Start trading cryptocurrency
What is a cryptocurrency?
Today, making money online is gaining more and more followers, and one of the ways to make a profit is trading, for example, digital assets. Cryptocurrency is an encrypted unregulated digital asset that is used as an analogue of currency in exchange transactions. Such a currency does not have a physical form, it exists only in the electronic network in the form of data. The exchange of electronic money occurs in much the same way as the exchange of emails, hence the much shorter transaction processing time than through a bank, minimal commissions and the absence of an intermediary.
Cryptocurrency accounting is called a blockchain, and it is maintained collectively by all network members who have this currency. Each type of virtual currency is programmed and identified by a complex code.
Bitcoin is not the only cryptocurrency, but the first in history and the most popular. Unofficially, bitcoin is already called "digital gold". An important aspect of virtual currency is the technology on which it is based. It is she who determines the security of operations. With a sufficient number of participants, the turnover of transactions in cryptocurrencies can reach billions of dollars.
In addition to Bitcoin, there is a whole group of so-called “altcoins” that are also actively growing. Among the leading altcoins are Litecoin, Ripple, Ethereum.
Factors affecting the value of cryptocurrencies
Events in the electronic money market are developing rapidly, new currencies are constantly appearing and old ones are disappearing.
There are a number of factors that can affect the rise or fall of a coin. The growth may be due to high demand, and the purchase of this asset for speculative purposes affects the supply.
The fall of the coin may be caused by the negative news background and statements. There are many other reasons that can significantly change course.
The cryptocurrency market has now reached its all-time high in terms of capitalization. This happened because users are starting to consider this asset as an investment tool.
The “buy low, sell high” rule that applies to the financial market in general works for cryptocurrencies as well.
How to start trading cryptocurrency? Regardless of the amount of capital, a trader can find a suitable digital asset and purchase it, counting on growth in the future. When trading, it is very important to follow the news of both the market as a whole and a particular asset.
As in trading other assets, it is important to be guided by two types of analysis: fundamental and technical.
Technical analysis is not much different from chart analysis. Fundamental analysis should take into account certain facts about cryptocurrencies, including the fact that their prices can be manipulated by large market players.
The most popular virtual coins
Bitcoin naturally takes first place in all such rankings. This is a long-lived cryptocurrency with the most impressive capitalization. It's not called "digital gold" for nothing.
In addition to bitcoin, there are several options for investing in the digital money market in order to earn money in the long term.
- Ethereum (ETH) is the cryptocurrency that powers Ethereum. It is a decentralized software platform that allows you to create and run smart contracts and decentralized applications (DApps). Ethereum became the progenitor of 90% of cryptocurrency projects. Almost all trading pairs on cryptocurrency exchanges are pegged to assets based on the Ethereum blockchain. Ethereum has established itself exclusively as the main blockchain springboard for the deployment of cryptocurrency and blockchain startups.
- Bitcoin Cash is one of the few hard fork assets that has not only not lost its popularity despite fierce competition from BTC, but is also actively developing as a more accessible and improved analogue.
- Litecoin is the most accessible asset on exchanges. This is a virtual (electronic) coin based on the Bitcoin software and similar principles (anonymity, security, high transaction speed). This is the second fork of Bitcoin.
Before you start trading cryptocurrency, you should register on the platform, which will take only a couple of minutes. When the cryptocurrency for investment is selected, you can start trading.
How to determine which cryptocurrency is worth investing in?
A crypto trader needs to know what a cryptocurrency is and how to choose the right coin for trading.
There are a couple of simple indicators that can give an idea of the seriousness and potential of each cryptocurrency:
- its market capitalization, that is, the position in which it is located, and the share of the coin in the total market value of cryptocurrencies;
- a community of followers and developers. When a cryptocurrency has a large and developed community, this often indicates good prospects for the project;
- news agenda - successful projects will interact with the media, and thus increase the credibility of their cryptocurrency;
- expert analytics of the leading economic portals dedicated to cryptocurrency.
You can properly start trading cryptocurrency in the Philippines, you just need to study trading strategies, understand their advantages and disadvantages, and master a few of them. It is also important to understand how to work in the market, to be able to use fundamental and technical analysis. You can LEARN THIS FOR FREE, FOR EXAMPLE, ON A DEMO ACCOUNT of a brokerage platform. Try it, it's easier than it looks!
In trading cryptocurrencies, a trader uses various data that should make the work more efficient. To do this, it is necessary to structure the analysis of the material, choose the most informative tools, work out a system for responding to signals, and adjust your actions in accordance with the results. That is, develop a trading strategy. A trading strategy streamlines trading and makes it convenient for analysis.
Crypto trading has been around for a long time for market participants to define template strategies that are convenient for a beginner to start trading with. Subsequently, when he has mastered well one or more of the most commonly used strategies, he will be able to develop an individual technique.
Among the strategies in terms of time parameters, the following can be noted:
- Intraday trading: an analogue of a normal working day, when a trader opens and closes positions during the day or day. Leaving the auction, he closes all positions until the next session. One of the most common and rather pragmatic strategies. The price of a cryptocurrency can change dramatically overnight and closing all positions prevents losses. But on the other hand, the trader will not receive the profit that would have been waiting for him if he correctly predicted a sharp price movement.
- Positional trading: with this strategy, the trader works only at a certain point in time, for example, during a trend reversal. It is impossible to predict events on the crypto market with sufficient certainty, if a trader predicts a reversal, then he starts trading at any time when this happens.
- Swing trading: trading here is carried out within a certain long cycle from 10 hours to several days. A trader places a position at the beginning of a trade, waits for the end of the cycle, places another position and fixes income. So, it works with cycles of decline or growth in the price of a coin, a period of increased volatility. The advantage of this strategy is that, to a large extent, the cycles are subject to patterns and the results of trading are more predictable here. On the other hand, a crypto trader does not make money on short sharp price fluctuations, which are very typical for virtual coins.
- Scalping: A crypto trader tries to capitalize on every price move. This is high frequency trading based on superficial market analysis. Minimal fluctuations in the cryptocurrency rate are always observed, so scalping is possible at any time. The strategy requires the trader's constant attention, the ability to quickly predict the situation and respond to its change, which comes only with experience.
Using ready-made trading templates, a trader in the Philippines can create an individual strategy. At the same time, he may not develop something new, but use already proven methods.
When choosing a strategy, a trader proceeds from what kind of cryptocurrency he plans to trade, from the state of the digital asset market, his financial capabilities and the goals he sets for himself.
Two Main Algorithmic Trading Strategies
If you are learning algorithmic trading, then you should start by learning the two trading strategies commonly used in algorithmic trading: based on moving averages and based on RSI (Relative Strength Index) lines.
The moving average method remains the most popular technical analysis tool to this day. He gained his fame due to the ease of constructing, calculating and interpreting the results. The essence of the method is in the calculation of averaged data for a certain period of time. In a schematic representation, the indicator seems to slide along the asset chart. The direction of movement indicates the prevailing trend. A progressive increase in values indicates the growth of the market, a downward one indicates its fall.
Types of moving averages:
- Simple Moving Average (SMA);
- Weighted Moving Average (WMA);
- Exponential Moving Average (EMA).
The Relative Strength Index (RSI) is a line chart indicator that measures the strength of a trend by calculating the average number of gains and losses over a 14-day period. RSI can be used to determine if an asset is overbought or oversold. When an asset is overbought, the market is expected to correct and pull back in the opposite direction, i.e. trend reversal.
Experienced traders use the RSI to determine the trend reversal point. The RSI line usually moves with the price. A divergence between the price direction and the RSI line signals an approaching price reversal.
The RSI line moves in the range from 0 to 100. The range from 30 to 70 is most often used as a baseline. When the indicator line rises above 70, the asset is considered overbought. When the RSI value is below 30, the asset is considered oversold.
Graphically, Bollinger Bands are two lines that limit the price dynamics from above and below, respectively. These are kind of support and resistance lines, which most of the time are at levels far from the price.
Bollinger Bands are formed from three lines. The middle line is the usual moving average. The top line is the same middle line shifted up by a certain number of standard deviations. The bottom line is the middle line shifted down by the same number of standard deviations.
The uniqueness of Bollinger bands is that their width changes in response to changes in market volatility.
The meaning of the Bollinger Bands indicator is to determine sharp deviations from the average rate of the current trend of the currency pair. If the Bollinger Bands are chosen correctly, then its moving average (center line) is a good support/resistance level, and the boundaries of the BB channel can serve as targets when opening positions. Usually, Bollinger Bands are plotted on a price chart, but they can also be plotted on any indicator drawn in a separate window, such as an oscillator.
Bollinger Bands indicate the hidden nature of price fluctuations much better than many other tools do.
Cryptocurrency trading is one of the fastest growing areas of trading. It attracts investors with the opportunity to quickly get impressive profits. Therefore, register on the platform and start trading in the Philippines online today.