Similarly to trading stocks, trading cryptocurrency is an efficient way to earn money from buying and selling assets. The difference is in increased risks when working with crypto coins. The cryptocurrency market is still very young and not stable. Many factors affect live crypto prices and drive them up and down daily.
To trade in cryptocurrency, you should understand the basic things about the market:
- How are live crypto prices formed?
- What is trade volume?
- What is capitalization?
- How do trading strategies work?
- What crypto exchange to pick?
Let’s talk about trade volume.
What Does Trade Volume Mean in Crypto?
If you look at crypto ranking on the Coinmarketcap resource, you can see the categories of assets placed in the order you can manipulate - sort them by trade volume, price, or market cap.
Trade volume is the total number of crypto coins traded on all platforms (usually measured in the last 24 hours). If you open a crypto exchange, for example, WhiteBIT, you will see the trade volume of assets traded on this platform. The volume indicator can be displayed in dollars equivalent or the number of assets units.
For example, the BTC - USDT pair is traded on the WhiteBIT exchange. The total volume of this pair reached 84,885 during the last day (24 hours).
Trade volume is an important indicator that is the basis for such metrics as liquidity, trends, etc. In fact, the trade volume indicator determines the liquidity of assets. Liquidity shows how easy it is to sell or purchase the asset at the current price. The higher liquidity, the better. Suppose you want to sell BTC. There are always those willing to buy it. So there is always liquidity for Bitcoin.
The higher the trade volume, thus, the higher liquidity, so the less sensitive the asset to market fluctuations, so the more stable it is.
How to Invest in Cryptocurrency?
Pick a liquid asset with sufficient market capitalization and use one of the large and credible crypto exchanges, for example, WhiteBIT. Then apply a crypto converter to buy coins quickly and at the current price. On WhiteBIT, you may use fiat money to invest in crypto. Just pick the fiat currency you have and the asset you want. Then pay the commission, and the coins will arrive in your account in a couple of minutes.
Can Cryptocurrency Trading be Difficult to Comprehend?
It is crucial to recognize that trading cryptocurrencies is not akin to gambling. Merely relying on luck is insufficient to prosper in this domain. Cryptocurrency trading entails strenuous efforts, which encompass the following:
- Comprehensive market and price chart analyses.
- Fundamental research of external factors that influence cryptocurrency prices.
- Evaluation of investor sentiment.
- Risk management.
- Familiarization with cryptocurrency trading strategies.
- Implementation of diversification tactics.