Understanding the Cryptocurrency Trading Phenomenon

Written by: Julia Gerstein, a crypto trading bots enthusiast and a content writer at TradeSanta. Her final goal is to help readers find what they need, understand what they find, and use what they understand appropriately.


There was a time, about 10 years ago, when people used quite interesting tools to trade Bitcoin (BTC): PayPal and Liberty Reserve, eBay and Tor, forums and even the mining hardware Bitcoin Core.

Today, however, it’s hard to imagine a world where only those are the means to obtain crypto.

With the emergence of giant crypto exchanges, such as Binance, Kraken, HitBTC, Bitfinex and many more, cryptocurrency trading sparked an interest as a common occurrence. Multi-million trade volume of the mentioned exchanges helped forward the mass adoption of non-fiat money and made people ask questions.

What’s the difference between crypto trading and other types of trading? Which concepts do you need to learn in order to commence the process of cryptocurrency trading? And what tools do professional crypto traders use?

These and other questions we’re going to address in this piece.

Why Crypto Trading Is Still Chaotic

In a way, as a phenomenon crypto trading is experiencing the same turbulence as the California Gold Rush in its very beginning. In the middle of the 19th century, thousands of people in America were mining gold chaotically, and there was no law regulating the process.

So is the situation with cryptocurrencies today. Although it’s been more than 10 years since Bitcoin (BTC) was brought to light, not all the countries have defined cryptocurrencies’ legal status, and that’s why the process of crypto trading still reserves chaotic elements.

How Everything Works on Well-Established Markets

Say, you have experience trading forex. Either you go with a third-party broker or a forex native broker, you will need to fill out a form with your name, telephone, address, country of residence, taxpayer identification number etc.

That being said, all the processes on the platform are 100% transparent, and there are a lot of middlemen involved.

Once something is wrong with your forex broker, say, they try to give you inappropriate advice or don’t let you withdraw your money, you can always apply to the Commodity Futures Trading Commission (CFTC), to the National Futures Association (NFA), or even to the Securities and Exchange Commission (SEC).   

What Traders Love About Crypto

The situation with crypto trading is not the same. Although you normally need to send personal information to an exchange in order to get verified and trade a significant amount of crypto, it’s not always the case.

For example, with OKEx, everyone, except for the citizens of the restricted regions, can pass KYC in a matter of one minute and withdraw as many as 100 BTC per day. No taxes, no additional fees to brokers...

On the other hand, with crypto, once your funds are lost, they are lost, and no-one will be able to retrieve them. The crypto community is still in need to deal with this issue.

Cryptotraders’ Pocket Vocabulary

So you see, crypto trading is still young as a process. But professional crypto traders use tools that originate from traditional trading in order to analyse possible wins and losses, place orders and invest in new coins.

Take a look at basic definitions you might want to use.

  • Fundamental analysis - an analysis that assesses a coin’s performance over the years, the economic environment of the coin, such as the financial performance of a project, its challengers and its business model.
  • Technical analysis - an analysis that uses very many indicators that might help you figure out exit and entry points, such as MACD, simple moving averages, parabolic SAR and many more.
  • Stop loss -  a trading tool designed to limit the maximum loss of a trade by automatically liquidating assets once the market price reaches a specified value. There are multiple types of stop loss that can be used in different scenarios depending on the crypto market situation. It can sometimes be difficult to avoid loss due to the many possible market outcomes, but stop loss can be helpful even for new and inexperienced traders.
  • Take profit - a type of order that specifies how much profit you’ll take from a trade as a percentage of the order value. Setting this not only determines the return from your trade, but also influences the trade’s risk factor and the time taken for the trade to close.

Basically, you see how these elements repeat the ones from the traditional trading, and it makes sense in a way.

Because the aim of both trading types is the same: to assess the possible strategy and make a move that will ultimately result in revenues.

Cryptotraders’ Favorite Tools

Being a part of the community, you always want to be in the know about the latest news, and here are a few channels you might want to utilize.

  • CryptoCompare’s News Feed -  the CryptoCompare news feed might turn into your favourite source of the latest news in the niche.
  • The Unchained Podcast by Laura Shin - one of the most beloved shows in the crypto community where Laura asks uncomfortable questions about things that everybody is interested in. Tune in!
  • Jake Chervinsky Twitter - Jake Chervinsky is one of the lawyers who can really define the place of the project in the legislative framework, interesting to read, fun to learn from!

These are a couple of trading instruments you might want to use when going in for professional crypto trading.

  • TradingView - a charting web service with historical and real-time data from crypto, stock and forex exchanging. You might want to use it in order to implement some elements of technical analysis, since there are very many indicators implemented into the interface.
  • CryptoCompare - the website provides various data about several listed coins, such as their price, available supply, trade volume over the last 24 hours or market capitalization. If you need to quickly learn essential data about the project, this is the place.
  • TradeSanta - a cryptocurrency trading software, also known as a cryptobot, that lets you take advantage of crypto market fluctuations. If you have a strategy, you can automate your trading process.

In Summary

The influx of crypto exchanges with million trade volume has brought to life the phenomenon of cryptocurrency trading that is currently experiencing its adolescence. 

The crypto trading process on top of several top exchanges is transparent, but only to some extent. It means you can keep your anonymity and not pay taxes, and yet, your crypto funds are not as protected as when you trade with forex, for example.

In order to start trading, you need to learn basics that originate from traditional trading. For instance, you might want to google stop-losses, take-profits and other risk management instruments.

And last but not least, always try to keep up with the latest news of the market by listening to the right podcasts and Telegram channels. The more information on a specific coin you obtain, the better your chances to invest and end up with revenues on your hands.