For you crypto activists, of course, you are no stranger to the term trading in the crypto world. However, for those of you who have just entered the crypto world, you must still be unfamiliar with this term. In fact, trading itself is arguably the main activity in transacting in the crypto world.
Moreover, nowadays, crypto trading is one of the most talked about trading and is being loved by many traders. So, what exactly is trading? How is crypto trading different from forex trading and how does it work? This article will give you a little overview of crypto trading for you.
Understanding Crypto Trading
By definition, trading is all activities that include buying, selling, and exchanging assets that we have in an asset trading activity. Thus, crypto trading is the activity of buying, selling, and exchanging cryptocurrencies that we have.
Crypto trading is carried out by investors to benefit from the activity of selling and exchanging their cryptocurrencies. Actually, crypto trading has similarities to trading stocks and foreign exchange or forex.
However, crypto trading is more volatile and traders can participate in the mining process. The mining process is the process of generating crypto currency from a computing system in such a way and using high power and high specification technology.
How to Trade Crypto?
If you want to start investing in the crypto world, you need to know two ways to trade crypto, namely the centralized and decentralized categories. What are the categories of centralization and decentralization? Here’s a little review for you.
Crypto trading with this centralized category has characteristics like trading fiat currencies or forex. You have to make exchanges through a centralized exchange. This exchange is a place for you to store and exchange bitcoins for other cryptocurrencies.
Using this category, you will find it difficult to lose your cryptocurrency just because you forgot your wallet password or private key. That’s because all your passwords or private keys will be stored by the exchange.
However, another lurking risk is that you could lose your assets due to being hacked by irresponsible hackers. Therefore, if you want to use this centralized method, you should look for a truly professional and trusted exchange.
This is done so that your crypto currency is safe and not easily attacked by hackers. Usually, a really good exchange will have a good security and backup system.
In contrast to centralized systems, decentralized systems offer more privacy and personal management. That means all your data, whether it’s personal data, passwords or private keys, will all be in your control.
In addition, trading activities in the decentralized category will be automated and peer-to-peer. Later, the environment in the decentralized system will be driven by an application called smart contract.
With this decentralized category later, you have the right to 100% control and manage your own account. So, you don’t have to worry about being attacked by irresponsible hackers.
However, because all your data is stored by yourself, when your password or private key data is lost, you will not be able to open your account. Thus, the cryptocurrency that you have can be lost and cannot be returned.
Crypto Trading Similarities and Differences with Forex Trading
For those of you who have been in the trading world for a long time, at first glance it may seem that crypto trading is the same as trading forex or foreign currencies. However, crypto trading seems to be different from forex trading, although there are some similarities.
The similarity between crypto trading and forex trading is that both must be based on in-depth knowledge of trading in their respective markets. In addition, crypto trading and forex trading also use the same trading charts and indicators.
Crypto trading and forex trading both use Fibonacci, MACD, Bollinger Bands. RSI, Moving Average, and more. One other thing to know is that both crypto trading and forex trading can both provide advantages and disadvantages.
In addition to the similarities above, there are some differences that you need to know between crypto trading and forex trading, namely:
- Traded Assets
As the name implies, forex trading will use transaction assets in the form of fiat currency. In forex trading, you will benefit from the transaction process of one currency with another country’s currency.
For example, you buy an asset in USD when the price of 1 USD is equivalent to 15,500 in IDR. Then, you sell it when the exchange rate of 1 USD becomes 16,000 in IDR. At that time, you have benefited from forex trading.
Unlike forex, crypto trading provides an opportunity for you to make transactions between one crypto and another or between crypto and your country’s fiat currency.
The concept of trading is more or less the same as the concept of trading on forex. By paying attention to the exchange rates between cryptocurrencies or cryptocurrencies with fiat currencies, you can make a profit from it.
- Transaction Decision Basis
The basis for transaction decisions used in forex trading is arguably broader than crypto trading. That’s because forex trading involves two currencies from different countries.
Therefore, a forex trader must understand the current economic conditions in the two countries concerned. In addition, forex traders must also know the global economic conditions that may affect the value of a country’s currency.
Not to mention, the economic conditions of countries with higher economic levels will affect countries with lower economic conditions. Therefore, forex traders must be diligent in studying macroeconomics.
Meanwhile, in crypto trading, knowledge of global economic conditions is not really needed to make trading decisions. However, news and various policies regarding blockchain and cryptocurrencies must be known by traders.
In fact, traders also have to be up to date on the condition of famous people who have started to enter the blockchain world. Usually, these conditions can affect the price of the cryptocurrency itself.
Well, that was a little review about trading in the world of cryptocurrencies. After knowing the big picture of crypto trading, are you interested in starting trading in the blockchain world? If so, just get started.