In this article, we’ll talk about some key choices you’ll have to make as a trader. These are choosing a market to trade; a time frame to trade in; specific analysis tools that help you make good decisions.
We’ll start with…
Choosing a market
Making money as a trader can be tough. One thing that makes the job a lot easier is choosing a market, or several markets, to focus on.
What do “markets” mean in this context?
When we say “market”, we mean the pair of assets that you’re going to buying or selling.
In terms of trading crypto, markets are defined by two things. First, by trading platforms. Second, by specific coin and currency pairs.
Here’s an example. Adara has a Bitcoin to Ethereum pair. This pair has a number of active trades for each time period, as well as a number of outstanding bids and asks. When put together, all of these form a market.
Choosing a market, or several markets, to trade in, comes down to several key factors.
The first is…
Volatility
This measures how much price can vary over a period of time. Pairs like Bitcoin to the US Dollar are fairly volatile. Altcoins are far more volatile, comparable to taking mentos, dropping it into a bottle of diet pepsi and hoping for the best.
Volatility is a double-edged sword. Higher volatility produces more opportunities for profit. but it can also rip your head off and blow out your trades if you aren’t careful..
Another key factor is liquidity.
Liquidity
As we discussed in the previous video, liquidity allows you to move in and out of a trade more easily.
Some traders like liquidity.
With high liquidity, you can make as many trades as you want, anytime you want, with minimum slippage.
Other traders relish in low liquidity environments. They know that if they are patient in thin markets, the price will come to them.
Really it comes down to a matter of style and your trading plan.
Popular pairs like Bitcoin-Ether have high liquidity. Altcoin pairs, on the other hand, can be very illiquid. For most traders, choosing a market with high liquidity is the better option.
The last decision you have to make regarding market is about value-add platform features.
Features
In a perfect world, there’d be one massive crypto market. In real life, markets are split up into exchanges, all of which have their own features.
For example, Adara offers real-time updates on selected coin pairs; a selection of widgets that help trade profitably; a large selection of liquid coin pairs. We also have the ability to process tens of thousands of transactions per second seamlessly.
Details like these should also be a factor when you’re deciding on the platform you want to use and the coin pairs you want to trade.
Once you’ve figured those out and settled on a market, it’s time to decide on a time frame to work with. That will be the topic of one of our next articles.
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