The term trading was already used long before the emergence of bitcoin and blockchain technology because it is an activity of the stock market where it can be said that trading is speculating in financial markets, based on certain economic criteria and probabilistic to know or suppose when there would be greater possibility of obtaining benefits.
Now, we know that this term does not correspond exclusively to the blockchain technology of which we have already spoken extensively in the previous article entitled “What is blockchain technology? Where we mention the concept of distributed accounting and the elements that make up the chain block blockchain.
What is cryptocurrency trading?
This is a procedure very similar to the one carried out with shares in the stock market, but instead of buying shares or shares in companies we buy cryptocurrencies and it is done in platforms where you can buy different types of cryptocurrencies, this is ideal, that you can have several options since not all have the same rhythm to raise or lower their value.
The main idea is to buy cryptocurrencies at a low value and then sell them at a higher value or exchange them for other higher value cryptocurrencies. It is recommended to start with low value cryptocurrencies, that is, altcoins, although the cryptocurrencies that are most accepted to buy other cryptocurrencies are bitcoin and ethereum.
Explanation of the process
Normally trading is done on a platform known as Exchange. In it you have the possibility to buy the cryptocurrencies in two ways: in the basic or advanced Exchange. The difference between one and the other is in the way in which the prices of cryptocurrencies are handled. For example, suppose you want to start your operation buying dash, for this you enter your Exchange, choose the amount in dollars or dash you want to buy, then wait for the transaction to be confirmed. As I mentioned before, the coins that are most used to buy other cryptocurrencies are ethereum and bitcoin, so now what we do is with those dash buy one of those two.
Normally in this process there is always a space in which you establish limits, that is, you put what you want to buy when your cryptocurrency falls to a certain value or you want to sell when it reaches another value you define. In those processes of high and low prices is where the profits are obtained.
How to know which cryptocurrency to buy or sell?
The decision on which cryptocurrency to buy or which one to sell will depend on the same analysis that you do in the stock exchange. It is based mainly on market trends, on probability analysis and, very importantly, on which companies are using that cryptocurrency since this gives them a lot of value quickly because it increases the confidence of the users and therefore the number of transactions.
Errors you should avoid in cryptocurrency trading
Based on the experience of some users it can be said that there are certain things that it is better to avoid when trading to avoid losses. Some call to go short when the price rises in their favor or go long when the price rises against and this is something that should be analyzed but it is not recommended to give or wait for signs that this will happen, the ideal is to make decisions itself.
Another common mistake is to change from one market to another just by believing that the first one does not work, you have to learn very well how the market works in which you are working before deciding to leave it. Another mistake is to use many indicators, using those used by other people and believing that they work even more than the analyzes done on their own. It depends more on the way the horizontal and diagonal lines move.
It is not advisable to use the strategies of others since each one must define their own objectives and their methods will not always work unless we do exactly the same movements with that person, the analyzes will never be exactly the same. Another common mistake is to start with very little capital. If you are going to look for trading as an option to get easy money it is not the best option because if you have psychological pressure you will not get good results. The money will come after you learn how the market works and in this process there will almost always be losses.
What do you think about this topic? Is there any other trading error that you think should be avoided?
If you want more information about buying and selling cryptocurrencies you can contact us or write your query in the bottom part (comments section).
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