📚Coinstore Classroom: Crypto Trading 101 — Part 7🤓
Hello again Coin Collectors,
Carrying on from the previous part of Coinstore Classroom📒, on basic terms or phrases, we would like to share with you. We hope that through this corner, we are able to share with you some knowledge and tips 💡 on cryptocurrency! As such, we hope to be able to share and educate you on the basics and necessary information of cryptocurrency, so that you are able to make a more informed decision when trading crypto.
For this session of Coinstore Classroom, we will be sharing with you terms on terms used in trading or to describe trading.
Here are the 3 terms or phrases we would like to share with you:
Overbought refers to a security (cryptocurrency/stock) with a price that’s higher than its intrinsic value. Many investors use price-earnings (P/E) ratios to determine if a stock is overbought, while traders use technical indicators, like the relative strength index (RSI).
Ultimately, overbought is a subjective term. Since traders and analysts all use different tools, some may see an overbought asset while others see an asset that has further to rise.
Oversold is a subjective term. Since traders and analysts all use different tools, some may see an oversold asset while others see an asset that has further to fall.
Oversold conditions can last for a long time, so prudent traders wait for the price to base out and start to move higher before buying.
Fundamentals can also highlight an oversold asset by comparing current values to prior values in terms of price/earnings (P/E) and forward P/E, for example.
3. Short Selling:
Short selling occurs when an investor borrows a security (cryptocurrency/stock) and sells it on the open market, planning to buy it back later for less money.
Short-sellers bet on, and profit from, a drop in a security’s price. This can be contrasted with long investors who want the price to go up.
** Short selling has a high risk/reward ratio: It can offer big profits, but losses can mount quickly and infinitely due to margin calls.
Here are another 3 basic terms for futures or trading in general, we thought you should know before making trades in the cryptocurrency market! Stay tuned for part 8, to find learn more terms and phrases regarding cryptocurrency trading! 😉
It’s never too late to start diving into the world of cryptocurrency. Whether you’re young or old, a pro or a newbie, Coinstore welcomes you to our arcade where we learn together… the fun way! We make cryptocurrencies available for everyone in a sleek, exciting and simple fashion, equipping you with experience and techniques to buy, sell and trade on the go.
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