What is cryptocurrency?
Even children know how to use cash or bank cards, but only a few people yet understand how to use the crypto market. Cryptocurrency is a digital asset that works on an automated decentralized payment system known as a blockchain.
However, many people find cryptocurrency very interesting because it gives them many opportunities to receive income. The most popular way to profit from cryptocurrency is trading. Traders need to pay attention to cryptocurrency rates to succeed. Let’s analyze how this process works using a European crypto exchange called WhiteBIT.
How does cryptocurrency trading work?
Trading cryptocurrencies is similar to trading traditional assets like stocks, securities, etc. Crypto trading is multifaceted, but most often, the task of a trader is to buy a cryptocurrency at a low cost to sell it after it grows. It means that crypto trading buys or sells cryptocurrencies to profit directly from the trading process.
The idea is quite simple. No one can guarantee that traders will minimize losses and make profits in the future. One needs to be properly prepared for it. To trade with a maximum profit, traders collect and analyze information about the market’s direction in the current conditions, select promising assets, and make a purchase only after that.
For those who want to try their hand at crypto trading, the most convenient platform for this will be a centralized cryptocurrency exchange. It offers a wide range of trading tools and the ability to implement various cryptocurrency trading strategies.
What are the benefits of cryptocurrency trading?
Trading opens up many opportunities for modern people: they can trade instead of working, combine trading with their primary work, receive passive income, etc.
At the same time, one can start even with small amounts. The WhiteBIT platform is perfect for it, as it pays equal attention to all categories of users.
Depending on experience and goals, users can use spot, futures, and margin trading:
• Spot trading is buying and selling using market, limit, stop-limit, and stop-market orders.
• Futures trading is buying and selling futures contracts with no fixed expiration date and price.
• Margin trading is buying and selling with up to 20x leverage to multiply profits.
It is important to note that the WhiteBIT team has developed a tool that makes the learning process for beginners much safer. This tool is called Demo Token.
Demo Token is a free asset in the form of demo versions of BTC (DBTC) and USDT (DUSDT), thanks to which users can trade in real-time with actual cryptocurrency prices without the risk of losses.
With the help of this tool, beginners can learn how to trade, and more experienced traders can try out new strategies or adjust existing ones.
What factors affect the price of a cryptocurrency?
One of the main differences between cryptocurrencies and traditional assets is the absence of a central authority or bank that issues the asset. Also, cryptocurrencies are not supported by the state. So many factors can affect their prices — for example, significant cultural events or famous people.
Let’s say you want to trade Bitcoin. Of course, you need to know bitcoin basics first. Consider all the factors, and pay attention to the pattern, market situation, etc. After that, a user usually decides on the strategy: whether they want to go short or long, the type of trading they prefer, or whether they want to make passive income. All these opportunities are available on WhiteBIT.
Bitcoin is the first and the most popular cryptocurrency in the world. Its total amount is 21 million, and over 19 million has already been mined. Each Bitcoin halving makes miners’ rewards bigger and slows the process of mining down. Moreover, Bitcoin has attracted a lot of attention from big investors, which caused the price of the asset to grow. That’s why many people start their crypto trading journey with Bitcoin.
Of course, Bitcoin is the most famous cryptocurrency in the world, but don’t forget about hundreds of other coins waiting for investor attention. In 2017, Bitcoin accounted for 80% of the total capitalization of cryptocurrency markets. But in 2022, its share has decreased and is now taking up less than 50%.
The reason for this is the increased interest from traders and investors in newer cryptocurrencies that often have better features and capabilities than Bitcoin. Part of Bitcoin’s capitalization has moved to ETH, Tether, BNB, USDCoin, Solana, and other currencies gaining popularity.
Investors need to consider a lot of factors when buying any other cryptocurrency. A coin with new exciting features is much more likely to increase in value than another faceless coin that repeats its competitors.
Regulations and media attention
As stated above, Bitcoin (like other cryptocurrencies) is unregulated. But governments continue to push for the need to regulate cryptocurrencies. This idea has both pros and cons.
For example, a few weeks after the Securities and Exchange Commission (SEC) approved the first U.S.-based Bitcoin-related ETF: the ProShares Bitcoin Strategy (BITO) ETF, the price of Bitcoin surged to $69,000.
At the same time, miners were forced to move to other countries because of the ban on cryptocurrency transactions in China in 2021. This ban negatively affected the price of Bitcoin, reducing it from $51,000 to $41,000 in September 2021.
The media also play a significant role in determining the value of a cryptocurrency. It seeks to inform investors and stakeholders about developments around a certain cryptocurrency.
Any changes in the previously described factors are instantly covered in the news, spread among the masses, and affect price charts. All this can happen within 24 hours or even less.
At the same time, fluctuations in the price of Bitcoin can also affect other cryptocurrencies.
Where to start?
After educating yourself and analyzing a cryptocurrency you like, create an account on the WhiteBIT exchange. Like most exchanges, WhiteBIT asks users to pass KYC verification to make their experience on the platform more secure. The next step is depositing funds to your balance on the exchange. It can be done by transferring assets from other exchanges, your crypto wallet, or your bank card.
With funds on your balance, you can start trading on WhiteBIT. First, decide which type of trading you want to use: basic, pro, margin, or futures. Then pick the order that fits you the best. There are many options on the platform, depending on the type of trading you’ve picked:
Depending on the market trend, pick the needed price and wait for your order to be fulfilled. If your guess was correct, you might succeed.
Tips for successful day-trading and investing in crypto
Perfect trading strategies do not exist, but if you follow the basic rules when going through the steps, the probability of making a profit becomes much higher.
1. Picking a platform
When choosing a platform, novice traders usually base their decision on the exchange’s liquidity, assets, and fees. However, to select the most secure and convenient exchange, many other factors should be taken into account:
• How long has it been around, and what is its reputation;
• Number of supported cryptocurrencies;
• Deposit and withdrawal methods;
• Available trading instruments;
• User reviews, etc.
2. Picking an asset
Potential profit largely depends on the initial choice of an asset. When choosing which cryptocurrency to buy, the following factors should be considered:
• Experience and previous successes of the project creators;
• Innovativeness and use of modern technologies;
• Trading volume and market capitalization;
• Compliance of the state of affairs with the declared plans and goals;
• Asset liquidity, etc.
3. Picking a strategy
The task of a trader is to develop his winning strategy to make a profit. It is recommended to study existing trading strategies, analyze all the features, and, if necessary, make adjustments. Below are the most popular strategies for day trading:
• Range trading;
• Using trading bots, etc.