At times, people tend to stay away from cryptocurrency trading because they don’t know how to trade cryptocurrency. Cryptocurrency trading may appear to be full of complexities to the untrained eye. However, cryptocurrency trading is a lot like Forex trading. If you know the basics then you can start cryptocurrency trading and learn more as you trade. Nobody is a born cryptocurrency trader and you will end up honing your trading skills over time. This brief guide aims to explain the basics of cryptocurrency trading and its execution.
Cryptocurrency Exchanges and Trading Platforms
Just like stock market exchanges, cryptocurrencies too have their own exchanges. It is on these exchanges that the actual crypto trading occurs. Here, buyers and sellers place their orders and the exchange acts as an interface for fulfilling those orders. Just like stock market exchanges, there are numerous cryptocurrency exchanges as well. Some people may choose to directly trade through the exchanges themselves. However, there are a lot of trading platforms that can make cryptocurrency trading easier and smoother.
The cryptocurrency trading platforms act like stockbrokers and place orders on your behalf with the exchanges. These cryptocurrency trading platforms allow you to see ask and bid prices of the orders, up on the exchanges. Thus, you can make quick and calculated decisions as to what your entry point for a trade should be.
Such platforms allow you to leverage the price differentials amongst different exchanges. You can check the orders up on different exchanges and then buy or sell at the one that suits you best. If you choose to directly trade through a cryptocurrency exchange, then you can only trade at the prices prevailing on that exchange. So, to start trading, you need to first pick the right cryptocurrency trading platform.
Just like you store normal currency in wallets, you can store cryptocurrency in digital wallets. If you plan to purchase cryptocurrency directly, then you need to have a cryptocurrency wallet. While there are a lot of options available, you should choose a wallet that the trading platform you use supports. Better still, you can choose a trading platform that supports multiple wallets so that you can transact easily. Some trading platforms also have their own wallets so this also something that you can explore.
Find Reliable Sources of Information
Cryptocurrency is volatile and it is this volatility that allows traders to make and lose money quickly. Hence, you need to understand the volatility to an extent so that you can set the right target prices for your trades. There are a lot of websites that publish information about cryptocurrencies. Hence, it may be a little hard for you to find reliable sources of information. You can consider Torex crypto trading platform that has developed some crypto trading tools, including Torex Trade (that supports API trading with Stop Loss, Take Profit and Trailing Stop), Arbitrage Tool, Price Checker, Telegram based Price Notification tool, and a HODL Tool. More advanced crypto trading tools are considered to be developed.
Types of Orders
To perform a cryptocurrency trade, you first need to place an order up on the stock exchange. This first step itself can be a tad bit challenging if you don’t know the common types of orders. While placing an order you can pick any one of the following order types based on your need:
You can place a market order if you want to immediately buy or sell cryptocurrency at that instant. If it is a buy market order then you will instantly buy at the lowest price on the exchange. If it is a sell order then you will end up selling at the highest or most profitable price. This is the best price available on the exchange at that instant. A market order is basically meant to grab or shed cryptocurrency at the same instant of placing the order. It, however, does try to get you the best price available.
Immediate or Cancel (IOC) Order
You can place an IOC order if you want a trade executed immediately or not at all. In this type of order, either a part or whole of your order will be fulfilled immediately. Otherwise, it will get cancelled. It may happen that the exchange partially fulfils your order. In such a case the rest of the order cancels.
This order allows you to set the baseline for a trade in stone. In this order, you trade at the set price or a better price. You can sell at a set price or higher, but never lower than the set price. In case of buying you can buy at your set price or lower, but never higher than the set price.
Stop-loss orders allow you to set a trigger for placing your order. Your order is not put up on the exchange till it hits your trigger price. This allows you to place orders at pre-set target prices to book profits or cut losses.
Trailing Stop Orders
Trailing stop orders allow you to place a market stop order which is a fixed gap away from the prevailing market price. For selling, it set below the prevailing price and for buying it is set at a price that is above the prevailing price. Trailing orders allow traders to take a defensive position in order to protect their gains. It opens trades and keeps them profiting unless they go against the trader’s set parameters. You can even set a limit trailing stop order to sell at a set price and rather than selling at the best price available.
Take Profit Orders
These orders are somewhat like stop orders. These orders go up when the price moves in a supportive direction over the market price. This will enhance your chances of getting a profit. You can set your desired trigger. Also, you can choose between going for the best price available using a market take profit order or choose to close the position at a set price using limit take profit order.
A Comprehensive Solution
By now, you are aware of some basics of how to trade in cryptocurrency. You need a good trading platform, a cryptocurrency wallet and reliable sources of information. You also need to know a few basic types of orders and you need a trading platform that allows you to choose amongst them. While you can opt for individual service providers for each of these aspects, a comprehensive solution would be better. Torex is a trading platform currently supports nine cryptocurrency exchanges to choose from. It has inbuilt data analysis tools and allows you to leverage multiple kinds of orders. You can open an account with Torex as it may be a helpful cryptocurrency trading solution for you.
We are happy to announce that Torex cryptocurrency trading app is now available on Google Play Store. Install Now!