Such a tool may happen over time as artificial intelligence becomes smarter. Still, until then, we must ensure to do our respective research, be aware of the risks present within the market, and do a fantastic job in the markets.
It will be a long journey but you can learn a little bit each day. We will be here to provide further guides and information as well to help you along the way.