Trading in Crypto

This article is a brief text of ETERBASE E-BOOK.
we have compiled this article to provide beginner and intermediate knowledge for anyone who is interested in trading. it will also be helpful for users who know something about cryptocurrency trading but still consider themselves a beginner.

LARGE VS. SMALL TRADES

 The act of trading is slightly different depending on how much you are willing to invest. 

Small trades and large trades have different pitfalls.

 First, it is best to define these two terms. While some may say that a large trade is something which involves at least four figures ($1000+), probably this is not true. 

A large trade is any amount of money that you would be extremely uncomfortable losing. Not so uncomfortable that you would have to start selling other assets to survive, but uncomfortable enough that it causes apprehension the next time you trade. 

This amount will be different for everybody. For some it might be over $1000, for others, it might be over $100. 

This means that a small trade is any amount of money that you can lose without feeling any form of pressure, financial strain, or even discomfort. That’s generally less than $1000.

 Engaging in small trades is a great way to get a feel for the crypto market, as well as the exchange. It gives you a taste for what trading feels like, although there is something to keep in mind. Some exchanges charge hefty withdrawal fees, which are mostly negligible with large trades, but for small trades, they can eat your profits.

RISK AND IDEOLOGY 

We’re on the cusp of the golden age of cryptocurrency. Perhaps in the next five years, cryptocurrency will truly hit the mainstream. Developers and marketers recognize this, so they are trying to lay a foundation now. This has caused several coins and tokens to advertise themselves not just by the nature of their technology, but also by the ideals they stand for. This is most noticeable with Bitcoin Cash. While the technology has a few important differences to Bitcoin Core, the way it is advertised focuses more on the ideology behind it. Bitcoin Cash is often spoken of as the one true alternative to Bitcoin Core, in that it is meant to be more community-driven and open to input. It has also attracted fans because the developers are anti-off-chain solutions.  

Ripple is regularly detested in crypto circles because its ideologies lean towards the banking and corporate industry. 

Ethical stances, Philosophical ideals, and emotion ruled the current crypto landscape. This is not a bad thing. However, it does mean that investors need to check themselves often.

BUY LOW, SELL HIGH 

Although It sounds easy, you will be surprised. Many people confuse buying low with buying genuinely bad coins. You should only be buying low on coins that have a proven history of performing well but have been struck by a market-wide dip. This way, you can know that it isn’t just your coin which is failing, but all coins and tokens. When the market recovers, so will your coin!!! (most likely). 

Selling high is a struggle too. Most people always want to wait a little longer to see just how far the top goes. Bad idea!!! If you’ve made a satisfying profit on your investment, pull it out and convert it to fiat.SO Don’t get too greedy.

Market or Asset …?

It’s easy for somebody to tell you ‘go and use technical analysis to read the market’ because they can hand you a set of techniques for you to play with, but you will come to learn that these are not too useful. As an alternative to the standard methods of reading charts, a beginner should be reading into the values of a particular coin or token.

Questions??

For big coins like Bitcoin, Litecoin, Ethereum, etc. you probably think you don’t need to reach much about them because you already know so much. This is not true. For big coins, you need to be looking into the following attributes:

• What are their plans for the immediate future and what does the public think of them?

• How many people do they have on their main developer team and who are they?

Answers!!

It is better to know the answers to all these questions before you invest in a coin like Bitcoin or Ethereum. It might not seem too critical, but what you are doing is examining the foundation on which these coins are built.

Charts can be manipulated, but these topics cannot. Knowing these gives you an indication of the strength of the coin’s team, the strength of its fans, and its roadmap. It also makes you aware of the organizations that are trying to dethrone them. For instance, if you were to try and find Bitcoin’s rivals you would discover two other big coins: Litecoin and Bitcoin Cash.

These are both trying their best to replace Bitcoin in its entirety. Knowing the competitors means that you now have an understanding of your asset’s enemies. Keeping them on your radar means that you can always be ready to even invest in them should the time come.

You need to know your assets inside and out if you want to be confident about your trades. You might think this is only important for people who indefinitely hold, but this is not the case. Even if you want to pick up a particular coin/token for a couple of days, for those days you have the same interest as holders, so act accordingly. You can ask the same questions about smaller, more obscure coins and tokens too, only now you need to be more vigilant. When it comes to the larger coins, you don’t have to worry about scams, but smaller coins are different. Anybody with a basic understanding of programming can build their own token.

You should check to see if any blatant lies are present. While none of this counts as technical analysis in the conventional sense, it still allows you to apply concrete knowledge to your trading decisions.

This is what separates high-quality traders from those who have entered the game with no understanding.

UNDERSTANDING THE MARKET

Mr. market is a tool used to help new traders keep themselves in check when it comes to the pandemonium of the financial markets. The analogy was created for the stock market, but it translates perfectly to the world of cryptocurrency too.

Benjamin Graham stated that when you buy an asset, you are inadvertently entering into a partnership with Mr. Market. He will give you all kinds of different advice regarding what to do with your asset, but for the most part, you need to ignore him because Mr. Market is irrational and focuses too much on emotion rather than hard facts. He will tell you to sell your coins when the market dips, and buy while the market rises, because Mr. Market is trying as hard as he can to succeed.

The problem is that Mr. Market changes his attitude throughout the week (or day sometimes) and his reactions to changes in the industry can be drastic.

Mr. Market:

You need to ignore Mr. Market for the most part. However, there are a couple of times you should pay attention to his presence.

If Mr. Market is telling you to sell your coins for an extortionately low price, you may want to consider buying more. This is because you will get to buy your coins at a low rate; a rate so low that it may never be seen again. You should also take into account times when Mr. Market tells you to buy while a coin is high, in the hopes that it will go higher. Now might be a good time to sell, because if Mr. Market wants to buy more, it means that the asset is performing well. It is better to gain a small profit than to lose all of it gambling it away.

Remember, we are trying our best to distance ourselves from the game of gambling. Doing this reinforces merely the topics discussed earlier trying to avoid major losses or trying to catch a falling knife.