Intro to trading with Cryptohopper
This is the first of a series of blog articles showing you how to master your trading using Cryptohopper.
Picking up a new tool can often be daunting as it usually involves a learning curve. The first monkey to pick up a stick probably couldn’t play golf on his first day. The same principle also applies to cryptocurrency trading.
In a recent survey, 30% of our users have expressed a desire to learn more about technical analysis as well as other key features of our platform.
From the start, we believed we needed to create a tool that would not only provide use to people in a passive way, but also teach users to trade properly. When you set up your trading bot, it won’t just start trading automatically on it’s own. You need to feed it instructions by which it will trade. This is why it’s important to keep learning how your crypto trading bot can form trading decisions, and ensure that you are fully aware of all the features you can use. So without further ado, Cryptohopper 101!
Cryptocurrency trading vs traditional trading
Cryptocurrency trading represents the democratisation of trading. No longer is trading something for the 1%, anyone with internet connection can learn and begin trading to grow their own portfolio. At the same time, crypto and traditional trading embody several other differences. The following set them apart:
Cost - traditional trading involves high transaction/brokerage fees. Cryptocurrency trading fees can be as little as 0.1% per trade.
Access - Trade, broker licenses or strenuous identity verification steps are often required to be a part of traditional trading, these are not always needed in cryptocurrency trading.
Closing hours - Cryptocurrency markets are day and night, traditional trading only allows you to access your portfolio in certain time frames. This means you will not be able to access your account as fast in the event of bear market scenarios.
Volatility - Cryptocurrency markets are much more volatile than traditional markets. This is a double edged sword, and represents higher risk, but higher reward
Automatic vs Manual trading
While cryptocurrency trading is an innovation in finance, automatic trading is an innovation in cryptocurrency trading. It is therefore, in many ways at the forefront of financial innovation.
Usually, cryptocurrency traders manually buy and sell on an exchange. They use technical indicators to make an estimation of whether the coin will go up or down in the future , and then based on that decision buy or sell the coin. This process is heavily time consuming, demands your 24/h attention, but can actually be automated. Cryptohopper allows you to decide on a strategy, and have the trading bot execute it automatically. The following are the differences between manual and automatic trading:
24/7 - Automatic trading is truly 24/7, allows you to trade all night and day. If you’re holding a position to sell with profit, how else are you going to sell it when your target sell price is hit at 4:38 AM.
Rationality - Automatic trading is 100% rational, only looks at indicators, while manual trading is often a mind game. It take a great deal of restraint to avoid panic selling when manually trading.
Output - Automatic trading allows you to apply the same strategy across up to 75 different coins at once. Applying an indicator to various different coins involves typing it in individual per coin on TradingView, and then manually buying it on the exchange. Automatic trading allows you to do this with multiple different investments, while at the same time tracking any price changes for your open investments to ensure that they sell on time.
Beginning your Journey with Cryptohopper
Complete registration
As usual, the first step of the journey is to register for the free Explorer trial. This will give you 3 days free realtime trading experience, more than enough time to try out the platform for yourself.
Paper Trading: Trade with 0 risk
Cryptohopper can be seen as a perfect trading partner. But you might want to get to know it first before giving it all your money. For that reason, we’ve offered paper trading, a way to experience Cryptohopper in its entirety without using any of your own BTC.
Paper trading is essentially a simulator, which allows you deposit as much of any kind of fake cryptocurrency into the platform, and see how your trading bot would act if you really had that money.
Your trading bot will then interact with the exchange of your choice in the exact same way, and buy and sell using the currency you have. This way, you can see if you would be profitable with Cryptohopper, and thereby whether or not you want it to trade for you. We expect you will see the benefits within a few days!
Choosing an exchange
Cryptocurrencies are traded on exchanges, and there are many to choose from. Cryptohopper works on many exchanges that have been chosen based on trading volume, security and functionality.
As end user, it’s best to select your exchange based on trading fees, trading pairs and trading volume. You want there to be enough being traded (volume), you want to be able to trade as many cryptocurrencies for each other (pairs), and you want each transaction to be as cheap as possible (fees).
Of course, only select an exchange that works with Cryptohopper, you can see that here.
Selecting your coins, Buying your quote currency
Quote currency is essentially your standard currency which you will be focusing on building up.
The other coins you will be trading should therefore be considered investments that you do not intend to hold onto forever. You can choose between cryptos or Fiats as a base pair.
Essentially, you will face a paradox when choosing a quote currency. This is because, on one hand, you will be betting against your chosen currency. So, say you choose BTC, your hope is that the other coins you’re trading will increase in value as your BTC decreases, thereby allowing you to make more profitable trades.
On the other hand, your goal is to obtain more BTC, because, in the long run, you’ll want to have more of that built up. So in one way, you’re betting against BTC, but in another way you’re completely behind your quote currency.
The next set is to select all the other coins you would like to trade. You do this through fundamental analysis. This consists of looking at the following aspects for instance, and seeing if you think the project is worthwhile:
Who’s the team behind this project?
What roadmap have they laid out, and to what extent have they met their objectives?
What is market cap (Ie what’s the maximum size of the company?)
how much is the coin being traded?
Selecting your buying strategy
When to buy or sell an asset- that really is the billion dollar question. Most traders apply technical analysis to buy the coins that are increasing in price.
Learning TA separates the experts from the novice traders. If you want to take full control of your trading bot's buying decisions, you must feed only the most relevant indicators, perfectly tuned to future market conditions.
Head to the strategy designer to apply fully customized TA fuelled strategy. Here you will find 130+ indicators and candle patterns. Your trading bot will follow these blindly for all your assets to form it’s buy or sell decisions.
If you’ve got something great, you can even sell it in the marketplace, to other users.
Navigating the marketplace
One of the best features you can access is the marketplace.
It allows you to buy or sell templates or strategies from other users. If you’ve got no idea how to conduct Technical analysis, you may need to buy a strategy from another user.
A strategy is simply the total technical analysis that a trading bot will follow. Templates on the other hand include other aspects, such as the coins and amounts you may want to all the additional settings which will affect your trading bot's behavior.
Buy a strategy or template from a user and trade using their configurations. Any changes they make will also be fed to automatically to your trading bot for a full month, after which you are left with a static template. This ensures that for at least a month after purchase, your trading bot will be adjusting the market changes.
Applying your selling strategy
When your trading bot has bought an asset, it will move to current open positions, where your trading bot will monitor its price. It will only sell however, once it reaches your strategies objective. You can choose to simply sell at at a certain profit point, like say, when your investment hits 3%, or you can use tools like Trailing-Stop loss to track a price of a coin upwards, and only sell after a certain percentage drop.
If your position is in decline, you can apply a stop-loss to ensure that past a certain point, you will sell or short the position.
Applying other powerful tools
There are various other powerful tools that you should get to know if you want to get the most out of Cryptohopper. We’ll list them out:
Triggers: These allow your trading bot to respond automatically and adjust to changes in markets or when indicators are hit.
DCA: Dollar Cost Averaging allows you to buy more of a position which is the minus with the objective to go back in the positive.
Shorting: This allows you to sell a declining coin and automatically buy it back on its price floor.
Thanks for keeping up! Now go out there and make some trades. In the next few weeks we will be diving deeper into technical analysis, new trends in crypto and many other new changes in the crypto space.
