Trading of cryptocurrencies means buying at a low price and selling at a high price, as opposed to investing, which means keeping the cryptocurrency for a long time.
According to Mr. Mohammad Hosseini, trading requires analyzing the price of cryptocurrencies at different time intervals, which necessitates learning technical analysis and using fundamental analysis so that the trader will be able to identify the opportunities offered by the market.
Technical Analysis – The most important tool of a trader
Transaction or trading of cryptocurrency refers to buying and selling cryptocurrencies for the purpose of making a profit. The trader uses price charts, market news and future market events to make a profit.
There are many types of cryptocurrency trading, and the trading period can vary from a few seconds to a few months, depending on the trading style. Each of the different styles must be tested for an acceptable period of time to determine whether it is beneficial or not for the trader.
In general, you cannot find a trader who trades in the cryptocurrency market without analyzing the price charts of a cryptocurrency. In fact, technical analysis has the potential to run in all financial markets where asset prices fluctuate. On the other hand, technical analysis, which is widely used in the cryptocurrency market by traders and market analysts, is based on three general principles, which are:
- Everything is included in the price.
- Prices of assets change according to price trends.
- History repeats itself.
But according to Mr. Mohammad Hosseini, no analyst or trader can predict the price of a cryptocurrency in the future, certainly. On the other hand, traders and analysts, by technical analysis of the price charts of cryptocurrencies and relying on patterns, methods and regulations related to technical analysis, predict how, for example, the price of a cryptocurrency will change next week. He believes: no trader is able to make only profitable trades and he will certainly have trades that are accompanied by losses. However, there are traders whose asset balance of profit and loss is always positive at the end of the day.
Methods of trading in the cryptocurrency market
- Immediate buying or selling or scalping
In this type of transaction, the trader seeks to make a profit (albeit a very small profit) from the exchange of cryptocurrency in very short periods of time. This type of transaction can be done in minutes to hours. For example, you buy a currency for $ 100 and a few minutes later you sell it for $ 105. This transaction requires skill, focus, time management, and risk management. If you do this type of transaction correctly, you will get a good profit in a short time. This type of transaction is also known as scalping.
Scalping is basically a risky trading method, because the trader must ultimately have a high percentage of successful trades to achieve the desired profit. Therefore, because the profits from trading are usually less than the losses, it is enough for you as a trader to incur some large losses to lose all your profits from trading.
- Day Trading
Daily trading is what the name implies. This type of transaction is similar to the previous type, but the transaction is done during the day instead of a few minutes. Because trading in the cryptocurrency market is not limited to specific hours and is open 24 hours a day, trading can sometimes take more than a day.
- Swing Trading
An oscillating or swing trade is made at longer intervals. Swing trades usually take place in periods of a few days to a few weeks, and the trader will see the price go up and down for a few days to a few weeks to find the best positions.
In general, people who use swing trading method in the cryptocurrency market use more technical analysis as well as price behavior of cryptocurrency to find profitable points to enter and exit. Therefore, in this form of trading, no special attention is usually paid to fundamental analysis. On the other hand, traders in this style of trading leave the market after the price reaches a specific target (based on a specific percentage or price). This goal is considered in both market directions – both negative and positive.
- Position Trading
In this type of trading, the trader will have a longer-term view of the volatile transaction and is very similar to long-term investment in cryptocurrency markets. In this trading style, the trader takes a buy or sell position and then stays in it for weeks, months or even years.
In addition, traders often use weekly charts in their technical analysis to analyze long periods of time in positioning. On the other hand, traders do not pay attention to the fluctuations of the cryptocurrency in the short term, typically in this form of trading, because the trader’s goal is to gain profit from the price trends of a cryptocurrency in the medium and long term.
Characteristics of a successful trader
When it comes to the characteristics of a successful person in the cryptocurrency market we can mention the influence of factors such as focus, self-confidence, emotions control, firstly. But there are other factors that can help you to become a successful trader in this market. These include: discipline in planning and conducting trades, a constant desire to learn and update information related to the market, accept mistakes and potential losses, not pursuing other traders in the market, and trusting personal decisions, doing preventive transactions and overcoming inner emotions, being patient and not rushing in transactions, etc.
The role of cryptocurrency exchanges in trading profits
Cryptocurrency exchanges are usually done in online exchanges, therefore choosing the right exchange to trade will play an important role in the success of your transactions. There are various factors in choosing an exchange, including high trading volume, number of currency pairs in the exchange, liquidity, etc.
Today, most cryptocurrency transactions are done in exchanges such as Binance, Coinbase, and Kraken which have their own challenges. Mohammad Hosseini declares in this regard:
“Depending on the type of transaction you choose, you should keep your cryptocurrencies in different wallets. For example, for someone who trades on a daily basis, transferring money from a cold wallet or hardware to an exchange account can be a hassle and can cost a lot of money. Therefore, this trader should be more careful in choosing an exchange in order to be able to keep it.”
By studying what has been presented, you can probably start trading and add to your experience, but always remember that trading is risky and making any mistake such as high-risk trading, lack of strategy, lack of control over emotions, namely fear and greed, and most importantly, repetition of these mistakes will result in a loss of your money and assets.
If you want to be a successful trader, like any other investor, you have to spend a lot of time and money acquiring relevant skills. If you are entering the world of cryptocurrencies with the goal of getting rich overnight, it is better to get rid of this idea and find another tool to do so. Please visit hoseinifinance.com for more information about cryptocurrency trading.