Cryptocurrency trading is a fascinating way of earning profit but is correspondingly intimidating at the same time. The website http://crypto-trader.cloud/ will assist traders in their bitcoin journey with the best trading tools, fast payouts and phenomenal customer support. However, to better understand how cryptocurrency trading works and what it is all about, you must know the basic terms subjected to cryptocurrency trading.
CFD – Contracts for Difference
It is a derivative or an option that gives the holder the right to buy/sell a financial instrument at some future date and a fixed price, usually at another exchange. All crypto-trade contracts are traded on an exchange, so there is no need for currency transfer or to touch your coins physically. You can also change at multiple businesses via one account.
Futures Contract
A standardized contract between two parties lays out specific terms of trade between them before a specified transaction date, which sets out the details as to what will occur and when. Futures contracts are settled in cash and not the underlying product, so they only require a small margin.
The futures price is the price at which people sell/buy the future contract when trading, as opposed to its intrinsic value. All crypto-trade contracts are traded on an exchange, so there is no need for currency transfer or to touch your coins physically. You can also change at multiple exchanges via one account.
Margin
The difference between the entry price and exit price of a position after accounting for leverage. For example, if you buy a contract for $100 and sell it later for $120, your margin would be 20 dollars (120-100 = 20). A margin is a difference between what you bought and sold it for. Suppose the price of something goes up, and your margin increases. Suppose the price of something goes down, and your margin decreases.
Support & resistance
Support and resistance levels are price points at which it is believed that the price of an asset will stop and reverse due to an imbalance of supply/demand (buyers/sellers) at said level. Traders can use them to help predict where prices are likely to go in future or to exit a trade if they have gone against them.
Stop loss
A stop loss is an order to close a trade when the price reaches a specified price that you set. It will minimize your losses if the business moves against you and helps prevent you from being stopped. By placing this order, the trade automatically closes once your specified ‘sell’ price has been reached.
Leverage allows you to borrow money from the broker to trade with, thus multiplying your profits and losses and increasing risk. A 3x influence, for example, means that you can profit three times more from your investment, but you can also lose up to 3 times as much as your original investment.
Market
The market is the collective term for investors and traders buying and selling a specific asset at a given time. The market price is, therefore, the average price of the assets being bought and sold at any given time, with any investment having multiple prices across different exchanges. For example, in crypto trading, there are various markets for each coin, such as BTC (Bitcoin), ETH (Ethereum) etc.
Fundamental Analysis
Fundamental analysis is done by researching the current price of an asset as compared to its fundamentals. These include a coin’s technology, the team behind it, community support, etc. In crypto trading, fundamentals are essential because they help tell us how a coin performs.
Technical Analysis
Technical analysis involves taking an asset’s price and looking at the charts to predict where it may go. The best example is the Elliott Wave Principle, which states that markets fluctuate in specific patterns that repeat themselves repeatedly. These patterns are believed to indicate essential turns of events which may come up in the future or could represent a reversal of fortune for the said asset. So with technical analysis, you’re studying crowd psychology and trying to see what might happen next using chart readings.
This method uses price charts to examine how prices vary over time to predict future price changes. It also helps you see support and resistance levels by looking at historical price changes about these levels. You can do this on a daily, hourly or even weekly basis.
You can use different indicators such as candlesticks, moving averages or RSI, for example, to see if there are any significant support and resistance levels. At this point, consider entering a trade there. To get the best out of your technical analysis, you must clearly understand how charts work and what they show. For example, if a coin is in an uptrend, you will see a green graph that goes up. On the other hand, if the currency is in a downtrend, you will see a red chart that goes down.
The further away from the middle line (the zero line) that we get, the more bullish or bearish something is thought to be.