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Simple Answers to 5 Basic Cryptocurrency Trading Questions

Simple Answers to 5 Basic Cryptocurrency Trading Questions

Explainers Trading

11 May 2020

There are a lot of terms and principles to wrap your head around when it comes to crypto trading. If you’re just starting out on that journey, it can seem overwhelming. While crypto, blockchain, exchanges and trading can be very complex and technical, developing a base understanding doesn’t have to be difficult.

To help you get a head start, here’s an overview of basic questions and answers.

Besides Bitcoin, what else is there?

Although Bitcoin is the most traded and talked about cryptocurrency, this is one of the most commonly asked questions as there are thousands of other coins available for trading. Some of these coins are similar to Bitcoin but with a different value system and design, like BSV and Bitcoin Cash. Other coins are designed with a different purpose in mind like native exchange tokens such as AAB, utility tokens like Ethereum, or new concepts like tokenized commodities such as PhiGold.

Most crypto exchanges will have active markets for the biggest coins besides Bitcoin, and the smaller cryptocurrencies will only be traded on a selection of exchanges. Go to CoinMarketCap to see market cap, price, volume and other related info for all coins that exist. Combine fundamental with technical analysis to spot trading opportunities that meet your style.

How do I buy my first crypto?

Ways of buying crypto is what we refer to as on-ramps, and the type of on-ramps available will depend on where you are based and what services are being offered in your market. To answer the question, you can buy crypto with cash, credit card and bank transfer. AAX operates an OTC platform where buyers and sellers exchange fiat for crypto, as a way to serve both on- and off-ramps on both sides of the coin.

Take special interest in the rates incurred when using fiat currency to buy crypto currency. Bitcoin ATMs for example are easy to use, but the fees are typically above 7% which adds up if you buy crypto frequently. The same goes for credit cards, where users pay steep fees for the associated convenience and accessibility. When you’re looking into fees, look at both flat fees charged for the purchase as well as rates hidden in the exchange rate.

Selling your crypto works in a similar fashion, with the exception that fiat cannot be deposited to your credit card.

Are there fees for trading crypto?

There are minor fees for making trades and withdrawing/depositing crypto to and from other accounts. But if you have experience trading in traditional finance, you’ll notice immediately the fees as much lower for crypto trading.

On AAX, you can offset some of the charges by paying for transaction fees with native exchange token AAB. This gives you 25% discount, as well access to premium financial services and tools such as trading bots, higher withdrawal limits and lending which will be available soon.

What are some of the common approaches to trading crypto?

There isn't a right answer to this question. The way to approach trading crypto, really comes down to your own preferred style, risk appetite and what your goals are. If you want to spend a lot of time delving into charts and make frequent but small gains, then scalp trading or day trading is something to look at. Otherwise you can take a more medium- to long-term approach, which means you will only make few moves but the gains will be of a different caliber.

Either way, you will need to have a basic understanding of the fundamentals of the coins you’re trading, as well as some familiarity with reading crypto charts, reading market emotion, and develop the ability to use at least a few technical indicators that each use different information to generate signals.

Where can I trade crypto?

From Mt. Gox to the likes of Binance, exchanges form the living arteries of the crypto ecosystem. First-generation exchanges have built the infrastructure we see today, enabling the emergence of a global crypto marketplace, and now along with custodians, data aggregators and chain analytics, but also with traditional participants in finance, exchanges such as AAX are taking the space to the next level.

AAX is the world’s first digital asset exchange to be powered by LSEG Technology, part of London Stock Exchange Group. Offering OTC, spot, and futures, it provides a highly secure, deeply liquid and ultra-low latency trading environment; and a meeting point between crypto and global finance.

Open an account with AAX, or download the app, and experience the next generation crypto exchange.

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