The amount of options that users are presented with when it comes to crypto trading is immense. To help sift through some of this noise, we asked Quadency CEO Rosh Singh to answer some of the most common crypto questions of 2019.
Just like in traditional markets, it’s important to understand the instruments you are trading. With crypto, there is great research being put out on a regular basis that can be helpful for deciding what to trade. Research tools that offer reliable metrics about token projects are useful in evaluating their overall health and activity. Depending on your strategy, on-chain data that can shed light on the movement of coins in and out of exchanges can be crucial for getting ahead of a potentially large move.
Next, you want to decide what your goal is. Some traders like to increase their USD holdings by trading against BTC or other top coins, while others want to “stack more sats” by trading altcoins against BTC. In all cases, you probably want to stay away from any asset that is on a multi-year downtrend against BTC, as that’s generally not a good sign. You also want to look at the overall volume and liquidity of the asset as this can indicate risks related to slippage or even worse, sudden spikes or dumps that are common in thinly traded markets.
Buying and holding is certainly a popular investment strategy, however, during a bear market - the kind we’ve been in since early 2018 - there are trading strategies that outperform buy-and-hold. Since executing such a strategy over long periods of time is no easy feat and most traders don’t have the discipline or time to sit and monitor charts all day, we’re seeing a quick rise in the popularity of crypto trading bots.
Automated trading is growing quickly among retail traders. Bots can not only automate any strategy that can be traded manually, they can also trade strategies that are virtually impossible to trade manually. Another key advantage of automated trading is that it removes emotion from the equation.
As for strategies themselves, they can be as simple as “buy a fraction of BTC every day” (DCA) or far more complex and based on a combination of technical indicators.
Quadency offers automated trading on its platform, however our approach is different from other providers in that we treat bots as tools that can be used to effortlessly execute any strategy. Best of all, all strategies can be backtested natively within the platform, and run live on any of the top-tier exchanges we’re integrated with.
Always use 2FA, everywhere. If using a platform like Quadency, we always recommend only enabling trading on your API's and disabling withdrawal permissions. We also recommend that users keep their long-term 'hodl' funds in a secure, offline wallet and only keep what they actively trade in exchange accounts.
Choosing an exchange is a very important decision and should be considered carefully. I like to evaluate exchanges based on a mental model that includes reputation, security, regions served, number of markets available and fees. It’s not uncommon for traders to have multiple exchange accounts for various reasons such as asset diversification, or trading strategies such as arbitrage, market-making, etc.
So, the “best” exchange is really the exchange that serves all of your needs.
I believe institutions will finally start taking crypto seriously and begin participating beyond dipping their toes. Steadily increasing volume of Bakkt Bitcoin Futures and more options available for institutional-grade custody are both signs of a maturing industry. With negative interest rates across the globe becoming a new norm and 2020 being an election year, many are expecting volatility in the markets - meaning the “Bitcoin as a safe haven” narrative could be put to the test again. For traders, volatility can mean more opportunities than calm, trending or ranging markets so I’m particularly excited for what’s ahead.
Quadency is a platform that allows seamless crypto trading across a variety of exchanges. You can learn more about Quadency and why they are a CryptoTrader.Tax partner here.