To a certain extent, blockchain technology and the emergence of the cryptocurrency Bitcoin were a consequence of distrust of the traditional financial system. The realization of the advantages of blockchain technology contributed to the popularization of digital money, which prompted the creation of ever new cryptocurrencies, software and hardware for cryptocurrency mining, and the creation of various kinds of related internet services. And the property of cryptocurrencies to significantly change their value over a short period of time contributed to many people's desire to quickly earn money on cryptocurrency, that is, to take up trading on cryptocurrency exchanges, using the volatility of cryptocurrencies. The internet features a large number of crypto exchanges, and anyone can become a cryptocurrency trader. However, in order to start earning on cryptocurrencies using crypto exchanges, you first need to understand how cryptocurrency exchanges differ from classic exchanges, and what the main advantages and disadvantages of cryptocurrency trading are.
Cryptocurrency exchanges are specialized online platforms that act as intermediaries between buyers and sellers of cryptocurrency, in which all trading transactions are conducted on the basis of modern computer software. The main distinguishing feature of a cryptocurrency trading venue from classic exchanges is the volatility parameter, which leaves its mark on crypto trading and is characteristic of all electronic monetary funds. Its value can be hundreds of times higher than those demonstrated on traditional venues.
Volatility is, in simple terms, the variability of the price of the asset in which you have invested your funds or plan to do so in the future. An example could be Bitcoin, which over a short period managed to rise in price by 5000% and to fall several times over in a relatively short period of time. Such indicators are unrealistic to find on classic exchange venues, which demonstrate far more stable statistical data, without the huge jumps that are regular occurrences to which even newcomers to the electronic monetary funds market have grown accustomed.
Trading on classic platforms is a measured and slow process, earning on which most often requires considerable investments, since most traders earn on relatively small price jumps but at large buy/sell volumes. Cryptocurrency exchanges allow one to enter the market with a much smaller amount of starting capital and quickly earn a large sum of money if the trader is well versed in the trends characteristic of a particular crypto asset.
At the same time, trading on cryptocurrency exchanges is very often associated with accepting risks related to rapid and significant losses. Every trader's future is tied to how well they forecast rates. In order to "see" the future of the market as accurately as possible, it will be necessary to monitor all the news and system data about the cryptocurrencies of interest to a particular investor.
Despite this, a large percentage of experts doubt the effectiveness of systematic analysis for trading on crypto exchanges. High volatility and a large percentage of events that are not subject to any systematicity but happen randomly negate the use of mathematical methods for calculating the future rate. Most often, the future price of a cryptocurrency is controlled by various groups of exchange players (whales) who can in an instant dump a huge number of coins onto the market and crash the rate of the electronic unit.
Still, a strategy associated with monitoring the news is more effective. But here too there are downsides, since finding adequate and insider news is very difficult. Therefore, experienced exchange players advise using thematic forums and authors' blogs, which are far more often more adequate sources of crypto news.
The main volume of electronic currency that is sold and bought on the venues is part of the deals of whales, who will not announce in advance their plans to provoke rate changes, since this could reduce their profit. Building on this, one has to speak of the need to study trends already in the process of trading activity. The ability to recognize the plans of large players from the statistical data of a particular exchange, as well as the search for individual "fragments" of information from the news, will allow one to accumulate a decent amount of capital over a relatively short period.
The main thing is that you should not immediately rush to buy a particular crypto asset right after the start of its sharp rise in price. Especially if you have not previously studied all of its features. It is quite likely that the "big" players want to play on your thirst for profit, and quite soon the rate will fall even below the mark that was shown before the jump.
Analysis, lack of haste, constant tracking of the market, rejection of gambling excitement – these are the main methods that everyone who has considered earning on the basis of trading crypto capital on cryptocurrency exchanges should use.
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