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Trading digital assets can bring an experienced trader a lot of profit. This is due to the sharp price changes that occur in a still rather low-liquid market. To find a profitable entry point and earn on the difference of cryptocurrency rates help special trading strategies. There are different tools to benefit from the movement of quotes. The trader needs to create an account on the exchange to open positions through the terminal<\/span>. It is necessary to learn how to use technical analysis<\/span> tools and understand the data. Although cryptocurrency is a new and exciting industry, it carries high risks.<\/p>\n The principle that determines the current value of digital money is supply and demand in the market. If there are many sellers of coins, and there is no shortage to buy, quotes will fall. And vice versa, with limited supply, currency holders try to get the highest possible price. The issuance of digital assets is embedded in the blockchain algorithm. Some, such as Bitcoin, have a fixed maximum issue (21 million coins). Ethereum, for example, doesn’t have a limit, but the network uses a coin-burning mechanism to prevent the volume from growing too large and to slow inflation. There are other factors affecting the market:<\/p>\n The rapid change in the value of an asset in a short time is a problem faced by investors and traders, as it is difficult to predict in advance. There are several factors that explain why this happens.<\/p>\n Increased volatility and lack of liquidity can create a dangerous combination because both factors feed each other.<\/p>\n The volatility of cryptocurrency exchange rates comes from different perceptions of intrinsic value as a means of saving and a method of transferring value.<\/p>\n Storage is the function by which an asset becomes useful in the future.<\/p>\n It can be held on to and later exchanged for some good or service.<\/p>\n Transfer of value is any object used to transfer ownership in the form of assets from one party to another.<\/p>\n Experts agree that the volatility of the digital money market falls with the growth of capitalization<\/span> and the influx of new participants. Having passed the stage of formation, price fluctuations will probably come to the average values of the stock market, and it will become more difficult to make money on the difference in cryptocurrency rates.<\/p>\n Market participants capitalize on diverging prices of digital assets. Traders use spreads to buy coins at a low rate and then sell them at a higher rate. This is called arbitrage. There are 2 main types:<\/p>\n Usually, arbitrage opportunities are provided by less popular coins. Such assets are very volatile. However, this adds risk. The user will lose money if the price goes the other way. When searching for spreads, the following factors are taken into account:<\/p>\n Potential profit. <\/strong>The amount a trader will receive as a result of the exchange may be insignificant. In order to arbitrage with greater profits, it is necessary to increase the volume of trading.<\/p>\n In trading, it is necessary to use various resources to evaluate and predict the movement of the cryptocurrency exchange rate. Exchanges have terminals for transactions, the functionality of which includes indicators for technical analysis:<\/p>\n You can rely only on technical analysis in case of short-term trading on minute charts. In addition to built-in indicators, experienced traders use third-party services to analyze the market and find entry points.<\/p>\n The plan is necessary for a trader not to waste resources on random haphazard transactions, which are accompanied by losses. Constituent elements:<\/p>\n Earning on the difference of cryptocurrency rates is possible:<\/p>\n This example shows the general principles of building a trading strategy and is not a recommendation for action.<\/p>\n Even with a profitable plan, a trader can lose capital. Technical and fundamental analysis were developed for the stock market, where sharp price fluctuations are considered to be very rare. Therein lies the first problem of trading.<\/p>\n Due to high volatility, indicators can give false entry signals, misleading the user. Fundamental analysis of<\/span> altcoins can be ineffective due to the strong influence of bitcoin and ethereum movements on the whole market.<\/p>\n A big problem is the security of exchanges from hackers’ attacks. All user data is stored on the company’s servers, and having gained access to them, attackers withdraw money to their wallets.<\/p>\n Margin trading to make money on the bitcoin difference is not a problem in itself, but in inexperienced hands leads to a rapid loss of all funds. Using borrowed money, a trader can open large order sizes, many times exceeding his own capital. In case of a positive outcome, the trader will get a quick profit, but in case of a negative development of events, the market movement in 10% of cases will lead to the loss of all funds.<\/p>\n Psychology is inseparable from trading. Losses arising in trading make even the most experienced market participants nervous and doubt their decisions. Exiting a profitable position early and unwillingness to close a losing strategy is a manifestation of low psychological stability.<\/p>\n When choosing a trading platform, you should pay attention to such criteria as:<\/p>\n \ud83e\udd16 Can I use trading bots?<\/p>\n<\/div>\n Yes, but not all of them. If they do not give an advantage (for example, in the speed of opening trades), it is not prohibited by the rules of exchanges.<\/p>\n<\/div>\n<\/div>\n \u2753 Can trading commissions be reduced?<\/p>\n<\/div>\n Yes. The exchanges have loyalty programs for holders of native exchange tokens. The more such assets a client has, the lower the fee for making transactions through the platform.<\/p>\n<\/div>\n<\/div>\n \ud83d\udcb0 How many times will profit increase with margin trading?<\/p>\n<\/div>\n It depends on the leverage. For example, at x10, the income will be 10 times higher than opening without leverage.<\/p>\n<\/div>\n<\/div>\n \ud83d\udcf1 Is it possible to trade cryptocurrency via smartphone?<\/p>\n<\/div>\n Yes. Almost all major exchanges have mobile apps with a terminal for making trades.<\/p>\n<\/div>\n<\/div>\n \ud83d\udcdd What is arbitrage?<\/p>\n<\/div>\n A method of making profit due to the difference in rates of one cryptocurrency on different exchanges.<\/p>\n<\/div>\n<\/div>\n \ud83d\udcda What is spread?<\/p>\n<\/div>\n The difference between the buy and sell prices. When opening a position there are 2 values: for a long position it will be slightly higher than the market price, for a short position it will be lower.<\/p>\n<\/div>\n<\/div>\n<\/div>\n Is there a mistake in the text? Highlight it with your mouse and press Ctrl<\/span> + Enter.<\/span><\/p>\n<\/div>\nHow the exchange rate is formed<\/h2>\n
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Volatility of cryptocurrency rates<\/h2>\n
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\n \nReason<\/th>\n Description<\/th>\n<\/tr>\n<\/tbody>\n \n Liquidity<\/td>\n The ability of the market to meet supply and demand at the fairest possible price. A shortage of sellers or buyers causes severe volatility.<\/td>\n<\/tr>\n \n Capitalization<\/td>\n The higher the market value of an asset, the more difficult it is for a small group of investors to put pressure on it. This requires a large amount of capital.<\/td>\n<\/tr>\n \n Collateralization<\/td>\n Because cryptocurrency is not tied to real physical assets, it is difficult to estimate their objective value.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n \n![\"Is](\"https:\/\/cryptoproguide.com\/wp-content\/uploads\/2024\/10\/d0bcd0bed0b6d0bdd0be-d0bbd0b8-d0b7d0b0d180d0b0d0b1d0bed182d0b0d182d18c-d0bdd0b0-d180d0b0d0b7d0bdd0b8d186d0b5-d0bad183d180d181d0bed0b2_671c2d61c04bb.jpeg\")
\nHow to capitalize on cryptocurrency rate differences<\/h2>\n
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Effective modern tools for trading<\/h2>\n
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\n \nName<\/th>\n Description<\/th>\n<\/tr>\n<\/tbody>\n \n CryptoProGuide.com<\/td>\n Popular site for tracking cryptocurrency rates and their capitalization. Easily search and sort exchanges with analysis and customer reviews.<\/td>\n<\/tr>\n \n TradingView<\/td>\n A large set of indicators, an idea feed that displays new forecasts of only those authors to whom the user has subscribed himself. Market monitoring with the ability to select by parameters (growth, oversold, capitalization), convenient mobile application.<\/td>\n<\/tr>\n \n Bitcointalk<\/td>\n The first major cryptocurrency English-language forum. Here you can learn any information about the principles of blockchain, coins, ICOs, discuss forks and future listing of new tokens.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n A working trading strategy for beginners<\/h2>\n
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Pitfalls<\/h2>\n
The best exchanges for beginners<\/h2>\n
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Frequently asked questions<\/h2>\n
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