Four Things To Know Before Trading In Cryptocurrency Market
Follow 4 things before trading in cryptocurrency: If you travel from one country to another, what is the first thing you do? Probably visiting a bank and exchanging the currency for the domestic or local currency.
Similarly investing in cryptocurrency works the same as exchanging the currency with the local currency of the country. Few examples of these cryptocurrencies are Ether, Bitcoin and Litecoin which operate within a particular context within specific online communities. Exchanging for any currency depends on the worth or value of it as a whole. The value of euros or dollars is just because people know that they can buy service and goods with them.
The biggest question is, can a trader trust cryptocurrency? And should he start investing in it?
What is Cryptocurrency: It is a virtual or digital token which people use as a medium of investments and for buying online. One exchanges the regular currency such as dollars or euros to buy “tokens” or “coins” of a particular cryptocurrency. There are many types of it, but the most popular among them are Bitcoin Cash, Bitcoin, Litecoin, Ripple and Ether and a few others. All kinds of big financial and technical firms want a part of the crypto. Even Facebook has launched its cryptocurrency with the name Libra.
The word cryptography refers to the art of solving and writing codes. Every coin has a unique code associated with it; this is the reason why one cannot duplicate the cryptocurrency. This code makes it possible to identify and track during a trade.
Cryptocurrency is compared with the modern-day gold rush because the trader earns hundreds and thousands of dollars while trading in it. The history of cryptocurrencies is not long back; it has been just ten years. The first crypto (Bitcoin) was launched in the year 2009 by an anonymous person known by the name Satoshi Nakamoto.
Four Essential Point To Know Before Cryptocurrency Trading
Before leaving the traditional dollars and buying new Ether or Bitcoin, there are a few necessary things you need to note down:
1. The Volatility of Cryptocurrencies
The value or price of these currencies fluctuates significantly between ups and downs. For example, the cost of Bitcoin in 2017 oscillated between $900 and $20,000. Within a short duration, the price suddenly dropped.
Thus, investing in cryptocurrency is somewhat risky. However, the degree of risk can be managed, but still, one needs to be very cautious before investing the hard-earned money in this market.
2. Many Unknown Traders In The Market
There are still a lot of issues you need to find out in this market, this is among one.
Think once that no one knows the founder of Bitcoin yet. Thus, only a small percentage of traders in the global world knows exactly how to trade it and the actual transaction operation associated with it.
Ignorance exposes you to risk, that’s why it is advised to practice a trade and build fundamentals before heading towards something which you don’t know at all.
3. Use of Cryptocurrency In Fraudulent Activities
Traders who want to avoid regulation imposed by the government or banks and who wish to remain anonymous will make investments in this market. They do so to pursue shady deals in the black market. Thus, money laundering is a significant problem with the crypto market.
The explanation above doesn’t mean that only bad traders use cryptocurrency; it is just that the trader who wishes to carry out criminal activities without being caught consider it as an ideal place.
4. The Unproven Rate of Return Associated With Cryptocurrency
Trading in this market is similar to gambling. It is because it is exchanged between peer to peer without any link to regulatory measures. There is no fixed pattern for the fall and rise of its value. One can’t calculate returns and predict changes like in the case of growth of share mutual funds.
There is no proper data and enough credibility to make a long-term investing plan based on the cryptocurrency.
Should One Invest In Cryptocurrency?
It is the best platform for a trader if he wishes to expand its wealth. Many traders have become a millionaire by investing in the crypto market. But read once all the precautionary measures while investing your money. Wealth is what you earn through hard work, and it matters a lot if you play poker with your monetary future. So, go ahead but with care.
The Bottom Line
Your initial smart investment and risk handling strategy decide your profit. Follow the website fxreviews.best for the guide on risk management strategies along with the basics of cryptocurrency investment.
The vast majority of Forex education organizations fail to address the only true characteristic of a market place, human nature. You can easily find loads of charts, pivot points, moving averages, trend lines and all sorts of Fibonacci ratios, together with the latest in trading automation. Any Forex website publishes some or all of these data, along with myriads of other details, interviews and opinions. You may even get entry and exit signals, support and resistance levels, all of which could appear as sufficient in the decision-making process. I was under the same impression as a beginner, I was at the same level as an intermediate trader and only heavy losses and low risk/reward decisions made me look for a different approach to trading. If you are aware of the importance of having a trading plan for each trade you plan to initiate, then you must be familiar with moments of doubt, when following the opening of the trade, the market goes awry, together with your emotions and self-esteem. Do you feel frustrated? Join the vast club of frustrated professional Forex traders. When you see the market moving against all odds and logic, your emotional self cries for an immediate position reversal (SHORT from LONG and vice-versa), in complete disregard of your own trading plan. On the other hand, all your training books, videos and mentors have pumped the "trading plan supremacy" into your brain. While the viable solution seems to reside in the robotic way of trading the plan, a professional operator must learn to listen to his or her "hidden partner", the subconscious. Our brain is capable of storing immense quantities of data, without us being aware of it. Our five senses perceptions are in constant use and they permanently add to our overall life experience. While our subconscious is capable of dealing with all this seamlessly, the conscious mind has only a very limited operational capacity, primarily used to help us dealing with our daily tasks. As we trade, ALL our experiences are deposited deep within our brain, slowly building up what I call the unseen analyst. This is what you may call the sixth sense or the instinct traders develop as they progress. As the name of the game with Forex trading is VOLATILITY and 80% of all trades do not last more than 2-3 days, with the vast majority of them being day trades, it is easy to accept that conditions can and will change in a heartbeat, rendering most trade plans obsolete. The only way to alleviate the contradictions between your emotional self and the heavily trained brain is to learn how to give them priority over time. As a beginner, you simply cannot have the emotional experience to "feel" anything related to the market processes and therefore it is advisable to rely completely on the mechanisms of a trading plan. At this stage, take your time to learn how to interpret the charts, prepare yourself according to the daily economic calendar and how to construct a comprehensive trading plan. Once you took a trading decision, stick with it, no matter what. At this stage, you are a robot, implementing a trading strategy. Your emotional weight should be nonexistent in the economy of the trade. As you progress along the path of becoming a professional Forex operator, your unseen analyst will start adjusting your trading decisions, silently participating in your trading decision process. It is now the time to make room to your "feel", to accommodate your growing sentiment of "feeling the market". Your emotional weight should now become an accepted presence. You will soon learn how to adjust this "mix" in a way to achieve the optimal trading performance.
This article will teach traders to build positions through multiple entries as opposed to putting on the entire position right up front. Below we will offer a mannerism in which traders can look to increase their position size ONLY if the trade is moving in their favor.While at dinner recently with a group of analysts and traders, the topic of scaling in to positions came up, and a vigorous debate ensued. After 30 minutes of lively conversation, something became very clear: Even amongst professionals, scaling in to a trade is a hotly debated topic.Risk management is a huge part of trading; and since one of the few factors in a trader’s control is the size of the lot that they are trading, the topic of ‘scaling in’ positions certainly warrants attention.This article will explain what scaling in is, how to do it, and in which circumstances traders may want to look to ‘scale in’ to positions.What is scaling in?Scaling in is the process of entering a trade in pieces as opposed to putting the entire position on in one entry.A trader that is looking to scale into a trade might break their total position size in to quarters, halves, or any other division that they feel might let them take a more calculated approach to putting on a trade.Let’s say, for instance, that a trader was looking to take EURUSD up to 1.3300, but was afraid of a near-term movement against them. As opposed to putting on the entire trade right up front, the trader can look to ‘scale in’ to the position. The picture below will illustrate further:Scaling in every 100 pips If the trader wants their total position size to be 100k, they can choose to open 25k every 100 pips that EURUSD moves up. So, our trader can open 20k to start the position when price is at 1.2900, and once moving up to 1.3000 our trader can put on another 25k. This has the added benefit of allowing the gains in the first part of the position to assist in financing the second.After price moves up to 1.3200, the trader takes on another 25k, and again at 1.3200. Once price hits 1.3300, the trader can close the position at a strong profit.Why Scale In?In the above example, let’s assume our traders stop loss was at 1.2800 when they opened their initial EURUSD position at 1.2900. But instead of our trader scaling in, let’s assume they opened the full lot at the outset of the trade, and this time, unfortunately - the trade didn’t work for them as EURUSD ran directly to their stop at 1.2900. This means our trader takes a loss of $1,000 (100 pips X $10 per pip (100k lot)).If our trader instead looked to enter using a scale-in approach the trader would have a much more moderate loss of $250 (100 pips X $2.50 per pip (25k lot)).And the trader using a scale-in approach could have used trade management to assist in the risk management of the trade if the position moves in their favor.Let’s say that EURUSD moved up to 1.3000 shortly after our trader entered, but then reversed moving down to 1.2800. Once again, if our trader had opened the entire position up front they are faced with a $1,000 loss. But to the trader that had scaled in, adding a second part of the lot at 1.3000 - the loss would, once again, be much smaller.If the trader’s stop remained at 1.2900 while scaling in, the total loss on the position would be $600 ($200 for the first 20k scale, and $400 for the second (200 pip loss X $2 per pip)).But why would the trader be required to leave their stop at 1.2900 after the pair had moved in their favor 100 pips on the initial part of the lot? Many traders will use this type of movement as an opportunity to move their stop up to break-even, in an effort to remove their initial risk on the trade.So, as EURUSD moved up to 1.3000, the trader can open the second part of the lot, and also adjust the stop on the first part of the lot to 1.3000 from 1.2900. That way, if price reverses against the trader, they can get stopped out at break-even on the first part of the lot, taking a loss on only the second part of the position.This process can be continually instituted on all 4 parts of the scale-in approach, so that by the time the trader enters their final 25k of the position at 1.3200, stops have been moved to break-even on the previous 3 parts of the position, and the trader only carries, at maximum - $200 of risk on the position (assuming a 100 pip stop on any of the 4 legs of the position at 25k per leg).When to scale in?Traders often prefer to scale in when they are looking for a large move in a currency pair, but want to use a more risk-sensitive approach than putting on the entire lot right up front. The downside to scaling in is that you won’t get the entire move for the entire position.Whereas in our above example, the trader would be able to look for 500 pips at $10 per pip, a trader scaling in would only be looking for 500 pips on the first part of the position, with the second part seeking 400 pips, the 3rd looking for 300 pips, the 4th seeking 200 pips, and the fifth and final part of the lot looking for 100 pips. But keep in mind, scaling in also allowed the trader to take on far less risk during the trade than had the entire position been initiated right up front.
What is Future Cryptocurrency: Cryptocurrency is the most recently added twig in the arm of the financial market, which is proving a shot in the arm for its traders. They are corrugating their capital from elsewhere to invest in it following the rearing benefits that seem to from it. In 2019, the total cryptocurrency market value was pegged at USD 1.03 billion. As per the projections, it may grow up to USD 1.40 billion by 2024. However, the cumulative market cap of the cryptocurrency as of 5 August 2020 was $337.28 billion. There are overall 6088 digital currencies available in the online market for trading. (Data from CoinMarketCap. In 2016 the market cap value was lower than USD 18 billion and rose to 128.78 billion by 2018. As of 19 August 2018, there were mere 1600 cryptocurrencies available on the internet. The price of bitcoin peaked at nearly USD 20000 in the year 2017. Glancing at the growth prospects, the future of cryptocurrency seems bright and shiny. Future Cryptocurrency Definition It is a computer-generated digital currency which utilises the algorithm of encryption for securing the procedure involving creating of different coins and performing transactions. It is mandated as an ecosystem thriving to gulp down the current financial territory and policies. The advanced techniques of encryption are referred to as cryptography. These coins or digital money doesn’t have any physical presence or property of collateral for evaluating their values. Read More: How to Make Money Investing in the Cryptocurrency Market Some Characteristics of Cryptocurrencies - There is a universal discourse on whether cryptocurrencies should have a regulatory authority looking over their transactions. But even after more than eleven years of the launch of the first cryptocurrency bitcoin, no government in the regulates it. - As there it is available only in virtual form, there’s no over the counter platform for investors to buy and sell them. All the other cryptocurrencies that formed after bitcoin are also known as altcoins or alternative coins. - Experts consider it as a disruptive concept and force against the prevalent notion of fiat currency. - Bitcoin has the advantage of being the first of its kind. Hence, it captures the significant share and belief of investors compared to others. - Cryptocurrencies offer compliance free remittance and ease of transactions seeing through the boundaries of nations. - The ability to break the cross-border barrier of transaction makes the currency popular among classes. Advantages Enveloping Cryptocurrencies That Can Trigger its Future Prospects - It gives enhanced and compact advanced security for transactions. - All trades done have logs. Thus, they are transparent but at the same time far from anyone misusing the digital currency of another trader. - It comes with a decentralised system, which enables users to access it from different parts of the globe. - The international transfer is quicker than an eyeblink. - Low fees and prevention from scamsters and fraudsters are qualities that are dictating in an investors mind, and they are adopting the technology. - Protection from consumer chargebacks is one of the reasons that is triggering interests in industries and traders per se. Europe May Emerge as the Power Hub of Cryptocurrencies Currently, Europe holds the second spot in terms of cryptocurrency-related transactions and exchanges. The main markets comprise the UK, Germany, East Europe, and France. Besides, the rest of Europe contributes to its growth too. APAC Tops The Chart APAC, aka the Asia Pacific region, is on the top of the list where volumes of investors and transactions are mammoth and magnifying. It primarily includes Japan and South Korea and the RoAPAC, which has Australia, New Zealand, Malaysia, India, Thailand, China, and Singapore. Japan sits on the hilt when it comes to awareness and technology surrounding cryptocurrency. The government is apparently favouring the cryptocurrencies.