Due to the introduction of blockchain technology and the growing acceptance of digital assets by the general public, the cryptocurrency market has developed into a very profitable and active space for traders in recent years. Although Last year was a tough year for many crypto enthusiasts as it brought us into the bear markets, 2023 could be the year cryptocurrency trading resumes its long-term bull market. In this cryptocurrency trading training, we’ll explain cryptocurrency fundamentals, some of the best ways to trade cryptocurrencies in 2023, risk-taking techniques, and trading hacks that can help you master the markets this year.
What you’ll learn
- What is Cryptocurrency?
- Understanding cryptocurrency trading
- What influences cryptocurrency prices?
- How to Trade Crypto Profitably in 2023
What is Cryptocurrency?
Cryptocurrency is a type of digital currency that can be used to make everyday financial payments including paying for products and services online. Bitcoin and Ether are examples of popular cryptocurrencies.
Since they are created with blockchain technology, most cryptocurrencies are decentralized in nature. As a result, neither the government nor any other central authority maintains them. This makes it more efficient and reliable than traditional currencies as its impossible for a single institution to manipulate its supply or restrict its usage.
To the joy of investors, the value of top cryptocurrencies has increased significantly over the past few years and continues to rise. All records of crypto transactions are stored on the blockchain network and most of it can be accessed by the public. This makes it a bad option for money launderers.
Understanding cryptocurrency trading
A cryptocurrency transaction involves a buyer and a seller, just like any other tradeable asset. It often sees a price increase on increased demand when there are more buy orders than sellers. More sell orders often result in a price drop due to a decrease in demand.
The value of bitcoin and altcoins changes every second on the crypto market and it never closes like the stock market. There are various ways to trade cryptocurrencies, including purchasing coins and tokens on an exchange and then exchanging them for fiat money, trading cryptocurrency pairs to perhaps profit from changes in the price spread, or buying and selling derivatives.
Keep in mind that cryptocurrencies are very volatile. Their price may swiftly change in opposition to your position, resulting in losses. A trade carries more risk the more complicated it is.
What influences cryptocurrency prices?
The following factors could increase or decrease the price of a crypto at a particular point in time:
Supply and demand
Crypto prices are often influenced by the supply and demand principle, just like any other tradeable asset. Price increases occur when supply is insufficient to meet demand. Price decreases as demand falls. Similarly, a limited supply of a crypto supports its price.
Availability on exchanges
New cryptocurrencies typically only have a few exchanges where they are listed, which restricts trader access to them. If they are not widely traded, they could have wide bid-offer spreads in prices that could scare away some investors. However, a new cryptocurrency’s price may rise if it is listed on larger exchanges making it accessible to more traders.
New cryptocurrencies are being introduced constantly, making it difficult for some projects to stand out from the crowd and become widely traded. However, some have been successful in offering a new service, an upgrade to an existing network, or both in a bid to attract more traders to them. Typically, the price of a new cryptocurrency rises as acceptance increases, which can also lower demand for rival projects.
Inflation of fiat currency
Investors can choose to purchase cryptocurrencies as a store of value to protect themselves against the inflation of fiat currencies. Due to the increased demand, the price of the cryptocurrency typically rises as a result.
Government policies from popular countries in the world could also have a positive or negative impact on the price of cryptocurrencies. For example, Chinese regulatory restrictions on Bitcoin mining led to the crash of the price of most cryptocurrencies a few months ago. The policy also made many Bitcoin miners migrate to other countries like the U.S.
How to Trade Crypto Profitably in 2023
Avoid making trading calls based on hype
One of the errors new traders frequently make is relying solely on social media for cryptocurrency news. Never base investment decisions on the hype generated on social media. False information about digital currency spreads easily since it is a hot topic.
Do your Research
Researching a coin is one of the most crucial trading techniques. To research the worth of the asset you want to buy, you don’t need to be an expert trader. This entails staying current on all news on the cryptocurrency project. Additionally, you should assess your finances and set a trading and investing plan before betting on a volatile asset class like cryptocurrency. You may start your research on cryptocurrencies such as Bitcoin, Ethereum, Tron, Ripple, and Litecoin.
Arbitrage refers to the trading approach which involves buying cryptocurrency on one exchange and selling it on another. Spread is the term for the difference between the buy and sell prices. Trading volume and liquidity differences present opportunities for traders to make a profit. To take advantage of this opportunity, you must create accounts on exchanges where there is a significant price difference for the cryptocurrency you are trading.
Avoid Emotional Trading
Technical and fundamental analysis are definitely difficult to learn. However, it isn’t the hardest aspect of trading. Managing one’s own emotions and having the self-control to stick to one’s strategy rather than acting on impulses based on emotions is the hardest task faced by traders.
Trading emotions is a problem for all traders. It’s practically impossible to resist the impulse to trade. There is so much room for profit. Some traders see some hype about a particular crypto coin, they see the price is already starting to shoot up, and they don’t want to get left behind, so they buy too much at once. This is known as FOMO – the fear of missing out.
Be wary of Pump and Dump Schemes
Some fraudulent individuals or groups attempt to take advantage of the excitement and greed of traders by rallying them to buy a coin and manipulate the token’s price to rise, at which point the scammers sell their own tokens — raking in lots of profits and leaving several traders in losses. This is known as a “pump and dump.”
To avoid these schemes, consider trading volume when you select coins or tokens to trade. And avoid the temptation of the fear of missing out.
Manage Volatility with Stablecoins
The cryptocurrency market is extremely unstable, which causes many cryptocurrency traders to lose money because of how quickly the price of cryptocurrencies surges and falls.
As a result, stablecoins like Tether (USDT) and USDC were created. Stablecoins are a subset of cryptocurrencies with a predictable price. To keep the price steady, they are backed in reserves by an externally stable currency, such as the dollar.
To protect your gains and avoid losing them due to volatility, you can convert your cryptos to stablecoins and store them in your cryptocurrency wallets.
Utilize Technical Analysis
When trading cryptocurrencies, technical analysis is an excellent trading tactic that can help in choosing the right crypto to trade. It forecasts future trends and uses historical price movements and patterns to pinpoint the best times to buy and sell a particular crypto.
Technical analysis, when done properly, can reveal a market’s advantages and disadvantages. Understanding the many indicators and chart patterns is the most crucial element of this strategy. And having a solid foundation in technical analysis will give you an edge over other traders in 2023.
You can learn about various trading indicators and how they can help you make better decisions with your trading in this advanced crypto trading training (Web3 Masterclass).
Only trade with a Secure Exchange
With many different exchanges experiencing bankruptcy recently, it’s important to do your research and find one that is reliable and best fits your needs. The most credible exchanges are those audited and certified by security professionals and offer comprehensive customer service support. It’s also a good idea to choose an exchange regulated by governing bodies in your country.
Practice Risk Management
Make sure you are aware of the risks involved in crypto trading and how to prevent them or at least reduce their influence on your assets. If the market starts moving against you, develop techniques to quickly exit positions.
It’s important to know when to stop losing money and move on to the next trade. Be able to acknowledge when you’re wrong and don’t let feelings influence your decisions. In this manner, even during times of market volatility, you can preserve your cryptocurrency investment.
Use Automated Trading Software
Learn how to use automated trading bots. Thanks to the rapid growth of AI, you can utilize automated trading software to buy and sell cryptocurrencies. This will help you avoid having to trade all day long manually. When used well, automated trading could enhance your trading results in 2023.
Follow the big Crypto players:
Large traders with a lot of trading capital and experience, such as hedge funds and institutional investors, have the power to influence the market through their trades. You can learn about their trading process, strategies, or trade activities and possibly make money from them by keeping tabs on what coins they are buying through the data shown on the blockchain.
In conclusion, remember that trading is a marathon, not a sprint. Patience and discipline could make you very profitable in 2023 if you want to turn trading into a practicable source of income.
Frequently Asked Questions on Crypto Trading Training
Is crypto trading profitable?
Yes, some experienced crypto traders profit from crypto trading. Due to the significant volatility of cryptocurrency prices, traders may be able to profit from speculation on changes in prices. However, trading cryptocurrencies could lead to financial loss if the price of a crypto falls due to its high volatility without any proper risk management strategy in place.
Is trading cryptocurrencies safe?
Due to the unrestricted nature of the cryptocurrency markets, some coins or tokens may be fake. You should consider using a reputable cryptocurrency exchange that employs security measures like identity verification and double check new crypto projects before making them available for trading.
How do you start trading cryptocurrencies?
If you want to get started trading cryptocurrencies, open an account on a user-friendly crypto exchange and fund it with your fiat currency. Select the coins or tokens you wish to trade, pick a favorable trading strategy to try, and then use technical and fundamental analytical tools to help you decide when to initiate and exit a trade position.
If you want to learn more ways to level up your trading like a pro, check out this special crypto trading training course (web3 masterclass). from crypto university.
Crypto trading training video
Here is a helpful video guide by Crypto University – your Crypto trading advisor that shows you the best way to trade crypto in 2023. Crypto University is fully licensed by KHDA in Dubai, UAE, ensuring the highest quality of education and a secure future for you and your wealth.
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