In this article we will give valuable tips on how to trade like a professional trader. Taking into consideration that the capitalization of the cryptocurrency market is higher than the budget of some countries is easy to understand that cryptocurrency trading opens up great opportunities for earning virtual money. In fact Cryptocurrency trading is one of the most promising ways to make a profit, along with mining.
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What is the best way to do this? Where to trade cryptocurrency – on the Forex market or on a specialized exchange? Which trading methods work best? In this article we aim to answer all of your questions.
Trading cryptocurrency on the stock exchange or with a Forex broker?
There are two types of platforms where you can trade cryptocurrency.
Forex broker and specialized cryptocurrency exchanges. Each option has its own advantages and disadvantages.
Forex brokers are primarily focused on working with currency pairs, metals, CFDs.
Cryptocurrencies in the list of financial instruments occupy only a small part of the total list. They are often represented by Bitcoin, Litecoin, Ethereum, and possibly some of the more popular cryptocurrencies.
There are hundreds of assets on exchanges focused on cryptocurrency trading, ranging from generally recognized to new and little-known.
In terms of convenience for the trader, Forex brokers are more suitable. You can trade cryptocurrency with them through the MetaTrader platform. It is also convenient to conduct market analysis here. The technical capabilities of the platform for this purpose are much more adapted than the functionality of cryptocurrency exchanges.
Execution of transactions
The largest number of sellers and buyers of digital money is concentrated on specialized exchanges. Trading cryptocurrency on the exchange is cheaper (commissions are lower) and the rate at which transactions are executed is better than that of Forex brokers. This is not surprising, after all, trading with virtual money is not the main, but a by-product of brokerage companies.
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The level of safety of funds and the security of operations are higher for Forex brokers, since cases of hacking of cryptocurrency exchanges are known to the world, and there have not been any hacking of broker clients’ accounts yet.
Among the well-known brokers for trading cryptocurrency, we can recommend the company Alpari and Forex Club. The former also has an investment product consisting of popular virtual coins.
How to trade cryptocurrency – foundation or technique?
All the same laws work in the cryptocurrency market as in the foreign exchange market. If you open the chart of the euro-dollar currency pair and the chart of the same Bitcoin, they can easily be confused. They look almost the same.
On the charts of cryptocurrencies, figures of graphical and candlestick analysis are formed in the same way, indicators work.
However, when trading cryptocurrency, one should keep in mind that digital money is very sensitive to news. So Bitcoin immediately reacted to a possible ban on ICOs in China with a drop.
If you plan to use technical analysis strategies in cryptocurrency trading, stay tuned to the news and stop trading if the market starts reacting to rumors.
What affects the cryptocurrency rate – tips for traders
Events that affect the value of a cryptocurrency differ from those in the Forex market. Let’s analyze the main factors influencing the price of virtual money.
Rumors and statements
If there are rumors circulating among cryptocurrency traders that a currency is too overvalued, it is highly likely that it will fall rapidly in the near future. Experts’ statements also influence exchange rate fluctuations. Hysteria is massively inflated around a separate asset. It also pushes traders to actively “drain” or buy up the currency.
Legislation and the political situation do not affect the circulation of cryptocurrency, however, any state can make it so that cryptocurrency traders are outlawed. So any bans on the circulation of virtual money in a separate state will affect the fall in the value of the cryptocurrency. Legislation regarding the legalization of digital money will have the opposite effect.
Investments of large companies and international funds
If large and well-known companies or investment funds invest substantial amounts of cryptocurrency, this usually leads to an increase in its value. This phenomenon is easy to explain. Small investors drive demand and buy digital money based on the actions of large corporations. “If they take this risk and invest in cryptocurrency, then I should buy it too,” the crowd thinks. Buying drives up the rate and encourages other traders to buy as well.
Cryptocurrency trading tips and tricks
There is no difference in choosing a timeframe for trading with virtual money. You can equally successfully use scalping trading strategies or trade using the Price Action method on daily charts. It is important to know that in the long term, the price of the cryptocurrency is constantly increasing, so if you are trading long distances, it is better to buy the pair after a correction. Long-term purchases should be considered for at least a year.
It is not recommended to trade cryptocurrency at night. Technically, this opportunity exists, but in practice, the narrow price band in which the pair moves at this time does not even cover the spread.
Almost any trading strategy can be adapted for cryptocurrency trading. Both classic, based on the crossovers of moving averages, and complex proprietary trading systems are suitable. Support and resistance levels, Fibonacci tools work well.
The cryptocurrency market is at the peak of its development. New cryptocurrencies appear every day, and the price of the old ones has already grown by a factor of 100 or more since the release. From the point of view of investments for a short period, digital money is much more promising than standard assets of the Forex market. However, do not forget that this is a high-risk market that should be operated with the utmost caution.
Bitcoin trading: how to protect your investment?
Before you start trading bitcoins on a cryptocurrency exchange, you need to take care of the safety of your investments. While access to a standard bank account can be restored using documents, this is not possible with digital money. Losing the password to the wallet will lead to the complete loss of all funds on it. Protective measures in this case must be carried out extremely strictly.
To strengthen the security of your finances in your Bitcoin wallet, you need to take the following steps:
- Form a complex password with numbers, capital letters and punctuation marks.
- Do not store accesses on the PC. It is better to write down the password and login on plain paper and hide it in a safe place.
- Apply two-factor authentication.
- Complete verification of cryptocurrency exchanges.
Bitcoin trading will be safe if you follow these guidelines. It is important not only to make a profit on the cryptocurrency exchange, but also to keep it. Therefore, securing a Bitcoin wallet is an important procedure.
Bitcoin trading: MT4 platform
If you want to start trading bitcoin, you need to decide how you will do it. You can engage in direct purchases and sales of currency. The second option is trading on the stock exchange. The first method is simpler.
However, it requires significant capital. At the same time, in this case, you can only make money on a bid rate, that is when the exchange rate is growing.
Trading bitcoins on the exchange is a more profitable option. In this case, you will be able to make money in the bear market when quotes are going down.
Most Forex brokers provide the ability to trade cryptocurrencies through the MetaTrader 4 application. This is a terminal that allows you to study the entire history of exchange rate changes and easily apply technical analysis techniques.
Pros of MT4 look like this:
- the ability to open an unlimited number of trade orders (within the free margin);
- closing deals both in automatic and manual mode;
- partial closing of positions, transfer of Stop-Loss following changes in Bitcoin quotes;
- the ability to trade cryptocurrencies, Forex fiat currencies, metals, stocks, commodities, etc.
Mastering the capabilities of the MT4 terminal is not a problem. There are tons of tutorials and videos. Often all this can be obtained from the Forex broker with whom you opened an account for trading. These materials will help you understand how to trade Bitcoin.
One can share options for technical analysis and simply communicate on specialized forums.
Many people start with this. Trading is a fun and interesting activity that will allow you to make high profits. The main thing is to fully understand what is needed to trade cryptocurrency.
Cryptocurrency trading strategies
Trading with a trend is the easiest. It requires minimal knowledge and skills. The cryptocurrency exchange initially seems to be something overly complicated. However, in order to consistently earn by making deals with the trend, you do not need to use any smart strategies. One of the important but simple techniques is to determine the level of support and resistance.
Its principle of operation looks like this:
- Plot horizontal lines on Bitcoin quotes at all levels where the Bitcoin/USD rate is consolidating.
- Closing a candle above/below the identified level is a signal to open position. The same principle applies to Forex trading.
- If the trend continues, you can open a deal in its direction.
Positions can be opened manually or through trade orders. The second option will automate trading. Place orders to close deals 10-20 points above/below the opening price. A wider range can be taken for Bitcoin since it is a significantly more volatile asset than Forex fiat currencies.
Indicators for trading strategies
It is excellent to trade Bitcoin through scalping. This is a strategy that involves making a large number of short trades. To apply it, you need to use the appropriate indicators. When the level is broken, a few seconds are enough for the rate to reach the desired value, after which the transaction is closed, profit is taken.
Scalpers love to use large lots. Therefore, this strategy is quite risky. We recommend using conservative trading. The less experience you have, the less lot you should use for trading.
So are you still wondering How To Trade Like A Professional Trader?