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Lesson 4: How to Trade Cryptocurrency

How to Trade Cryptocurrency

There’s a difference between buying/swapping Cryptocurrency to trading Cryptocurrency. Sometimes it’s often used interchangeably. But you need to understand the difference. When someone is buying or swapping crypto it’s not the same as when they are trading crypto.

Cryptocurrency trading is usually misunderstood. I’m going to clarify it for you. Although, everyone involved in crypto business can be considered as engaging in crypto trading. But there’s such a thing known as trading cryptocurrency in the crypto ecosystem.

So, I’m going to focus more on just that aspect of crypto trading. These traders are only engaged in buying and selling as quickly they can spot tiny profits or suspect little losses. They can even engage in this using AI (artificial intelligence) called Trading ROBOT or BOT for short.

However, i have also included the explanation on buying/swapping of tokens before I explain on the trading. This would help further clarify them for you. The purpose of this lesson is to give you some knowledge on Cryptocurrency trading.

Below are the content of this lesson:

🔹️How to Buy Tokens
🔹️Payment Currency to Buy Cryptos
🔹️Exchanges to Buy Tokens
🔹️Introduction to Cryptocurrency Trading

✅ Crypto Lessons Table of Content

Before we continue, if you missed any of the lessons go back and go through it first. Here is the table of content to help you navigate through the entire course from any part of this lesson.

🔹️INTRODUCTION – Learn Cryptocurrency Investment
🔹️Lesson 1: How Cryptocurrency Investment Work
🔹️Lesson 2: How to Setup Token Wallet Address
🔹️Lesson 3: How to Claim Free Cryptocurrency
🔹️Lesson 4: How to Trade Cryptocurrency
🔹️Lesson 5: How to Pick Cryptocurrencies to Buy
🔹️Lesson 6 How to Farm Cryptocurrency
🔹️Lesson 7: How to Sell Cryptocurrency

So, this lesson and the other lessons will focus on teaching you WHAT TO DO. So much theory will be overlooked and the focus would be on practical.

✅ How to Buy Tokens

By now you should know that there are two types of cryptocurrencies. They are called coins and tokens. They are the same but with a little difference, which is because one has its own Blockchain, while the other doesn’t.

I made this clarification because we are dealing with tokens here only. That means crypto that doesn’t have their own Blockchain yet.

But before you can start buying tokens there are things you will need to know and probably have. Here are a few lists:

🔹️Crypto wallet (Trustwallet or Metamask)
🔹️Binance Smart chain (BEP20) or Ethereum (Ether)
🔹️Access to decentralized exchanges

For crypto wallet, I strongly recommend Trustwallet and Metamask. But in Crypto Lessons we use only Trustwallet. You should have downloaded one by now.

But note that this recommendation is not made for Cryptocurrency trading. In crypto lessons we focus only on basic lessons for Beginners. It’s a do it yourself lessons. Crypto trading doesn’t fall within a do it yourself class.

✅ Payment Currency to Buy Tokens

When buying tokens you will need some coins to pay or swap for tokens. Depending on the token that you want to buy or swap, there are coins often used as mediums for such exchange. Here are the most popular ones.

🔹️Binance Smart chain (BEP20)
🔹️Ether
🔹️Binance USD (BUSD)
🔹️USD Tether (USDT)

In order to be able to buy or swap tokens you would need any of these coins. You have to find out which of the coins is acceptable for the token you want to buy or swap.

✅ Exchanges to Buy Tokens

The best place to buy tokens are on decentralized exchanges (DEX). There are many decentralized exchanges where you can buy tokens. Some of these exchanges may only allow you to buy or swap tokens built on certain Blockchain network.

For example, some Exchange may only allow you to buy or swap tokens built on Ethereum Blockchain. The same way for tokens built on Binance Blockchain network. As you progress you will understand all these more clearly.

Here are some popular decentralized exchanges (DEX) to buy or swap tokens:

🔹️PancakeSwap
🔹️Uniswap Exchange
🔹️Poocoin app
🔹️Dextool app
🔹️Position Exchange
🔹️Bogged finance
🔹️Sushiswap
🔹️1Inch Exchange

✅ Introduction to Cryptocurrency Trading?

Crypto trading is the buying and selling of cryptocurrencies or exchanging of one crypto for another crypto assets or coins. The idea is to buy at a low price and sell at a higher margin.

There are different types of crypto trading strategy you can explore:

🔹️Day trading
🔹️Swing trading
🔹️Scalping
🔹️Position trading

✅ Day Trading:

This is the most popular trading style. Day trading, as its name implies, is the method of buying and selling crypto with in the same day.

✅ Position Trading:

This is to buy and hold strategy. This strategy is suitable for beginners. However, when it’s done by an advanced trader, it can be a form of active trading.

Position trading uses longer term charts, anywhere from daily to weekly to monthly in combination with other methods to determine the trend of the current market direction.

This type of trading may last for several days to several weeks and sometimes longer, depending on the trend.

✅ Swing Trading

Swing traders get in the game when a trend breaks. At the end of the trend, there is usually some price volatility as the new trend tries to establish itself. Swing trades are usually held for more than a day but for a short time than position traders.

✅ Scalping

Scalping is one of the quickest strategies employed by active traders. It includes exploiting various price gaps caused by bid-ask spread order flows.

The strategy generally works by making the spread or buying at the bid price and selling at the ask price to receive the difference between the two price points. Scalpers attempts to hold their positions for a short period.

✅ Crypto Trading Technique

If you want to start trading cryptos, then you need to figure out what type of trader you want to be. You should know the technique you will be using. It’s important for every trader to have their own trading technique that works for them.

Here are two main trading techniques:

🔹️Fundamental analysis
🔹️Technical analysis

You can use any of the techniques or both. It’s important that you discover what works best for you and stick with it.

✅ Crypto Trading Strategies

A trading strategy is a trading fixed plan designed to achieve a profitable return, either going long or short in Crypto market. There are four different types of trading strategy. You will need to decide the method you want to use.

However, for every trading strategy you need to define the crypto to trade, your entry and exit points, and apply your money management rules. A bad money management can make a potentially profitable strategy unprofitable.

Here’s how to formulate a trading game plan? You do it on paper before going into the market. This is where a lot of traders fail.

✅Types of Crypto Trading Analysis

After figuring out the kind of trade that you want to be the next thing you need to put in mind is type of analysis you’ll be using for your trade. We have to type of analysis and they are

✅ Fundamental Analysis

This is a method of measuring a coins intrinsic value by examining related economic and financial factor. The end goal is to arrive at a number that an investor can compare with the coins current price in order to see if the coin is undervalue or overvalued.

✅ Technical Analysis

Technical analysis is just the discipline that is used to evaluate crypto investment, and to identify trading opportunities by analyzing statistical trends gathered from trading activities. Here are the activities that are analyzed, price movements, trade volume, moving average, time frame and etcetera.

✅ Analyzing Coins

You must also know how to be able to analyze a coin, to know the ones that have great potentials for trade; by checking their market capital value, the volume of the coin, the most use of the coin, the team behind the coin, the technology behind the coin and how the coin is currently in demand.

✅ Risk Management

You need to know how to minimize your risk. Crypto trading is risky and the market is volatile. But by setting stop loss, having a plan and sticking to the plan, without allowing greed to control your trading, you will bulletproof your investment from unnecessary losses.

✅ Diversify Your Portfolio

Have a diversified portfolio. Don’t put all your money in one coin. Spread your money in different coins. Even if you have love in one coin, you can also gain in other coins to help cover the loss from one coin.

✅ Conclusion

Generally, Cryptocurrency trading is not for everyone. You need some technical knowledge to trade crypto. Although, you can buy and sell anytime you want. That doesn’t mean you are trading Cryptocurrency.

To really trade Cryptocurrency you have to use platforms that allows you to do so. But first, you have to undergo a training on trading. Because the risk of losing is higher than the gain of winning. And trading risks are permanent, unlike staking and farming that has impermanent loss.

It’s not advisable to engage in Cryptocurrency trading without adequate training on how to trade either of spot, features or even derivatives. If you know very little about Cryptocurrency it’s best to stick with more guaranteed investment options like staking and farming – that has little risk, which is also impermanent in nature.

Chinedu David
Chinedu David is a business consultant with experience in oil & gas, hospitality, IT & telecom, consumer products, business strategy, marketing and distribution. He was the telecom editor for SuccessDigest for over a decade. And founded Mystore, one of the indigenous online marketplace in 2013. Drop a comment below and he will respond to your query. He can also be reached via email: nedu@myblog.com.ng or Call/Text/WhatsApp: 07087770518
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1 Comment
  • MyBlog Dec 31,2021 at 10:55 am

    […] 2: How to Setup Token Wallet Address 🔹️Lesson 3: How to Claim Free Cryptocurrency 🔹️Lesson 4: How to Trade Cryptocurrency 🔹️Lesson 5: How to Pick Cryptocurrencies to Buy 🔹️Lesson 6 How to Farm Cryptocurrency […]

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