Main Differences Between Crypto And Traditional Trading

The following post is a guest post contribution made by Matt Johnes. We do not advocate using any mentioned services.

A first crypto exchange that made possible trading Bitcoin was launched only 2 years after the first decentralized currency was described by Satoshi Nakamoto in Bitcoin white paper. The ecosystem around cryptocurrencies advanced rapidly in 2017 when bitcoin skyrocketed to record-breaking prices nearly every day became one of the hottest topics in mainstream news. Ever since the crypto market has been progressing and new market players emerge every day. As Bitcoin revival brought all the market into the movement we decided to talk about crypto trading in this article.

Differences Between Crypto And Traditional Trading?

In its core crypto trading and traditional trading are based on the same principle. However, there’s a huge contrast in some aspects that in part are the reason for such rapid adoption of cryptocurrency trading tools and services.

  • No middleman
    All traditional trading happens via a licensed broker-dealer. Trading bitcoin or other cryptocurrencies on exchanges, however, doesn’t require any intermediaries. Anyone who holds some crypto can easily create an account on crypto exchange and trade directly.
  • 24//7 availability
    Cryptocurrency exchanges provide service 24/7 every day of the year. In contrast, traditional exchanges have fixed working hours and are closed for the holidays.
  • High volatility
    Crypto assets are infamous for their volatility which also provides greater opportunities to profit from crypto market price changes. On the contrary, equities and other assets on traditional markets are for the most part traded by algorithms that catch every price swing. As a result, volatility on traditional trading markets is very low.

Starter’s Guide to Crypto Trading

Buy Crypto
To trade crypto, you need to have some crypto, right? So the first step would be acquiring bitcoin or other cryptocurrencies for trading. The most secure way of becoming a crypto holder is to buy some amount from a friend or a trusted person. You may also check exchangers such as LocalBitcoins or Changelly that provide p2p service for crypto buyers and sellers. Another way to acquire crypto is by making a USD deposit on exchanges that support fiat (e.g. Bitfinex or Binance). In this case, you have several options: you can either trade your fiat deposit against crypto or buy some crypto to hold.

Choose an Exchange
There are lots of crypto exchanges that differ in withdrawal and deposit fees, but also in trading fees and available pairs. Do your own research and choose the one that suits your needs best.

Learn the Basics

Although crypto trading on some level is very dissimilar to the traditional one, there are some rules that every trader should pay attention to, no matter whether he’s trading traditional securities or crypto.

  • Learn from other traders’ experience
    The first and most important rule is to trade only what you can lose. Also, don’t let your emotions control you whether it’s panic or excitement.
  • Keep track of the market
    You don’t need to be a full-time pro trader to understand the basics of trading analysis. Before entering a position pay attention to what technical analysis says. Follow the main players and crypto resources to stay on top of things.
  • Define a strategy
    To trade successfully you need to define your ways to spot an entry point. However, you also need to have a clear vision of your exit strategy in both pessimistic and optimistic cases.

Once you get comfortable with the basics of trading and crypto exchanges, you can use different tools that will help you optimize your trading efforts by automating routine and giving you the opportunity to place much more orders at a time and react to market moves faster. There are different platforms that have trading bots you can use. One of the services that provide bots for free is TradeSanta platform. Their bots execute the strategy you set and place orders on exchanges 24/7 capturing market fluctuations.

To sum it up if you hold crypto and were thinking of trading we could say that crypto market has lower entry barrier that traditional assets one, and as it is not yet totally taken by algorithms there is a potential for taking advantage of crypto volatility. We hope that our quick skinny on whats and hows of crypto trading will help you better navigate the changing crypto market and capitalize on the market movement that is going on right now.

The following post is a guest post contribution made by Matt Johnes. We do not advocate using any mentioned services.



Michael

Hi, I'm Michael and my area of expertise is forex and cryptocurrency trading. I specialize in technical analysis, namely in chart pattern setups. I educate traders of all levels and I believe that prerequisite to successful active trading is always knowing risks of the game. My most current interest lays in cryptocurrencies, especially in Ethereum and in decentralized applications. I do not give investment advice, but for general inquiries please use the comment section under any article.
Michael

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