How to trade micro currencies

However, the denominations in the marketplace are still valued compared to fiat currencies similar to the stock market.

  • Trading and investing strategies are similar. In the stock market, traders can choose to day trade, swing, or position trade. They can also opt to buy and hold their assets for the long term. Similarly, traders and investors in the crypto market can do the same things.
  • Similar market products. The stock market has been around for generations, leading to innovative products such as derivatives and techniques such as using leverage to inflate gains (and losses.) Those same products and techniques have been ported over to the new age cryptocurrency market. You can now trade Bitcoin futures, options, and leveraged tokens.
  • How to trade micro currencies

    A micro account appears relatively simple at first glance. It’s a unique forex account enables trading with lesser sums of money. Why, therefore, would you want to engage in trading with less money? Does this imply that the risk involved with micro accounts is lower? Micro accounts are, in fact, a little trickier than they appear.

    A micro account generally serves the needs of ordinary investors who wish to gain exposure to foreign exchange (forex) trading but don’t want to take on significant financial risk.
    A minor contract for a micro account, also known as a micro lot, is 1,000 units of money, or one-tenth of a regular lot.

    The need for micro accounts has increased as more traders join the forex market each year.

    How to trade micro currency

    You may have heard that trading cryptocurrency is risky, and that is true, but so is trading all other financial instruments, including stocks and bonds. What differs is the level of risk.

    There are different kinds of risks, and in this section, we will discuss those related to cryptocurrency trading.

    • Market risk. Perhaps the most widespread of all is the risk that a given asset’s market price or the overall crypto market will swing unexpectedly and negatively affect your market position.
    • Liquidity risk. Refers to a situation where you are unable to exit a position.

      Typically happens when you can’t find a buyer for your asset.

    • Legal risk. Refers to a situation where a government regulation or policy negatively impacts an asset or a trading platform.

    You can use leverage on most of your trades on most leading cryptocurrency exchanges, such as Binance, Bitfinex, or BitMEX. The full list of digital asset exchanges with a leverage trading here.

    Please note: DO NOT trade cryptocurrencies with leverage unless you are fully aware of what you are doing and what risks you face.

    Differences between the stock markets and crypto markets

    • Market volatility. Owing to its old age, the stock market is more stable and less volatile. The crypto market, on the other hand, is accustomed to wild price swings.

      It is pretty normal to see double-digit percentage swings in a matter of hours.

    • Market maturity. Age is a significant factor in trading. The stock market has been around for a long time, while the crypto market is only about a decade old.

    As a maker, you list a potential trade on an exchange. For instance, if you want to sell your Ethereum coins, you will open a trade at a particular price point, inviting a potential buyer to fulfill your order.

  • Takers – on the other side of the equation will be the trader that fulfills the order, and these are referred to as takers. As the name suggests, these traders “take” already existing orders and fulfills them
  • Makers bring liquidity to the marketplace.
    There are makers and takers on either side of the purchase coin. There are makers for both buy and sell orders, and consequently, there are takers for both buy and sell orders.

    As the saying goes, you can’t improve what you can’t measure.

    When it comes to crypto portfolio management, you want to know how much of a particular asset you hold and where it is stored. You also want to know how much you are gaining or losing from a particular trade or investment.

    Keep in mind that you could have to maintain multiple portfolios. As a trader, you might employ different trading strategies simultaneously, meaning you are actively trading while at the same time swing trading and/or position trading.

    To be a profitable trader, you will need a suite of applications from data portals and news aggregators to portfolio trackers.
    They all work in tandem to offer you real-time data you can use to make better trading and investment decisions.

    We enjoyed researching and writing the guide with you in mind. Good luck!

    Crypto Trading | FAQs

    What is the best Cryptocurrency exchange for beginners?

    Binance. This is because it has some of the lowest trading fees in the market, provides a complementary mobile app for users to keep track of asset prices on the move, has a comprehensive education resource section and supports one of the broadest selection of payment methods. Additionally, it adheres to strict safety and security standards. All these are factors that make it ideal for a beginner.

    What is the best cryptocurrency trading strategy?

    It depends on your goals. Looking for short-term gains, then scalping and day trading would be the best strategy for you.

    A day trader will make multiple trades within a day, buying low and selling high within little gains that compound to large sums by the end of the day. Typically, sometimes it gets hard to perform this manually. To succeed in this strategy, you will need to consider automating your trades using trading applications or crypto trading bots like Coinrule.

    Important: It is not recommended that you begin your trading journey as a day trader.

    This is because this strategy’s fast-paced nature will require that you make fast decisions, and there is little room for research between trades.

    Scalping (a trading strategy in which traders profit off small price changes) is a part of day trading but typically involves concise trading periods. Think minutes.

    When either day trading or scalping, many trades will result in both wins and losses.

    TA – which is better?

    It entirely depends on the trader profile. Do you want to be the kind of trader that prefers to get in and out of trading positions multiple times a day (i.e., day trader)? Then crypto technical analysis will be your best friend. Instead, do you prefer to research and make informed bets every time (i.e., swing trader)? Then – a mix of both is the way to go.

    Note: As a trader, you can’t have enough tools in your arsenal.

    Applying both FA and TA will give you the best chance of identifying the best trading and investing opportunities in the crypto market. This is because the two techniques complement each other in so many ways.

    For instance, you may use FA to determine that an asset is worth investing in. What you may not uncover with FA, however, is the right time to invest.

    For this, you will have to rely on technical analysis.

    It could be based on these broad strategies or something completely new.

    Why you need a trading plan

    Here’s why a crypto trading strategy is crucial to your success:

    • It’s a map. Having and maintaining a trading strategy is akin to having a map. It guides your trades, helping you know when to trade, how, and why to perform a certain trade.
    • Keeps emotions at bay. One of the biggest challenges facing traders is the interference of feelings and emotions.

      These become an impediment when an asset’s price starts trending in the opposite direction to a bet. In cryptocurrency, this happens so frequently that it easily leads to an emotional roller coaster.

    This may come in handy when you have an issue.

    Coinbase (best for beginners)

    Buy & sell crypto

    What we like:

    Highly credible broker

    Perfect for beginners

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    80+ cryptocurrencies to invest

    Coinbase is a suitable cryptocurrency exchange for beginners who want to prioritize security and convenience. The platform makes buying and trading cryptocurrencies simple, while also providing high levels of security and transparency. In addition to its user-friendly interface, it offers trading, institutional benefits, and digital storage to consumers in more than 100 countries.

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