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Cryptocurrency Trading: How To Choose A Cryptocurrency For Trading
2022-11-23 • Updated
Trading is not an easy task to do. It requires a lot of attention and time, not to mention a profitable trading strategy. If you already have all of these, you’re almost ready to go. The only thing left to do is to choose an asset to trade. This article will teach you how to choose a cryptocurrency that suits the best for your trading needs.
Which crypto asset is best for trading?
There are lots of different opinions on the best crypto asset for trading. Some traders prefer to choose something reliable and relatively stable, while others seek volatile coins and join the crazy ride to the moon. But more often, the skyrocketing coins return to the average, and buyers suffer from uncontrollable losses. Generally, there are several factors you should keep in mind before trading:
Volatility of a token. There is Bitcoin, which is the leading coin in the crypto market. Its movements may seem volatile and sharp sometimes, but when compared with other cryptos, Bitcoin is relatively slow and stable. However, sometimes even Bitcoin moves by 30% a day, so be careful. Other coins (we call them altcoins) usually copy Bitcoin’s moves in both directions, but they tend to be more volatile. There were days when BTC lost 30%, and other coins fell by 40-60%.
In the contrary, Bitcoin is way slower than the others in times of a long-term uptrend. For example, the first five months of 2021 gave Bitcoin a 100%, while the Binance coin (BNBUSD) rose by 2000%. An impressive yet more dangerous move.
The popularity. Of course, you can buy cryptos just because they seem exciting and trendy. Sometimes this strategy works perfectly. Elon Musk started to talk about Dogecoin on his Twitter page. In less than five months, DOGE gained 100 000%. If you had invested $10 in Dogecoin before Elon Musk, you would have $10 000. You could buy Solana coin when the world started talking that SOL may replace Ethereum. Since that, SOLUSD rose by 24 000%.
This strategy lacks stability. On a bigger scale, such pumps almost always result in a sharp decrease in the price of an asset. Dogecoin lost 85% since the last high, and SOL lost 72%. On the other hand, now you know that trend stories often end with a price dump so that you can use it in your favor.
The project. Cryptocurrencies have specific goals to reach, and it’s crucial to understand what you are buying. Cryptocurrency projects that represent decentralized finances (DeFi) are pretty different from those which work in the NFT market. Some coins were created to work as a means of payment, while others provide holders with a voting right. Do not act brainlessly, and always check what currency you want to invest in.
What to buy?
This is a choice you should make by yourself. Still, several projects may be extremely interesting to investigate. Maybe some of them will become a part of your portfolio someday. We won’t mention Bitcoin, as it should be a choice number one for every crypto investor.
Ethereum. It’s a DeFi project that allows people to build applications in the blockchain. It’s the second-biggest crypto project and the leading coin in the altcoin market. At the peak of the last bull run, ETHUSD has reached the capitalization of $550 billion. Thanks to the Ethereum, now we can lend crypto, stake it for more rewards, buy and sell NFTs, and many more.
Maker. You probably know about stablecoins. They are coins pegged to real-world assets (like the USD). The biggest one is USDT (Tether). Stablecoins are usually centralized, meaning that a company is in charge of everything happening with the coin. But there is a decentralized stablecoin called DAI. DAI is pegged to the US dollar in a 1:1 ratio and collateralized with cryptocurrencies.
But most importantly, people control DAI mints and burns. Maker (MRKUSD) provides governance abilities to people. By owning Maker, you can choose what will happen with DAI stablecoin. It’s a promising technology, and you may consider trading Maker.
Where to trade?
All cryptocurrencies from this article are available to trade with FBS. Test your strategy, choose the crypto you liked the most and take the best from the volatility of the cryptocurrency market. You can master your skills on a demo account. The fast pace of the crypto market requires the best conditions. That’s why the spreads for the coins above are tight, and the execution is almost instant.
There is an acronym in the crypto world, “DYOR.” It means “Do your own research.” In other words, never buy crypto just because someone told you this. Check the site of the project, its goals, and the team. It takes some time, but the result is definitely worth it.
Trading has several levels of complexity, starting from the easiest, like buying and selling random assets, to a more comprehensive one, with deliberate risk management, timing, and objectives.
Free cryptocurrency is a bounty everyone wants to hunt. And there are ways to do it. Let’s find out how you can earn some crypto for free!
How to withdraw the money you earned with FBS?
The procedure is very straightforward. Go to the Withdrawal page on the website or the Finances section of the FBS Personal Area and access Withdrawal. You can get the earned money via the same payment system that you used for depositing. In case you funded the account via various methods, withdraw your profit via the same methods in the ratio according to the deposited sums.
How to open an FBS account?
Click the ‘Open account’ button on our website and proceed to the Personal Area. Before you can start trading, pass a profile verification. Confirm your email and phone number, get your ID verified. This procedure guarantees the safety of your funds and identity. Once you are done with all the checks, go to the preferred trading platform, and start trading.
How to start trading?
If you are 18+ years old, you can join FBS and begin your FX journey. To trade, you need a brokerage account and sufficient knowledge on how assets behave in the financial markets. Start with studying the basics with our free educational materials and creating an FBS account. You may want to test the environment with virtual money with a Demo account. Once you are ready, enter the real market and trade to succeed.
How to activate Level Up Bonus?
Open Level Up Bonus account in web or mobile version of FBS Personal Area and get up to $140 free to your account.