Getting to know exchanges: What's the difference between cryptotrading and classical trading?

Igor Gartsev

Top Leader
Marketing experience — 10 year.

Financial trading is experiencing a renaissance, comparable only with the flourishing of stock trading in the 1980’s. This boom is connected primarily with the ubiquitous spread of high-speed internet, which greatly simplifies the trading process. The appearance of cryptocurrency has only strengthened this trend. Financial markets are growing day by day, so if you want to keep up with current trends and understand the intricacies of trading you should read this article to the end.

Technical analysis

Most traders now use technical analysis, or, in simple terms, analysis of the chart to predict price behavior. Depending on the position of the price in the past, certain patterns are revealed and a forecast can be made as to how much this or that asset will be worth.

The graphs can be presented in two ways:

1. In the form of Japanese candles. This method was invented in the land of the rising sun more than three hundred years ago. Each candle shows the movement of the asset for a certain period of time (it can be either one minute or the whole day). In trader slang, this is called a timeframe.

Getting to know exchanges: What's the difference between cryptotrading and classical trading?

Open and Close shows the levels at which the price was at the beginning and end of the candle’s time range. Everything that is between these levels is called the «body». Depending on whether the asset is falling or growing, the body can be colored in different colors: green (or white) for growth, red (or black) for falling. The shadows of the candles (they are sometimes called tails) are needed for the trader to understand the highs and lows on which the price of the asset was for a certain period of time.

2. In the form of bars. This is a European type of graphic. It appeared before the Japanese candle.

Getting to know exchanges: What's the difference between cryptotrading and classical trading?

These are the two main schools of exchange trading. And although most people find candle charts more convenient, there are no conceptual differences because the price always has a certain character of motion, and these movements are cyclical. Searching for these patterns is the main task of speculators on exchanges.

As the stars point the way to lost travelers, certain combinations of candles/bars show traders how the price will behave. These combinations are called patterns or figures. In addition to the figures, trend lines, support and resistance levels, psychological levels, and various mathematical tools are used. Basic knowledge of technical analysis allows a trader to increase their percentage of successful transactions, and therefore to earn more.

Is it difficult? If I answered «no», then I’d be lying. Trading is not a source of freebies, but a whole profession. It is necessary to delve into it for months, and even for years. But all of us did not know how to walk or talk at one time, but now we do it automatically without even thinking. If you show proper perseverance and only make deliberate and verified steps, the market will generously reward you.

Let’s return to cryptocurrency

I am not only talking about the basics of trading stocks. The cryptocurrency market began to show dynamics and growth just five years ago! Although Bitcoin appeared in early 2009, the main interest and massive infusion of capital into it began in 2013 — that’s when the first millions of dollars from private investors entered which, of course, affected the growth and the jump in price. Just open the charts of most coins and see how they have a thin, almost straight line, stretching from the moment of its appearance. We are also interested in another thing: is it possible to apply the experience of trading classical instruments to a completely new market? There is no unequivocal answer here.

On the one hand, the cryptocurrency market does not differ in its nature from the classical one, it also depends on supply and demand, there are the same candle combinations, and the more people they reach, the more purchases or sales will be made.

On the other hand, one can not rely entirely on technical analysis when trading cryptocurrencies, primarily because of the capitalization of young coins. If we open the chart of the largest, in terms of the capitalization of the cryptocurrency — Bitcoin, then at once we will see patterns that completely coincide with the basics of technical analysis. You can track price changes after any pattern and see bounces from support and resistance lines. This can not be said about other, younger coins. Because of their small capitalization, they are subject to real chaos, and one order can greatly affect the price. That is, it is practically impossible to predict the price movement. Such markets are prone to all kinds of manipulation, and working with them is extremely risky.


So, working on an exchange can be a fairly profitable occupation, but only the most stubborn people with good self-discipline will succeed in this sphere! I’m sure you will succeed, you just need to make some effort. And in order to accelerate your growth as a trader and continue to gain knowledge, read the following articles in which we will get acquainted with various types of analysis and understand all details through practice. If you liked this article you can ask your questions in the comments — I will be happy to answer them!