Cryptocurrency is a digital money created by the special peer-to-peer networks. Cryptocurrency is not tied to real currencies, and its number is initially limited by the algorithm.
Digital currencies are a relatively new phenomenon in the financial world, rapidly gaining popularity, including as exchange commodities.
Trade in crypto-currencies in the financial markets opens unlimited opportunities for earnings: profits can be obtained both on the growth and on the reduction of quotations.
Cryptocurrency market features:
- The market is opened 24 per 7, which allows you to make transactions at any convenient time
- Low liquidity often causes high volatility.
Advantages of trading with crypto-currencies at ALS FX:
Interest in crypto currency is constantly growing, the price of them is rising, and many call them currencies of the future. ALS FX provides the opportunity to trade with crypto-currencies with low spreads and no commission. When trading at ALS FX, the trader does not acquire the currency itself, but he/she speculates on the price change. The ALS FX broker is a fully safe and licensed broker.
Example of a transaction:
To make a profit, you need to buy a crypto currency cheaper and then sell it more expensive or sell more and then buy less. The difference between the purchase price and the sale price will make your profit.
Usually during the day, bitcoin prices fluctuate within $ 5-35 per coin, but there are cases when it changed by more than 2000 points in one day. In 2013, the rate of bitcoin increased by 5580%.
To enter into a deal, the trader's account must have at least 20% of the current market price of bitcoin. For example, for the transaction to buy or sell at a price of $ 3,000 per coin, the trader must have a minimum capital of $ 1,000.
Exchange transactions and speculation on the cryptocurrency exchange are identical to any others. To make a profit, you have to buy cheaper and sell at a more expensive price. That is similar to investments in conventional currencies. Naturally, the base of instruments and the principle of determining goals for trade are put in the same way as in the securities markets or forex markets. It would not be a problem to make a profit by trading in virtual money for those who know the basics of trading in the stock market, securities and national currencies.
The main components used by the trading participant on the exchange are as follows:
- sell, buy orders for sale and purchase;
- history of concluded transactions;
- trading volumes held on the exchange (s).
To understand the basics of the exchange of cryptocurrencies, it is worth considering all these elements one by one.
Purchase and sale orders
Orders for purchase/sale from participants in the trade on the stock exchange form a so-called glass. This is a list or table that lists requests from users for the purchase or sale of one crypto currency for another or for fiat money and approximated by value to the current price at which the pair is traded.
The glass reflects the desire to trade in crypto currency at the rate of interest. If there is a counter offer to sell or buy, then the transaction is made, and the current price of the traded pair is corrected towards the perfect transaction. It should be borne in mind that, for example, if there is a sell order, counter offers of purchase are sought for at an equal or greater price. In the absence of counter offers, the order remains on the demand list, or until the order cancellation instruction comes from the participant who has put it out.
The market analysis by a glass of quotations
Only based on the data from a glass of quotes, you can perform analysis and make decisions for trading. The first thing you can calculate based on the list is the current spread on the pair being traded. For this end, the first values from the list are taken, and their difference is calculated:
Based on orders placed in a glass with a large volume, you can predict the further behavior of the price chart before trading on the crypto currency exchange. So if large purchase orders are found, then we can expect rapid growth. In the reverse situation, a large order for sale, most likely, will push the rate down.
It is important to note that not all the requests submitted by the participants are listed. Only the positions closest to the current price are displayed in it, therefore, it is already quite difficult to find out how the exchange rate will react after a number of large positions has already been worked out, so that quotations can be counted on short-term analysis only. The easiest way is to filter the list for large orders, and only on the basis of their processing, to draw appropriate conclusions. For a deeper analysis, you will need to apply approaches that include a review of the news about the pair you are interested in, or the means of technical analysis.
Separation of orders into passive and aggressive ones
An order can be called passive if it is put on hold not at the current exchange rate, but at a certain level, which is supposed to impose strong resistance or support. Such orders just form the strength of resistance/support levels (sup / res). Only when the rate of the crypto currency will approach the specified level it will be clear whether it will be able to overcome it or after testing it will reverse in the opposite direction. In this case, the ratio of the list of positions for sale and purchase, as well as trading activity, when they place orders only at the current exchange rate, will have a determining meaning.
Aggressive orders are those that are intended to trade on the exchange at the current level. In other words, they are called instantaneous, since they are executed at the first opportunity, when a counter offer is available. It is the aggressive orders that form and support the main part of the movement on the chart. After the execution of a major aggressive order, the exchange rate can make a significant movement and cause the triggering of a whole list of pending passive orders.
Levels of resistance and support for the price
The price is constantly changing, forming a schedule, far from rectilinear movement. It contains peaks and falls, which mark the highs and lows, which are often called local extremes. In addition to this, extreme values over a significant time interval are called significant or absolute. If you can draw a line along a series of highs or lows, it indicates the level of resistance and support, respectively. These are the levels and values of quotations at which the rate of the cryptocurrency is clearly perceived as a significant obstacle, after which it makes a turn.
Strong levels of support arise in places of accumulation of a significant list of purchase orders and also with the resistance level, which is determined by the presence of a significant list of sell orders. Actually, the main goal of the majority of the Exchange's players is to purchase the crypto-currency during the depreciation and sell it at a time when the price reaches higher values.
If we represent resistance and support lines in the form of a channel, then it is most profitable to trade at the borders of the channel. Determination of significant levels for the price chart is one of the main tasks for any analysis and forecasting.
The trend and trend price movement are one of the main definitions that market participants face. It is important to know the direction of the trend. The trend itself is just a channel composed of parallel resistance/support levels.
The direction of trend movement is determined by the slope of the levels. If they are directed upwards, then the trend is called ascending. This means that the trade in cryptocurrency is conducted with the predominance of purchases. For a downtrend, the opposite is true. The lateral trend is a movement in which the resistance/support levels are horizontally positioned and an approximate equality of sales and purchases is observed.
Differences between the crypto currency exchange and the stock and currency markets
Unlike the stock or currency market, the volatility observed on the cryptocurrency exchange is hundred times larger. Volatility determines the size of the price movement for a certain period in time. For example, in 2013, the bitcoin rate rose by more than 5500%. Such changes during the year cannot be found on the securities, stock or real currencies markets.
Given the steady movement of the exchange rate on stock exchanges in order to trade with tangible income, it is necessary to invest substantial funds in turnover. On the other hand, for the whole list of cryptocurrency exchanges, it is quite probable that, in few days, investment of only 5,000 rubles will bring a net income of 30,000-40000 rubles. Naturally, together with the possibility of rapid growth of savings, you can also quickly lose everything, that is, incredible volatility carries high risks. Everything depends on the ability of a participant in trading on the exchange to correctly forecast the rates. To do this, you can use both a fundamental analysis, relying mainly on news related to the interests of crypto-currencies, and trust in technical analysis.
Technical analysis on its effectiveness in relation to the crypto currency exchanges is somewhat questionable. Everything depends on the high volatility of trading instruments and the presence of a small share of systematic events in this market. As a result, the rates are managed by groups of players different in their specificity and purpose, capable of increasing the traded volumes at one time. Yet, many participants successfully apply a small list of elements of technical analysis for forecasting prices. Only basic tools and simple approaches are used, which are easier to interpret.
News trading strategies are more effective, but it is extremely difficult to find adequate news on crypto-currencies and, most importantly, determine it in time. Thematic forums and blogs are one of the best sources of news where players often post their views and comments on further developments. In the mass media, news on the lists of crypto-currencies, if any, appear with a long delay, which negates their relevance. You can learn a lot by visiting
It should be noted that on the cryptocurrency exchange the main part of the movement is created by limited groups of participants who sell large amounts of funds and are able to make a significant adjustment of the exchange rate. To say in advance about their intentions, such groups or individual players are unlikely to have time to detect the beginning of events in due time and place the relevant orders.
The situations where some market participants deliberately cause a sharp price movement in order to attract the attention of masses to the beginning of a more significant movement are more dangerous for a newcomer. As a result, a lot of hasty market participants pick up the initial spurt, start trading and already stimulate movement on their own.
Important rules for the crypto-currency exchange
For newcomers and many experts who are already familiar with cryptocurrency exchanges, it is advisable to get acquainted with the list of main theses:
- Greed is the main enemy of any trade. It is never worth waiting for additional growth or fall, if the forecast does not convincingly say this, it is better to be safe and stop on time or to enter the existing conditions without waiting for a perfect option.
- Patience is a guarantee of profit. This applies both to the maintenance of open positions and to waiting for more convincing signals to enter. This simple thesis will allow you to understand how to trade in cryptocurrency, avoiding excessive impulsive entries and exits in anticipation of a strong move.
- It is extremely important to always monitor the glass with a list of quotations. A glass is the main source of information for the exchange.
- The volume and capitalization for the markets are the key factors reflecting the mood of other players, since only knowing these characteristics, you can clearly predict the behavior of quotations.