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What Does Trading Cryptocurrencies Mean?

Are you thinking of starting to learn cryptocurrency trading, but you don't know the basic Information, Now here is our guide to explain it

In this article, we'll cover:

  • What does Trading Cryptocurrencies mean?
  • What are the types of cryptocurrency traders?
  • The 10 best Cryptocurrencies during August 2022...
  • The most common risks in cryptocurrency trading
  • Important tips for successfully trading cryptocurrency
  • conclusion
cryptocurrency-trading-2022

What does Trading Cryptocurrencies mean?

To begin with, we must introduce you to digital currencies, which are decentralized intangible virtual currencies that can be traded, that is, they can be sold, bought, and exchanged online only and not on the ground.

It consists of unique encrypted tokens located on a very secure virtual network, the Blockchain, known as the modern and contemporary Blockchain technology or technology that has made a digital revolution in the last two decades.

Cryptocurrencies are traded via “exchanges” trading platforms that mostly charge users who trade through them, but these are relatively low. Thus, stock exchanges provide a suitable virtual environment that brings users together in one place to be able to trade in a secure environment.

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The user benefits from trading encrypted digital currencies in order to achieve profits, and the size of the profit depends on several factors, the most important of which are the investment strategies that he follows, the size of the digital currency market, and the volatility of its price.

As we know, trading in digital currencies is a risky investment as it does not provide you with certain guarantees in case you lose your digital assets, but you must rely on yourself and learn investment strategies in this field, and then I can tell you that this field is very profitable and interesting!

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What are the types of cryptocurrency traders?

The main types of cryptocurrency investors:

  • Long-term investors: They invest for years in digital currencies such as Bitcoin, with the aim of achieving a huge and real profit, and they are the ones who contribute to the growth and prosperity of the crypto market.
  • Short-term investors: They invest for a short period of up to weeks, and their profit is relatively large.
  • Speculators: They deliberately buy and sell cryptocurrencies on a daily basis and can enter dozens of trades within 24 hours with the aim of making a quick instant profit.

The 10 best Crypto currencies during August 2022... "Bitcoin" is in the lead

Forbes estimates that there are currently more than 19,000 digital currency projects, representing the entire crypto market with a total market value of $1.3 trillion. But what are the best digital currencies according to June 2022 data?

Cryptocurrency is a digital asset that can be traded without going through the mechanisms of official financial authorities or central banks, and the most famous in this sector is the “Bitcoin” currency, which still leads the scene and holds about 44% of the total market capitalization.

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1 - “Bitcoin” (BTC)

It is the first-ever cryptocurrency, with a market capitalization of $565 billion, launched by Satoshi Nakamoto in 2009. Like most cryptocurrencies, Bitcoin runs on a blockchain, or registry transactions distributed across a network of thousands of computers, so that Extensions are verified by solving a cryptographic puzzle, a process called "proof of work".

Its price has risen significantly, exceeding $60,000 at some stages, while in May 2016, one could be purchased for only $500. On June 1, 2022, its price was about $29,700, representing a growth rate of more than 5800%.

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2 - Ethereum (ETH)

With a market capitalization of $219 billion, it is a favorite of software developers because of its potential applications, such as so-called smart contracts that automatically execute when conditions are met, and non-fungible tokens (NFTs).

In turn, it has witnessed tremendous growth. Between April 2016 and the beginning of this June, its price rose from about $11 to more than $1,800, an increase of nearly 16,300%.

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3 - "Tether" (USDT)

It has a market capitalization of $72 billion. Unlike some types of cryptocurrency, Tether is a stablecoin, which means that it is backed by fiat currencies such as the US dollar and the euro, and is supposed to hold a value equal to one of those denominations.

In theory, this means that the value of Tether is supposed to be more consistent than the rest of the cryptocurrency, and it is preferred by investors wary of other currencies' extreme volatility.

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4 - US Dollar Digital Currency (USDC)

With a market capitalization of $54 billion, it is also a stablecoin like Tether as backed by the US dollar and aimed at par value. This coin is powered by Ethereum, and you can use it to complete global transactions.

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5 - Binance Coin (BNB)

With a market capitalization of $49 billion, it is a form of cryptocurrency that you can use to trade and pay fees on Binance, one of the largest cryptocurrency exchanges in the world. Since its launch in 2017, this currency has expanded after its first task was to facilitate transactions on this platform.

Now, they can be used for trading, payment processing or even booking travel arrangements. It can also be traded or exchanged for other types of cryptocurrencies, such as Ethereum and Bitcoin. In 2017, it was only $0.1, but by early June, its price had risen to about $300, an increase of nearly 300,000%.

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6 - Ripple (XRP)

Its market value is $19 billion.

Launched by some of the founders of Ripple, a digital payments processing technology company, this currency can be used on its network in order to facilitate exchanges of different types of currencies, including fiat currencies and other major cryptocurrencies.

At the beginning of 2017, it was only $0.006, but on June 1, 2022, it had reached $0.4, which is an increase of more than 6400%.

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7 - "Cardano" (ADA)

Its market value is $18 billion. It is best known for its early adoption of "proof of stake" validation, a method whose goal is to speed up transaction time and reduce energy use and environmental impact by removing the competitive aspect of problem-solving and validating transactions on platforms like Bitcoin. Like Ethereum, Cardano enables smart contracts and decentralized applications.

The ADA token from Cardano has achieved relatively modest growth compared to other major cryptocurrencies. In 2017, it was $0.02, but on June 1, it was $0.55, up 2,650%.

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8 - “Binance Dollar” (BUSD)

With a market capitalization of $18 billion, it is a stablecoin founded by Paxos and Binance to launch a US dollar-backed cryptocurrency. To maintain this value, Paxos maintains an amount in US dollars equal to its total supply. Like other stablecoins, this currency gives traders and crypto users the ability to engage in transactions with other crypto assets while reducing the risk of volatility.

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9 - Solana (SOL)

With a market capitalization of $14 billion, Developed to help support the uses of DeFi, DApps, and smart contracts, it runs on unique hybrid Proof of Stake and Proof of Record mechanisms to process transactions quickly and securely.

When it was launched in 2020, its price started at $0.77, and by early June, its price was about $40.58, an increase of more than 5100%.

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10 - Dogecoin (DOGE)

With a market capitalization of $11 billion, it was popularized as a prank in 2013 but quickly developed into a prominent cryptocurrency thanks to a dedicated community and creative memes. Unlike many cryptocurrencies, there is no ceiling on the number of this currency that can be generated, leaving it vulnerable to devaluation with an increase in supply in the future.

In 2017, it was $0.0002, and by June 1, 2022, it was $0.08, an increase of nearly 40,000%.

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The most common risks in cryptocurrency trading

Now before us are the 4 most common risks for cryptocurrency traders:

1- Cryptocurrency price fluctuations

The price of any cryptocurrency depends on the market movement, specifically supply and demand. For example, when people tend to buy a particular digital currency in abundance, the demand here becomes greater than the supply, and therefore the price of the currency decreases. When people sell digital currency in abundance, the supply becomes greater than the demand and thus rises the currency rate.

The price drop and rise occur gradually or suddenly, so the investor must use the famous technical analysis methods of the cryptocurrency market and stocks, and indicators of technical analysis in addition to relying on the theoretical reading of the market movement and the general rules of investment.

Note: Depending on sudden or even gradual currency price fluctuations, the number of losses increases as the balance of funds you put into cryptocurrency trading increases.


2- Fraud and theft

As we have already mentioned, cryptocurrencies are built on secure Blockchain technology, but this does not negate the possibility of being exposed to fraud, knowing that your exposure to this will inevitably be due to human error or inexperience as an investor.

For example, you should use secure storage methods for your digital assets using secured electronic wallets and adopt cold storage, which is a method of storing currencies without the need for an Internet connection, and completely avoid hot electronic wallets connected to the Internet.

The most important thing is to master the use of your wallet for fear that someone else will access your password and steal all your savings or forget the encryption key phrase for your cold wallet.

Cryptocurrency can also be traded through the best 100% reliable and guaranteed digital currency trading platforms, and we have many platforms that have become famous and their laws and regulations are known to all.
The last trap that most beginners fall into is being unsure of the hidden story behind the sudden appearance of a certain coin and its price is often very cheap and therefore attractive to many users who may not realize the risks of buying that counterfeit coin.

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3- Entering losing trades

People rush to buy a particular cryptocurrency when its price rises suddenly and dramatically, hoping that this price will continue to rise and therefore when they sell it again, they will make big profits and this is not necessarily true.
As the price of the currency will drop suddenly after that this is called “price correction” which plays an important role in which seasoned long-term investors and not speculators.

Note: The name FOMO is commonly mentioned and it is already common in the cryptocurrency trading market, as the novice remains insistent on entering a losing trade, knowing that the result is known and does not realize that the opportunity to profit is missed and it is over.


4- Commissions and taxes imposed on traders

Trading platforms charge traders certain commissions for each trade that takes place through them, and the commissions are relatively low or high, and this can cause panic for investors, not only on platforms but also in countries.

Some countries impose taxes on financial transactions in digital currencies and those transactions are subject to tax and value-added law after they have allowed individuals and entities such as companies to trade digital currencies legally under a law imposed by the state.

Important tips for successfully trading cryptocurrency

  • Trade on a trusted trading platform

Whether you have a capital of a few tens of dollars or several million, you must protect it when you decide to trade cryptocurrencies. One of the first reactions you should get has to do with choosing the platform you are trading with.

Check their legal notices, read the reviews of other users, etc., to ensure that you are dealing with a trusted platform.

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  • Don't bet all your capital on one digital currency

In no case should your emotions and enthusiasm for a cryptocurrency lead you to bet everything on this single asset?

This advice is valid even in a long-term investment situation known as a holding; (holding is a term used to describe the storage of cryptocurrencies over a long time), which is a process that requires more trading time, as it does not depend on the multiple movements recorded by the market.

It is worth noting that the risk of a collapse or a sudden change in trend cannot be excluded and therefore the loss is significant if you trade or invest in a single cryptocurrency.

So we recommend that you diversify your investment choices, whether by avoiding investing all your capital in one cryptocurrency or by avoiding trading the same cryptocurrency multiple times in a row.

Develop a clear strategy for managing portfolios by, for example, opening many open positions simultaneously, of course calculating the percentage of the capital to be invested in each transaction, and so on...

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  • Don't buy sudden acceleration or deep dips

Cryptocurrencies are known to attract more and more traders and investors. And no one wants to feel too sorry for not investing in bitcoin and relive the heartbreak that already passed when the opportunity was right when the price of one bitcoin was less than $5 in 2010, while at the time of writing this article (July 2022) one bitcoin was worth $22,000.

Usually, the entry into the market or the exit of some large investors, usually called whales, after a particularly large socio-economic event, sometimes leads to sudden highs or lows.

Such rapid developments are usually noticed in a short time, for example, after the listing of a popular cryptocurrency on a new trading platform. Above all, don't give in to the sirens of these potentially tempting winnings.

In most cases, it does not take long for the market, for the price of the newly traded cryptocurrency to resume going down so those who entered late are in a bad position as they buy the top waiting for it to come back up or sell at a loss so it is better to invest based on more realistic considerations.

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  • Follow technical analysis

Moving averages, Bollinger Bands, or MACD indicators are graphs that guide you in the general development direction of the cryptocurrency market thanks to historical data, these graphs show you how the price of Ethereum, Bitcoin, FTM, or other cryptocurrencies has evolved over the past few days, months or years. And the interpretation of the charts will guide you on whether you want to trade cryptocurrencies or not. In the case of the moving average, for example, a bounce on the moving average (at 20 days) is often a good buy signal.

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  • The most important tip in this list of tips: Commit

When it comes to investing, and thus operating the savings, discipline should remain the keyword no matter how risky, trading cryptocurrencies with a clear logic in the sense that sticking to the plan drawn up in advance and not jumping from one currency to another, for example:
if you see that the cryptocurrency you bought two days ago has We grew +200% in 48 hours, you have no certainty that this growth will continue.

All you have to do is stick to what you planned, collect your winnings as soon as you get them, and then move on to another trade.

Now you know some of what it takes to shine in the cryptocurrency market through trading.

conclusion

Cryptocurrency trading is easy for many beginners and has many negatives and positives, but as a professional investor, you should avoid falling into the trap of negatives and invest in the positives to make a profit.

I mention that the trading process requires patience, learning from mistakes, commitment, diversification, and caution against tempting offers from unreliable fraudulent parties that seek only to get investors' money.



© 2022 Idhsaine imad

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