Cryptocurrency is a digital currency created and controlled using cryptographic (computational) methods. Currently, there are special exchanges for trading Bitcoin, Ethereum and other relevant digital currencies.
Basic concepts of cryptocurrency trading
Cryptocurrency trading is carried out online through one of the special exchanges. The most popular services are:
- BTC-e.nz;
- Exmo.me;
- Livecoin.net;
- Poloniex.com;
- Yobit.net.
Income on these exchanges is formed by buying one digital currency at the time of its decline and then reselling it as the market value rises. In addition, there is the possibility of exchanging some forks (virtual money from the sale and purchase of bitcoin, litecoin, ethereum, etc.) for other forks and for traditional types of currencies - rubles, dollars, euros, etc., and vice versa.
The main components of any exchange for trading cryptocurrency are charts of the current rate, orders for sale and purchase, trade volume and transaction history. In accordance with the charts, the trend of growth or fall in the value of the currency is determined and forecast. Bidders have access to charts of various types: some show changes over five-minute intervals, while others show changes that occur, for example, once a day.
Orders are called user requests to sell or buy currency. Trade volume reflects the total mass of a cryptocurrency that has changed hands over a certain period of time (to determine demand). As for the history of completed transactions, it allows you to track the latest transactions on the exchange in order to find out the most popular types of currencies and instruments for making transactions.
Strategies for trading cryptocurrencies
There are many varieties of stock trading strategies. One of the main ones is to monitor the state of the market using the order book - a set of orders from all over the world to buy and sell assets in real time. Taking into account the data from the order book, you can find out the current spread for the traded pairs. To do this, it is enough to calculate the difference between two adjacent values from the list.
Based on orders placed in the order book, further price dynamics are predicted before each purchase or sale of currency. If large buy orders are detected, further growth in the price of a fork of one type or another can be expected. In the opposite situation, the presence of large sell orders most likely means a decline in the rate in the near future.
Another popular strategy is called Classic Arbitrage. This is a mini-risk trading in which trades are monitored on multiple exchanges. On one of them, currency is purchased at the most favorable rate and subsequently transferred to one of the highly profitable forks on another exchange, after which it is sold at a higher price. As a result, the exchange player earns income from the difference in rates dictated by various exchanges.
