So, you’re a beginner to cryptocurrency, or just want an overview of what it is and how people trade it? Well, this post will help to inform you.

We’re going to break down what cryptocurrency is and why it’s so popular with traders, as well as all the different types of cryptocurrencies and where you can find them. We’ll also highlight some key terms that you’ll need to know before trading cryptocurrency, like “HODL” and “FUD”.

What is Cryptocurrency?

In a nutshell, cryptocurrency is decentralized money. It’s a digital asset that is used as a store of value, which can be exchanged for other currencies and goods.

Essentially, you’re buying into the currency itself and not the company running it. For example, if you bought Apple stock today, it would only represent ownership in Apple Inc, which has its own business to run.

What You Need to Start Trading Cryptocurrency

The most you’ll need is a cryptocurrency wallet, which is downloadable to your desktop, and for some currencies, you’ll also need a cryptocurrency exchange. For example, okx.com.

A cryptocurrency wallet will help you store your coins and tokens, as well as any money that you wish to use to buy more. A cryptocurrency exchange is an online trading platform that allows you to buy and sell cryptocurrencies with each other on the platform using an escrow service.

How to Read Cryptocurrency Charts

To better understand what’s going on in the charts, it helps to have a clear idea of what’s going on in the market.

There are multiple cryptocurrencies available to trade today, each with its own charting software. The stock market uses similar charts, which is why cryptocurrency charts are sometimes referred to as “stock charts”.

Some popular trading platforms, such as Coinbase and Kraken, use their own proprietary charting software called their respective “exchanges”. If you use these exchanges, you’ll be able to see live charts when you log into your account.

Also, Read to Know the Reasons Why You Should Use a Binary Broker to Trade Crypto

Candle Stick Charts

Generally, you will be shown a candle stick chart. This is a line chart that shows the price going up and down, with the end of the day linked to the start of the next day. 

This is an important concept to understand when investing in cryptocurrencies. The candles on this chart are based on the closing price of each candle stick. The candles with longer tails are high volume, and therefore more likely to follow through.

When we’re talking about high volume, you’re simply referring to trades that have a larger dollar value than normal, which helps your investment grow in value.

Common Trading Strategies

There are many ways to trade cryptocurrency, but the most common ones you’ll see are:

  • HODL – Hold on for dear life. This translates to holding onto your investment without selling. Cryptocurrency is volatile and is subject to wild swings in value. Holding your investment through the tough times may result in significant gains.
  • FOMO – Fear of missing out. Many new investors get in at the top, just before the coin skyrockets in value. The fear of missing out on a big gain is what causes many traders to buy in early.
  • Buy the dip – Each time there’s a dip in the price of a coin, you have an opportunity to buy more at that low price. It’s common to see dips happen when there’s bad news about a specific cryptocurrency, so you may be able to use this strategy to your advantage.

There’s a lot to learn about cryptocurrency, but it’s all about human psychology. Understanding that the market doesn’t always make sense is an important thing to know and will help you make better trades.

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