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How To Trade Crypto When The Market Is Off?

EXMO CEO Sergey Zhdanov answers the most popular questions about crypto trading and gives some advice about trading crypto when the market is falling.

What is the most important difference between fiat trading and cryptocurrency?

Fiat trading was formed in not a single decade. The first stock exchanges were opened in the 16th century and still exist until today, but cryptocurrency exchanges are a relatively new phenomenon for the modern world. In this novelty, there are both strengths and weaknesses of the cryptocurrency market.

Strengths are:

1. Sudden emission is impossible. The total amount of a particular currency is known immediately, and no one is able to “turn on the machine and print a few more millions” for some of their purposes;

2. You can use the money directly, without intermediaries, such as banks or exchanges;

3. The cryptocurrency world is distributed by default. There is no single center, system organizer, operability and availability of decisions about (non-) validity of transactions;

4. High speed. Implementation of the transaction takes a few minutes;

5. Fixed cost. The cost of transactions is fixed and does not depend on the amount of transfer. This is especially convenient for large transfers, as banks usually charge some fee;

6. Logs of all transactions are public. Therefore, all the money movements can be traced: for example, with (hypothetical) payment of taxes by Bitcoins, you can check where exactly each Satoshi went. This is very relevant for the fight against corruption.

7. Creating a new personal wallet takes a few minutes;

8. Security and safety. Bitcoins, like other cryptocurrencies, cannot be blocked, they cannot be taken away through the courts or by pressure on banks.

9. Freedom. Cryptocurrencies work wherever the Internet is available, ignoring any borders.

But on the other hand, there are weaknesses too.
They are:

1. The money supply of each specific currency is limited and can only decrease.
2. Lack of course guarantee (at the moment). State currencies are provided with goods and services produced in the territory, taxes, and fees are paid in national currencies. This makes national currencies necessary and in demand. On the other hand, the Cryptocurrency world is provided just only by the demand for it.

3. High liquidity risk.
4. It’s hard enough to explain to users, who had never interacted with the world of cryptocurrencies, what the cryptocurrency is and how it all works. For this reason, cryptocurrencies have not yet become widely used.

What do you need to start trading crypto?

To understand the basics of trading minimum capital would be enough. Many things depend on the chosen strategy, preferred currency pairs, and your own expectations. For example, in the XRP / RUB pair, the minimum size of the limit order for entry is 15 Ripple — this is 360 rubles with the current rate. This is about $ 5.5. Of course, with such a low deposit, you should not count on a substantial profit in a short time. If you have a desire to engage in cryptocurrency trading seriously, you should increase the initial deposit, since there is no upper limit. However, any deal should be approached in stages and wisely.

What is the best way to distribute assets up to $ 1000, up to $ 10,000 or more?

Actually, there is no particular difference. If your trading strategy can double your capital in 3–4 months — what’s the difference, in what particular currency will the increase take place? In general, diversification is desirable, but it is not the cornerstone of trade.

When is it best time to enter the cryptocurrency market, knowing its volatility? Is it too late to enter the market now?

Jonathan Swift said that “There is nothing permanent in the world except inconstancy.” You should not expect constancy and calmness from the world of money, including the cryptocurrency world. It is worth looking for ways to make money on this impermanence, on this dynamic. In general, the moment of entry into the market is determined precisely by your beliefs, your trading strategy, your character. For example, if you prefer medium-term trading, then you will be primarily interested in the long protracted movements that are present on the market with enviable regularity. If you prefer intraday trading — from scalping to trading from distribution levels or other methods — then the volatility of the market and the balances you encounter will only be on hand.

How is it more rational (if possible) to behave on the bear market? How to behave on the bull market?

You need to sell when the price falls, and buy when the price grows. Do not try to deploy the course with your own asset — it simply won’t be enough. On the bear market, each next transaction should be lower in price than the previous one; for the bull situation is the opposite. This is how a line of bears or a line of bulls is formed, with an average of the price of entry.

When and how should you take a risk?

Each trader determines his own risk management personally. Despite the overall diversity of strategies, in general, there are several common features:

1. Do not spend all day trading; over time, attentiveness and concentration decreases, and the possibility of error highly increases;

2. We recommend a transaction with the amount of not more than 30% of your deposit. This is the basic rule for many investors and traders;

3. The size of the risk in each strategy should be within
3: 1

What is the background to rely on when calculating the dynamics of a crypto asset?

Same as the forex exchanges — a fundamental and technical analysis:

4. Fundamental analysis is based on studying the financial and macroeconomic situation in the world, it can be used to solve the problem of what currency to buy or sell in order to get the long-term profit;

5. Technical analysis is created to answer the question: when you need to buy or sell certain assets. It is based on the analysis of various graphs, it is widely used mathematical methods.

Should I rely on my own intuition and thoughts “I feel this way …” in cryptocurrency trading?

Premonition is usually based on extensive experience in one area or another. When a person is engaged in something specific for a long time — he has a subconscious level of understanding and skills, which manifest themselves as premonitions, in the future. This is a type of foreboding that you should trust — under your own full responsibility. Another type of judgment is thought like “I heard…; they told me .. “. Making a decision on the basis of someone else’s judgment is a very common mistake by the newbie traders; you should always think on your own and take a personal responsibility for your actions and choices.

Do you have any questions/comments or advice? Please, share your opinion with us!



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