Cryptocurrencies are a new asset class that presents a number of lucrative opportunities. In comparison to the early days of crypto, there is now a large variety of means to invest in tokens.
There is increased regulatory acceptance and many new trading products such as futures and contracts for difference on such tokens. Stablecoins have also made it easier to gain exposure to the market.
But making profits is another matter entirely in terms of trading. You need a dedicated crypto terminal and even then, you need to be a subject matter expert.
What Is A Crypto Terminal?
A cryptocurrency trading terminal is simply an online platform that plugs into existing brokerage accounts, such as Binance or Bittrex. These terminals will have special features that separate them from regular trading exchanges. Right now, the market is denoted by a distinct lack of cryptocurrency trading terminals.
Because it is such a new industry, there is little reliable data and not all that much in terms of established trading models. This is because the correlations between cryptocurrencies and other assets are not yet clear, and there are many new coins being introduced to the market.
As interesting as the new asset class might be, making profits is still largely the same. The fundamentals of trading carry across to this new asset.
- Never risk more than you can afford to lose.
- Test over and over.
- Always hedge according, to prevent an adverse price movement.
- Do not trade on emotions.
- Pick one or two currency pairs and monitor them closely.
So, the fact remains that most traders lose money over time. But what makes trading cryptocurrencies a little different is that it is so volatile. Volatility is a trader’s best friend. At least, it is for traders who know what they are doing. This is because volatility can give disproportionate results, depending on how large the price movement is.
This might be a little simplistic, but it’s true in a general sense. Because of a lack of established data, traders might be able to spot differences and patterns that are not priced into the market – something which is far more difficult to do in the FX and similar markets.
Things to Understand About Crypto Trading
There are a number of items that need to be understood about crypto trading. The first is obvious – it’s volatile. But it’s not just volatile, but super volatile. You need to be prepared for the price swings.
The vast majority of coins have a strong positive correlation with the price of Bitcoin (BTC). This means that as the price of BTC rises and falls, other coins mimic this action.
But people do not really understand what makes Bitcoin move. While there are some short-term patterns that chartists can pick up on, it frequently experiences spikes of 10% or more in a single day, which are just not predictable. This is why taking the right hedges is so important with this asset. On a more positive note, it can take a while for other cryptocurrency trading pairs to follow the price of Bitcoin, so you do have time to mitigate.
Because of the hype-laden nature of cryptocurrency, it is possible to make money when riding waves of momentum. For example, when there is new of the first transaction on the Bitcoin or Litecoin Lightning Network (or any other third-layer solution), the price will likely rise following the news. Traders can make profits by getting in early on these events.
Beware of Scams and Hype
There are plenty of people who legitimately make their living trading cryptocurrencies. But the industry is also well-known for a large number of scams and false claims. Every new token has to hype itself up to the hilt, with claims that it is going to revolutionize a particular sector.
None of these claims have really materialized – even for coins such as Bitcoin, Ethereum, and Monero. Ripple has arguably had the most impact in terms of real-world integration, but real-world use is not as much a factor as one would believe. The price is mainly driven by speculation and rumors.
You have to learn to differentiate actual news from mere hype and speculation. However, you must also learn to ride the hype. Even fake news starts a certain momentum which traders jump on. Get on top of these waves and exit at the appropriate opportunities. It might be a good idea to keep abreast of the latest news on some of the mainstream crypto outlets such as CoinTelegraph or CoinDesk.
There are a huge number of ICO projects that are said to have huge potential. Just keep in mind that the vast majority of these are going to fail, even if they are not outright scams. Almost 80% of ICO projects in 2017 were scams. While certain coins might jump 400% or so in a short period, this is the exception, not the rule.
The Example of a Crypto Terminal
Superorder.io is a new trading terminal that is designed specifically to cater to the need for a sophisticated cryptocurrency trading terminal. It easily connects to four trading exchanges – Binance, Bittrex, BitMEX, and CEX.IO. More will be added soon.
But it is more than just a new kind of trading terminal. It has created a new paradigm of cryptocurrency trading with a LEGO-style approach. This assists new and experienced traders in implementing strategies with a click-and-drag model, chaining strategies together to visually observe how everything is linked together.
In addition, they have several profitable cryptocurrency trading bots for rent. While past performance is no guarantee of future success, it is a definite indicator. You can look at their past results over time to see how it works. You can make profits with a cryptocurrency trading terminal, once you take it slowly and proceed with caution. There is no substitute for research and diligence.