Cryptocurrency trading as a way to make money gained prominence in 2017 when there was the first explosive rise in the price of digital currencies. As of 2020, trading in digital currencies is back in the centre of interest. People saw buying cryptocurrencies as a new way to save money and earn money while selling them at a bargain price. Startup Analytics, in its report, noted a 26% increase in traffic to cryptocurrency exchange sites in July compared to previous months.
If you are new to cryptocurrency exchanges and have no experience in trading, it is not easy to understand the terms, rules and techniques of trading, develop the right strategy and discover opportunities to make money.
To develop your own strategy and start trading on a cryptocurrency exchange, a novice crypto investor needs to determine which way of earning is suitable for his or her character and level of current knowledge about the world of cryptocurrencies.
There are several ways to make money on cryptocurrency exchanges:
The authors of the Crypto Research Report believe that the price of cryptocurrencies will only go up until 2025. In a growing market, every way of making money that a novice investor chooses will be successful, but as long as they understand the nature of the chosen method and the specifics of how it works in the digital currency market.
Trading is common speculative action. The basic principle of trading is "Buy low, sell high". Traders tend to buy a cryptocurrency for a short time, choosing an entry point, buying cryptocurrency, and exit point, selling cryptocurrency, using various methods of market analysis. A novice trader should learn the techniques of technical analysis of the market and closely monitor how news from the cryptocurrency industry affects the rate of digital currencies.
On cryptocurrency exchanges, digital currencies are traded in pairs with each other, with regular currency, dollars or euros and stabelcoins.
Pairs, where cryptocurrencies are traded for regular currencies or stabelcoins, are best suited for beginners. The exchange rate of regular currencies and stabelcoins, cryptocurrencies linked to regular currencies, are less prone to fluctuations.
An important rule to remember when trading cryptocurrencies in pairs is:
The essence of investing in cryptocurrency can be described in two words: - "Buy and hold". Depending on the term for which the digital currency is purchased, investments are divided into short-term and long-term investments.
Long-term investments include buying cryptocurrencies for more than three months. To successfully invest in cryptocurrency for the long term, an investor should:
Preparing for short-term cryptocurrency purchases is similar to preparing for long-term investments, with one difference: for short-term investments, you should regularly monitor the rate of the cryptocurrency to have time to sell it in case of a sharp price drop.
The method of arbitrage is to compare the price of the same cryptocurrency asset on different trading floors. The trader compares the price of the selected asset on different exchanges. His task is to find the difference between buying and selling rates.
Having bought the cryptocurrency cheaply on one exchange, the trader sells it at a higher price on another. The process can be repeated several times during one trading day. When making money on arbitrage, one should be aware of commissions for depositing and withdrawing digital assets to exchange accounts, so that commission interests do not "eat up" all the profit during the transfer, be aware of the timing for which the cryptocurrency exchange accepts and returns the asset, so as not to miss out on a profitable price in the process of waiting.
The ways of earning digital currencies work differently on cryptocurrency exchanges. All digital currency exchanges are set up more for trading, you can buy long term cryptocurrency on them, try to make money through arbitrage. In each of the chosen methods, you should keep, as a backup or additional platform, an exchange with comfortable and easy conditions for transactions, storage, input and withdrawal of digital currencies.
Broex cryptocurrency trading platform will be a reliable helper and a starting point to test all ways of earning in practice.
Broex has all the necessary tools for trading, long-term investors can buy currencies at a favourable exchange rate, low exchange fees and convenient cryptocurrency withdrawal options will help you make money on arbitrage.
Broex will help you choose the cryptocurrency exchange that's right for you.