by Hodler Ash 
How to trade cryptocurrency?
There was a time when crypto was perceived to be a scam and currently trade cryptocurrency is the hottest market. The wild volatile nature of cryptocurrencies is helping people make fortunes. But that is only possible with the right trading strategies.
Types of Cryptocurrency
Although Bitcoin is setting a trend with its performance in the trade market, there are more than 2,000 cryptocurrencies currently existing. Any cryptocurrency other than Bitcoin is called an altcoin. Bitcoin covers 38% of the market and Ethereum covers 18%, making these two the rulers of the market. Other actively trading exchanges are Litecoin, Zcash, DASH, Ripple, and Monero.
Also Read : Meaning Of Weak Hands
Any central financial authority does not fund cryptocurrencies. Rather they are “mined” by solving complex mathematical problems. It requires specialized computers and a large amount of electric power. The amount of processing power required is what makes cryptocurrencies so valuable.
What is Cryptocurrency Trading?
Cryptocurrency trading allows traders to purchase bitcoins and altcoins with U.S. dollars. Like any other trading policies, cryptocurrency offers you the buy and hold strategy, and weekly up and down volatility. The wild waves in the price of cryptocurrency have given rise to several strategies like futures contracts and binary options. They allow you to make a profit even when the value seems to be going down.
However, less experienced traders are not advised to bet on the downward movement of price, which is called the shorting technique.
Also Read : HODL Meaning in Crypto
The limitations to ‘mine’ bitcoin are set at 21 million coins. Currently, there are 18 million coins in circulation. Each bitcoin can be split into decimal places. Each fraction is called a “satoshi.” There are 100,000,000 satoshis in 1 bitcoin. But in practice, the regular exchanges do not allow such small units to be traded. Instead, to keep things smooth, you are asked for the amount of US dollars you are willing to spend to buy bitcoins. The exchange then automatically calculates how many or what fraction of bitcoin you can buy.
How to trade cryptocurrency for profit?
- Long-term trades
You must be aware of the famous crypto term, ‘HODL’, which had been actually generated as a typo in one of the bitcoin forums. But later it became a term that means “Hold On For Dear Life.” Traders often tend to buy bitcoins and hold them for a long period of time before selling. It can be one year or more. The idea behind this is that, all the bitcoin is wildly volatile, its price will eventually increase over the long term.
The main reason why people choose to hold on to bitcoins is that is an easy technique, requiring very little time to be invested. One does not have to understand the complex trading charts or graphs as the person is only planning to hold the coin until the value reaches a desirable amount. You don’t need to spend the time checking on the price updates, you can follow the market in your spare time.
On the other hand, short-term trading requires a person to have a constant eye on the rise and fall of the prices. It becomes a full-time job in return for a quick but minimal profit.
Another notable advantage of long-term cryptocurrency is that the traders do not need to invest a lump sum amount in order to get started. As the goal is to hold on, one can accumulate fractions of bitcoins whenever they have spare money and let it grow over time.
- Trading on Volatility
What backs the volatility of Bitcoin is the limitation in its supply. The current number of bitcoin circulating is above 18 million and the maximum supply could be up to 21 million. Whenever the demand exceeds the number of holders who are willing to sell, the price of bitcoin increases automatically.
Crypto traders and investors take advantage of this volatility with short-term approaches. They analyze and predict short-term trends so that they can buy just before the trend sets in and sell when the price surges.
Cryptocurrency is one of the most exciting trading assets that the market has experienced. The market is still young and there are opportunities that are yet to be explored. But cryptocurrency is here to stay and has successfully created a fair share of millionaires.
