Basics of crypto trading -Beginner Level - Trading Terminology
Exchange
Exchange Where coins are listed and customers can trade crypto currency with FIAT currency or other cryptocurrency. Example - Binance, Bittrex, BITMEX, HitBtc, Okex, Coinbase etc.
Customers need to register and verify their account in exchange.
Binance exchange screen for trading
Scalp Trading
Customers are buying and selling same quantity of the cryptocurrency within a time period of few seconds or few minutes to lock small amount of profits.
Day Trading
Customers are buying and selling same quantity of the cryptocurrency on the same day and taking profit or loss out of it. customers will not hold position overnight. Day trading is being done on the volatility of the price of crypto currency.
Swing Trading
Customers are buying and selling crypto and hold position for few days. it is also type of short term trading. Trade can be hold for few days to book the profit.
Investing
coins will be purchased to hold for months or few years and target will be to book huge profit. These type of trading are driven by fundamental analysis of the cryptocurrency.
Technical analysis (TA)
Technical analysis is statistical analysis of past market data to forecast future price of the coin. basic data to consider for statistical analysis is past price and past volume. customers are using various tools to plot and analyse the data. There are online statistical tools available to do crypto TA like tradingview.com, Coinigy.com etc.
Fundamental Analysis (FA)
FA is the analysis of management and development team, purpose of coin, coin/token intrinsic value, mass adaptability etc.
Crypto FA is different from share stock FA.
- In the case of stock share, we have available financial statement of the company to analyse FA.
- In the case of crypto, coin/Token whitepaper is basic information to do FA. Further data can be collected from technical development of the coin and it's usage with time.
Trading Pair
The trading between one type of crypto to another type of crypto/FIAT.
Example -
BTC/USD - Trading between BTC and US dollar (FIAT). BTC can be bought by US$ or BTC can be sold for US$.
BTC/USDT - Trading between BTC and Tether. Buy BTC from tether or sell BTC for Tether crypto.
Ada/BTC - Buy Ada with BTC or sell Ada for BTC.
Trading pair in Binance exchange
Order Book
- Bid - All the orders, which are bidding price to buy coins and order is not filled, will be displayed in Bid section.
customer who is interested to sell, he can sell to the bid if meeting his target price. - Ask - All the orders, which are asking price to sell coins and order is not filled, will be displayed in Ask section.
customer who is interested to buy, he can buy from the ask if meeting his target price. - Spread - The difference in the minimum price of Ask and maximum price of Bid is called spread.
In above order book,
Minimum Ask price - 6941.34363186 USDT
Maximum Bid Price - 6920.00000001 USDT
So Spread = 6941.34363186-6920.00000001 = 21.34363185
Hope I have covered basic terminology of crypto trading. You can read my previous blog for other crypto terminology.
Suggestions are welcome.
Happy Learning...
Previously, I see these terms but never knew what they meant. I was just doing what I had to do. thanks for sharing. It was helpful. Really helpful
Thanks a lot. These basic terminology is helpful for beginners and who wants to learn about crypto.
@vyaduka
wow.. very nice.. it complete informatic what I want to search. I have got lot of information about crypto trading and how I get benefit from it..
Thank u so much
My friend that's why Binance is the best exchange of the world, Excellente post an information!!
I like Binance. BITMEX is worst.
Awesome information..
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it's a series of crypto terminology...you can read my previous blog also.
Very Informative! Thankyou
Ey. Thanks for sharing your knowledge
Quality content, it will be helpful for others
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Thanks a lot for motivation. I will continue to post blog.
I had read your previous blogs also and they also are quite interesting
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thanks for the sharing
Good and informative post.
The beginners should know what they are dealing with, not come afterwards and ask what the difference between day trading and hodling is.
So newbies, do your homework!
well said.
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