Bryant Miller’s BASICS OF TRADING
Exchanges
There are more than a hundred exchanges that you can get on to be able to trade the currencies. You should have at least 10 exchanges in your basket, and you should use the ones that allow you to keep your coins wherever you please and transfer to them only when your trades are open, find an exchange that is quick with withdrawals and an exchange that executes rapidly without the need for brokers.
Market
If you want to trade cryptos actively, it is not a difficult process once you get your fundamental study and technical study internalized. There are few, if any, regulations on it that you need to abide by, and as long as you do not engage in fraud or theft, and you conduct yourself equitably, you won’t need to keep looking over your shoulder.
The first thing you need to know is that the crypto market is not centrally regulated. That means there are no rules yet on what you can and can’t do, but there are limitations as to what is acceptable in the marketplace. You can trade manually, you can use program trading, and you can even use artificial intelligence.
Tradability
Bitcoin is not the only crypto out there that you can trade. And the USD is not the only fiat that you can trade that against. There are over 1000 cryptos in the market today and over 100 fiats that are worth trading. However, mastering all those pairings creates a nightmare. You should focus on just a few.
Tradability is a combination of volatility and breadth. Volatility is the frequency of movement that it makes in a given period of time, and breadth is about the gap between the movement of the price’s high and low. You need both to make it tradable. Tradability is a lot different from buying and holding for future profit.
Liquidity
Liquidity has to do to with volume and efficiency. You can think of it as friction. If you get into an asset, you want it to be as frictionless as possible. That means you get in when you want to and you get out when you want to. There are a few situations that may make that untenable. One scenario that could happen is when everyone wants to sell, you will find that there are no buyers – that’s not a liquid market. You may discover that finding a seller or finding a buyer is not easy because there is lackluster interest in the asset; or you may find that there are not enough exchanges supporting the market, which reduces the potential trader’s access to that asset. These are just a few ways the asset is illiquid – there are more. This is partially the reason Bitcoin is more valuable and in demand than its alternatives and the USD-BTC pair is a popular investment tool for day traders. It is also because there is sufficient liquidity to make your trades almost seamless and efficient. This is called a liquidity premium, and it is one that you should be willing to pay, as the payoff is worth it.
