How to Learn Cryptocurrency Trading

It’s impossible to determine a perfect time to get involved in cryptocurrency trading, but there are various factors you can evaluate to make your decision and determine if it is a good opportunity for you.

After hitting a peak in November 2021, the crypto economy slipped into a bear market, meaning that winter has arrived for Bitcoin, Ethereum, Litecoin, and thousands of other digital tokens.

But knowing how to learn cryptocurrency trading is the challenging part of this quest to buy, sell, and hold Dogecoin, Shiba Inu, and Avalanche.

So, how do you start figuring out how to learn all things related to cryptocurrency trading?

Before you determine how to trade crypto, there are some basics that you first need to become acquainted with before you start trading and using tools like limit orders.

How to Learn Cryptocurrency Trading

Here are five things you must know first before you start trading digital currencies:

1. Open a Crypto Brokerage Account

The first step is to open a client account at a crypto brokerage firm. This will allow you to buy, sell, hold, and trade cryptocurrency. The process is similar to what you would do with any other brokerage account for stock trading, including keying in your personal information (name, address, phone number, etc.).

2. Deposit Funds to Your Account

Once your account has been approved, you will need to deposit funds. How much you deposit is entirely up to you, although some platforms might require a minimum deposit. After you deposit money into this account, you can decide how much you wish to trade, be it a dollar or $100.

3. Choose Your Digital Currency

For beginners, it is essential not to go overboard in your crypto trading endeavors. In other words, you want to stick to one or two virtual tokens rather than constructing a portfolio of a dozen digital currencies. By focusing on a single cryptocurrency, you can concentrate your efforts on advancing your investment opportunities, learning from your mistakes, and using any market or technical analysis on one token.

4. How Do You Want to Trade Crypto?

There are a few ways to trade cryptocurrency today. The first is through a crypto exchange where you can directly buy, sell, and trade digital currencies. The second is through crypto CFD trading, where you can trade the price movement of a virtual currency without holding the underlying asset. The third is by purchasing shares of crypto-related exchange-traded funds (ETFs).

5. How Are You Storing Your Cryptocurrency?

Typically, crypto holdings are stored in wallets. There are two types of wallets: hard and soft. The former is when your crypto assets are stored on a physical device offline, while the latter is generally stored on an application. Hard is great if you are holding onto crypto for the long term. Soft is preferable if you routinely use your holdings to buy goods and services in the economy or trade crypto.

That said, if you are actively trading cryptocurrency, it would also be easier to store your funds on an exchange or platform to have simple and ready access to these assets.

How to Trade Cryptocurrency

Now that you know the basics of cryptocurrency trading, it is time to get into some of the more advanced aspects of investing in Chainlink, Filecoin, or Solana.

Here are five tools you should include in your arsenal of crypto trading:

1. Technical Analysis

Technical analysis is a trading method to assess investments, identify patterns, and seek out opportunities. Technical analysis has been used for stocks, commodities, and forex, but it can also be utilized for crypto.

Crypto technical analysis is essentially the same as monitoring market prices, volume, and momentum and making predictions on outcomes, support, and resistance levels.

Put simply; you are not just throwing darts on a board and expecting a token to go up. You need to have a plan, you need to do your research, and you need to have some criteria to go bullish or be bearish.

But what would be some examples of technical analysis?

2. Exponential Moving Average (EMA)

The exponential moving average, also known as EMA, is a technical chart indicator that monitors the price of a commodity, stock, or cryptocurrency over time, with a greater emphasis and weight on the most recent price movements. Ultimately, it is about removing the frenzy of short-term fluctuations and providing superior insight into the price.

Here are some things you should know:

· EMA can be integrated with the relative strength index (RSI), moving average convergence divergence (MACD), and average directional index (ADX).

· While it is a lagging indicator, it lags less than the simple moving average (SMA).

· EMA is just one component of a trading strategy, so investors should not only depend on the indicator.

3. Fibonacci Retracement Levels

Fibonacci retracement is another technical analysis trading tool that provides crypto traders with the knowledge of when to place orders, invoke limits, complete trades, and close positions. In order to determine support and resistance levels during an uptrend or downtrend, the Fibonacci retracement level will depend on horizontal lines and percentages.

Here are some points to consider:

· Maintain a focus on long-term trends.

· Fibonacci is not a reliable tactic for short-term trading (day or swing).

· Refrain from combining reference points.

4. Heikin-Ashi Candle

How do you cancel all the market noise during a high-volume or volatile trading session? This can be a challenge, but if you depend on candlestick pattern techniques for your crypto trading campaign, perhaps the Heikin-Ashi method is your solution. This strategy reduces the market noise of day-to-day movements by producing a chart that spotlights trend directions and potentially predicts future prices.

Here are a few things you should know:

· The Heiken-Ashi indicator will slow down the market and remove many false signals, which can be quite common in crypto trading.

· The disadvantage, however, is that the Heikin Ashi depends on lagging indicators, which might not highlight a potential reversal in the markets.

· If you are employing a scalping strategy, Heikin-Ashi might not be right for your crypto trading needs.

5. Japanese Candlesticks

For anyone who has participated in the financial markets, they would have become familiar with a Japanese candlestick. This is a price chart that shows the opening, closing, high, and low price points for any given period (one minute, 30 minutes, one hour, or a single session).

It was initially used by Chinese rice merchants. Today, Japanese candlesticks are mostly used by stock market traders. But can a Japanese candlestick also be applied to crypto trading? Yes.

Now, there are three primary types of patterns you need to be aware of:

· Doji: This pattern suggests that buyers and sellers are indecisive about a security, so this could be a terrific trading opportunity for investors.

· Hammer: This is a price pattern that shows the investment is trading lower than its opening and could be poised for a trend reversal.

· Shooting Star: This is a single-candle pattern that offers signals to investors of a potential reversal.

The Best Time for Crypto Trading?

There is never a best time to trade crypto except if you have a time machine. Volatility, in crypto trading, is the norm. Expect wild market swings in either direction. If your crypto investing thesis is long on tokens such as Bitcoin, Ethereum, or another cryptocurrency, then a strategy to enter crypto would be dollar-cost-averaging. If you are looking to actively trade, in either direction, then you may want to trade during pullbacks on uptrends or pullbacks on downtrends.