Cryptocurrency Trading on the Exchange

Published:21 November 2017 Updated:22 April 2024

Cryptocurrency trading is a new promising direction in online trading, which allows earning income from trading in digital currencies. Since its inception in 2009 (according to Wikipedia), cryptocurrency offered a better approach to money for payments on the Internet: without controls, commissions, and intermediaries, contributed to the emergence of a huge market in scale with incredible profitability, fabulous profits, full-fledged crypto-economy with its new laws and rules.

All this has literally “seized the minds” of those who are interested in modern technology and additional sources of income. So, what is cryptocurrency trading and How do you make money on it? Let’s talk about that in our review article.

What is cryptocurrency trading and how to make money on it?

Before answering the question of what is digital currency trading, it is worth defining the concept of cryptocurrency: it is a digital (virtual) currency, the unit of which is a coin (-coin), which is issued online, not connected to the usual currency or any state monetary system. In simple words, it is electronic money.

Cryptocurrency trading is the same as Internet trading, but instead of the usual assets (currencies, stocks, bonds, etc.), the trader trades digital currencies (e.g., bitcoin, litecoin, quarkcoin, etc.). This market, unlike binary options and forex. The market is even more dynamic and unpredictable, the attention to it is constantly “heated” by the rapid growth of prices, and “crazy jumps” in exchange rates. This opportunity to earn fabulous income in a short time on cryptocurrency has become a subject of heated debates: some accept cryptocurrency, and some oppose it, but its existence in the market is justified and especially valuable in the era of universal globalization and the development of the Internet.

Everything is familiar if you have already tried trading binary options, forex, etc. Traders buy digital currency at the most favorable rate and sell it, waiting for the value to rise. In order to trade digital currency, you do not need to perform complicated manipulations, your main tools will be: charts, which can be used to determine the trend of the currency (up or down, fall or rise); orders – otherwise, requests from crypto market players to buy or sell the currency; transaction history, which will help you track the list of exchange transactions and which tools were used to make them; trading volumes, this information will help you determine exactly how much of the cryptocurrency has passed from one hand to another. Of course, indicators are available to you, strategies, trading automatic robots, you can earn through mining (Wikipedia), and cloud mining.

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Market volatility, the constant rise or fall in exchange rates, and the increased risks faced by investors have caused, a whole “cryptocurrency fever”: today everyone is involved in conversations about when digital currencies will “burst” and what will happen next. Thanks to the news, sensational statements, and headlines, we all know when the value of such currencies surges, and when they fall in value.

The volatility of cryptocurrencies is hundreds of times higher than that of traditional trading options. However, cryptocurrency trading is also a risk of loss, and if you fail to track a trend change, there is a risk of losing your capital. The risks include the fact that the future of cryptocurrency, if I may say so, is foggy and today it is not quite clear what will happen after this “bubble bursts”. In addition, crypto exchanges can be blocked, or hacked, your account can also be hacked due to an insecure password, and since the exchange is not responsible for such situations, all losses are borne entirely by traders. Of course, all these risks do not stop investors from trading in cryptocurrency and getting huge profits, the possibility of making quick money very shortly attracts more and more interested market players to trade in cryptocurrency today.

A profitable trading strategy on a cryptocurrency exchange is something that can bring a speculator good performance. This is one of the first things a trader has to think about if he or she is interested in making regular income from digital assets. You have to understand that choosing a broker or a reliable crypto exchange is only part of the job. There are various cryptocurrency trading strategies on the web, among them there are both effective working techniques and ineffective systems. But how to choose among all this variety the strategy that will bring you profit? We offer you a number of the most common strategies for professional investors in crypto assets trading on cryptocurrency exchange.

  • Trade on the trend. This classic technique is popular in both binary options and forex. Following the general uptrend does not require the player to have a deep knowledge of the market, or the ability to work with indicators. For this strategy, it is important to choose the right moment to purchase the desired asset, which clearly indicates that the coin is trending upward in its price in the near future.
  • Buying and holding assets. Another one of the classic methods of working with cryptocurrencies, which is unknowingly used by most traders. The peculiarity of this strategy is that the investor, having purchased a digital coin, holds it waiting for its price to rise and sell it at a better offer. Here, in order to correctly predict the rate of the cryptocurrency, it will be necessary to refer to the fundamental analysis of the market, because the nature of long-term investments is influenced by the demand of users, as well as large investors.
  • Making deals “on kickback” to the previous moment. This strategy differs in that it gives a more active trade, common for those players who work on short-term periods. The trader opens a deal in the direction of counter-trend waiting for the price of the coin to rise to its previous point (level). The fact that the digital currency market has a high volatility helps in this trading technique. Professionals advise using no more than 2% of capital from the deposited funds for a successful result.

As you understand, cryptocurrency exchange trading strategy is important in this market. Video materials, as well as traders’ comments on the network note as effective methods of work also scalping and trading on the news. What is the reason for the success of some speculators and the constant losses of others? You have to constantly test new cryptocurrency trading strategies, try something new, and don’t stand still. Development is a necessary condition for profitable trading, remember that.

Cryptocurrency trading for dummies has long been a popular issue on the web and all because more and more people want to find a decent earning opportunity for themselves. Of course, in the last two or three years crypto trading has become incredibly popular, among our acquaintances, coworkers, and friends many have discovered digital currency (read the current cryptocurrency forecast for 2018 here). All this is impressive, the market is growing, surprising with its dynamics and volatility. An impressive number of traders increasingly confidently state that the source of their main employment is trading on the cryptocurrency exchange. Reviews, video lessons, and numerous conferences on the network – all prove the popularity of the digital market.

Getting started with cryptocurrency trading might seem overwhelming, but it doesn’t have to be. By learning some basic principles, you can feel more confident and navigate the market better. Here’s a simple guide to help you begin your journey:

  • Get to know the features of technical analysis, which will help, with the help of additional tools (indicators, oscillators, trend lines, etc.) correctly see the picture of the market and its prospects.
  • Study the market of popular and the most liquid assets; for this purpose, the crypto exchanges have the market depths, and the history of transactions – this data will show you the interest of traders in particular assets, which means that you can listen to the mood of the masses and make a decision that will bring you profit; study the news, current market trends – this will also bear fruit.
  • Decide on a platform, on which you will work (it can be either the stock exchange or the broker’s terminal) – it must be characterized by comfort for you, informativeness (a set of tools for analysis, high-quality analytics, etc.).
  • Trading based on market trends is one of the most popular trading systems because it allows you to minimize risk while maximizing potential profits. However, it’s also valuable to explore other strategies that have shown promising results.
  • Take advantage of leverage. What is margin trading on a cryptocurrency exchange? Everything is simple and if you work consciously with this tool, it will bring positive results. So, margin trading in digital coins is an opportunity to trade on the platform not only with your funds but also with borrowed capital, which is taken from the broker on the security of their assets. What is it for? To trade larger volumes of currencies and receive higher returns than if you were using only your capital. It is profitable both for the exchange and the trader; if the broker receives the interest from such trading, the speculator himself, properly managing the funds, has the opportunity to earn a significant income, only temporarily borrowing money from his broker.

Interestingly, it is cryptocurrency trading on the exchange that is widespread among speculators. Videos and reviews of players clearly show that investing here is both profitable and profitable. Many traders with experience in other financial markets turn to digital assets, try trading with a broker, or explore the possibilities of cryptocurrency exchanges. What is the main advantage for you? You are not limited in anything by digital currency, and this market has huge opportunities for you, so remembering our recommendations for “dummies”, you can safely start learning about crypto-trading.

Basic concepts in cryptocurrency trading

Cryptocurrency (cryptocurrency) – digital currency issued by solving mathematical problems based on cryptography.
Cryptography (cryptography) – a “language” of mathematics used to create ciphers and codes to secure and conceal information; used to validate Bitcoin transactions.
Blockchain (blockchain) – a registry/database or “transaction log”.
Mining, in the world of cryptocurrencies, involves using computer power to create new blocks of transactions for digital currencies. Users contribute their computing power to this process, and in return, they have the chance to earn rewards in the form of cryptocurrencies.
Miners (miner) – people engaged in mining, that is mining cryptocurrency – the search out of millions of combinations of a single correct code (also called a hash), which provides miners with a reward.
Cryptocurrency exchange – a trading platform used by traders united by the goal of generating income from cryptocurrency trading.
Bitcoin – the world’s first cryptocurrency available to traders as a digital currency.
Satoshi (satoshi) is the smallest indivisible piece of bitcoin currency (or also bitcoin penny; 1 bitcoin is 100,000,000 satoshi).
Altcoin (altcoin) is the common name for cryptocurrencies offered as an alternative to Bitcoin.

Fork – a cryptocurrency that appeared on the market later than bitcoin and other altcoins, which is its partial counterpart.
Faucet, faucet (faucet) – a special online resource where users can receive cryptocurrency for completed tasks.
Pamp – mass acquisition of digital currency to artificially increase its exchange rate.
Dump – planned “collapse” of the rate by the big players.
Fiat, fiat currencies – real money, whose price is set by the state (ruble, dollar, euro, etc.).

What is the difference between forex trading, binary options, and cryptocurrency?

There is such a difference, it is significant today and it favors traders. Unlike “traditional” and familiar financial markets (binary options, forex, for example), the profit from cryptocurrency trading is tens or even hundreds of times higher than in standard markets due to “cosmic volatility”. However, the percentage of risks and losses in the digital currency market is also high: you are not insured against blocking the crypto exchange, against hacking your account (and this is despite the two-phase registration, etc.). Crypto exchanges are not regulated because there is no ready regulatory framework for this area yet, and the virtual market is rather subject to general security requirements, and the need for user verification, which still does not protect traders from unforeseen situations.

Trading binary options is one of the simple and affordable investment options. As you know, when trading options, the trader only has to determine the anticipated movement of the quotes (up or down). Forex Trading (The whole truth about forex) The options market is a bit more complicated and requires even more knowledge and miscalculations (it is necessary to skillfully use pending orders, stop-losses, and margin calls), but the income can be higher than in binary trading. Cryptocurrency trading does not require profound trading knowledge, still, the investor must monitor the dynamics of the digital currency and watch the most popular coins to get income.

The main principle of such trading, as we mentioned in our article, is to buy currency cheaper and sell it at a higher price. While in standard financial markets, you can track market dynamics and possible changes based on news and significant events, cryptocurrencies are not so simple. After an important news release, the dynamics of digital coins can change several times and there is another interesting feature: if a group of traders conspires to buy/sell virtual coins en masse, it can also cause a shift in virtual market sentiment and you will lose your coins if you don’t follow it in time.

What to do then? “Vanquishing” (or “petting the cat”) will not work unambiguously, and this humorous designation, common in the field of virtual trading, will not make you richer. It is worth being serious, you should be able to analyze the market, to track the mood of its participants. Also, correctly work with a set of standard tools, available on crypto exchanges: charts, market depth, history, orders (here we accept BUY (buy) and SELL (sell) orders, on some exchanges, you can use stop orders (which will allow to get profit with lower risks) and stop-limits (orders which are in a suspended state until reaching a certain value). All of this data, when used skillfully, will help you analyze the market situation correctly.

Forex and binary options (basics of binary options here), are attractive since you have some protection. After all, serious brokers are trying to get a license, and are members of professional associations, which gives confidence to the trader. Cryptoexchange won’t give you that. Although digital money becomes one of the assets of binary options trading or the forex market and guarantees a decent income, it doesn’t provide a hundred percent assurance of easy earnings. Digital currency is dynamic and you need to be able to take advantage of the information and react in time to the changing market sentiment.

Why do I need a cryptocurrency broker?

At first, cryptocurrency trading was earned through mining, then, to start working with virtual money, all traders had to register on a cryptocurrency exchange. This is still the case, but as the popularity of digital currency continued to grow, cryptocurrency trading, which takes place with the help of cryptocurrency brokers, appeared. For example, today such cryptocurrency brokers are the following companies: Alpari (official website), Pocket Option (official website), RoboForex (official website), Tickmill (official website), etc.

Forex brokers (as well as Binary Options Brokers), which offer cryptocurrency trading among available assets, are more popular among traders. Working with cryptocurrency in this case, you are protected from hacking, for which cryptocurrency exchanges are so famous. The broker is subject to legislation and has licenses. However, here too, you need to be able to track trends in virtual currencies, as the risks of sudden losses of virtual money remain.

Video taken from the channel Trading and Investing on YouTube

Ratings of cryptocurrency brokers (this can be both binary brokers and Forex brokers), reviews of traders about their trading terminals are also popular on the network. When compiling a rating of cryptocurrency brokers, the availability of a license, period of work in the market, reputation, reviews of traders, types of available cryptocurrency (brokers AMarkets (site), Alpari (site), RoboForex (site), have an impressive set of cryptocurrencies available, except bitcoin (site) and litecoin (site), Dashcoin is also available to the user (site), Ethereum (site), Monero (site), Zcash (site), Ripple (site), etc.). So, trading digital currency with a broker will reduce your risks and work in a reliable terminal.

Why is a cryptocurrency broker better than a cryptocurrency exchange? If you have no experience in trading on financial markets, this information will be of key importance for you and by knowing the disadvantages of cryptocurrency exchanges, you will save both your money and wasted time. When starting to trade cryptocurrency, you should know that cryptocurrency exchanges often provide their users with a very complex trading terminal that can be difficult to deal with not only for beginner traders but also for professionals. A cryptocurrency broker, offering cryptocurrency as one of the assets, allows the trader to trade in a familiar environment. Often trading on a cryptocurrency exchange is completely unprofitable for novice traders: these are large amounts of deposits, commissions, service fees, for transactions, high cost of transferring money to the purse.

One of the main drawbacks of cryptocurrency exchanges is their insufficient security and reliability, making them frequent targets for hacker attacks and closures. Additionally, if your account is compromised, the exchange typically doesn’t reimburse your lost funds. While cryptocurrency brokers may also have limitations, such as offering a limited selection of cryptocurrencies, they come with numerous advantages. As a result, many traders prefer to conduct their trades on reputable and secure trading platforms. These brokers, similar to binary options and forex brokers, strive to offer quality service, comprehensive training programs, and helpful resources in the trader’s native language. Moreover, traders can easily reach out to the support team with questions and receive knowledgeable assistance. Overall, trading on such platforms is often more user-friendly and comfortable compared to cryptocurrency exchanges.

Platform for cryptocurrency trading

A cryptocurrency trading platform will allow you to work comfortably with digital currency and make trading functional. By choosing the right cryptocurrency trading platform, you can organize your work more productively and focus on the essentials. Today, you can trade digital currencies either on a cryptocurrency exchange or at cryptocurrency brokers (binary brokers, forex brokers).

If you choose a crypto exchange to work with, you will face the fact that there are many similar websites. How to choose the right one for you? Good cryptocurrency trading platforms (for example, Poloniex (site), EXMO (site), Garantex (site), Bitfinex (site), Binance (site), ByBit (site), OKX (site), etc.) have the following set of characteristics:

  1. A large number of digital currencies on offer, both popular and less popular, gaining traction. The greater the choice of coins, the more profitable it will be for you to work.
  2. Fast and convenient deposit and withdrawal of funds. Crypto exchanges try to offer the user a variety of ways to transfer funds: it can be payment terminals, bank transfers, etc.
  3. The possibility of exchanging digital currencies into rubles, etc. This feature is not present on all sites.
  4. Platform language. Some crypto exchanges try to provide Russian traders with materials and support in their native language, but not all platforms can boast of that. As for the work of technical support, everything is very complicated here and, either you will not be able to contact the managers, or at best it will be in English.
  5. Mobile applications that allow you to trade from anywhere in the world.
  6. Tools for trading and information analysis (orders, charts, graphs, indicators, etc.). The more additional tools you have at your disposal, the more chances you have to increase your capital and reduce your risks.
  7. Platform security is one of the key objectives of crypto exchanges, and by attracting traders to the site, exchanges promise that by following all security recommendations (complex passwords, two-phase authorization, etc.) traders can safely trade without worrying that their account will be hacked and all money will be lost. Despite this, hacking and hacker attacks are something that continue to seriously threaten exchanges today, but we still advise following the recommendations for the security of resources.
  8. Positive feedback from traders about working at the exchange.

All of these parameters will also apply when a trader chooses a cryptocurrency broker. However, what a trader should choose for trading – a cryptocurrency exchange or a cryptocurrency broker – is up to the market players. Not all cryptocurrency brokers are ready to offer maximum functionality for working with digital currency: cryptocurrency trading and exchange, trading on weekends when traditional exchanges are closed, implementation of wider spreads during strong market volatility, provision of comfortable commissions and fees when servicing digital currency trading.

Video taken from the channel DENTON INC. – Sgurtonovosti on YouTube

Cryptocurrency trading on Android and Apple

Cryptocurrency trading is a serious job, the effectiveness of which depends on the constant monitoring of market trends. Thanks to the development of technology, it is easier to do it today. Mobile applications for Android and Apple devices enable you to trade conveniently from anywhere in the world, at any time that suits you. They provide all the necessary functionality for comfortable trading 24 hours a day, enabling users to trade digital currencies and promptly respond to market changes. Additionally, they facilitate convenient and swift withdrawal of funds when needed.

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