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How Trading Crypto Differs From Other Markets?

Posted in Cryptocurrency Trading Basics on . Tags:#crypto#cryptotrading

In this article, we will be going through the key ways through which the crypto market differs from other markets you are already used to and some of the advantages attached to trading in the market.

There are many markets to trade these days and the crypto market seems to be the newest of them. So it is no surprise that most traders are still trying to figure out how to go about trading cryptos. For those who are already used to other types of markets, you really have nothing to worry about. Apart from getting used to a new fast-paced trading interface offered by crypto exchange and also trading without leverage. There are little differences when it comes to making your trades in cryptos. However, a wide difference does exist when you are comparing the nature of the market itself. Cryptos differ from stocks, currency or commodities in so many ways. Although a relatively new instrument with a lesser market cap than the most existing market. The crypto market has gained a really large following and it has become more or less the financial instrument of the millennials.

In this article, we will be going through the key ways through which the crypto market differs from other markets you are already used to and some of the advantages attached to trading in the market. 

Open 24/7

This is by far my most favorite characteristic of the crypto market. The fact that I can make trades at any time of the day and follow price action in real-time makes the crypto market my favorite to trade. Unlike other popular financial instruments which close on weekends, the crypto market is still very much active during weekends. As a matter of fact, some of the largest moves recorded in the market did occur on a weekend. 

Personally, I think the weekend is the time when those who have heard about bitcoin or some other coin during the week, have time to do their research as well as make their first trades. Those part-time traders who are also busy with other things during the week will have time to check on their trades, close them or make new ones.  


Another feature of the crypto market is its high level of volatility. The market has on several occasions made huge gains as well as a massive loss within minutes. For those conversant with binary options where you can lose or win a lot of money making the right choice within 60 seconds, you should be used to this type of volatility. A perfect example of this was when the price of bitcoin dropped by 10% within one hour on September 6, 2018. On the same day, Ethereum (ETH) saw a dip of 15 percent, Bitcoin Cash (BCH) 14 percent. 

This massive drop in price led to the entire crypto market losing about $40 billion within 24 hours. 

Right now, if you go to the CoinMarketCap website and check for the top gainer or loser you will surely find coins that lost 50 percent of their value within 24 hours. Also, you will find coins that doubled their value within 24 hours. 

So if you don't have the stomach for this type of price swing stay out of the crypto market.

Anonymity Illegal Activities Are Common

Unlike other financial markets where things are regulated to an extent, the crypto market is not. Although there has been a significant increase in regulation of the industry as a whole. But this hasn't really reduced the effect of the bad eggs. The market is riddled with numerous hacking attempts both on the network as well as individual or corporate wallets. The use of cryptocurrencies for illegal transactions is also quite common. Many drugs and tax evasion crimes related to virtual currency have been uncovered in recent times. Although these illegal activities don't have a direct impact on traders it is worth knowing that what you are dealing with fuels several illegal activities globally. However, before you get all mushy, these illegal activities predate cryptos. Fiat cash has always been used for such operation, crypto-only made it easier to vanish and hide. 

Few Margin Trading Options

For those used to leverage trading, especially forex traders. You might find it hard to cope with little capital requirements. With forex, an account balance of $100 with a leverage of 400x makes it possible to buy trades worth about $40,000. With cryptos exchange, you $100 will only buy your fraction of a coin priced above $100. For lesser priced coins, you can buy as many as your $100 worth. Importantly, recent years have seen many CFDs brokers offering crypto trading to their users. Although the top five cryptos are the most common of these offerings. With leverage up to 50x, you can increase your trade value. Also, crypto exchanges offering margin trading option like BITMEX has surfaced. Other top exchanges like Binance have revealed plans to start offering margin trading. But for now, your options are pretty limited. 

Lots of Trading Option

Apart from stock trading, the most financial market has less than 100 trading instruments worth looking at. With crypto trading, there are over 2000 coins listed on the CoinMarketCap platform. This means you have the luxury of buying or selling more than 2000 coins. Although a bucket load of trading options, it is better to focus only on the top 100 by trading volume, especially if you have enough cash to throw around.  

Market Manipulation is Common

Inside trading and market manipulation are done across all financial markets, but doing it in the crypto market is quite easy. This is commonly called "Pump and Dump". To do this, all that is required is for a group of people to come together and select which coins they will be pumping and dumping and how much they will be investing. Once the coin and amount to pump into the coin are decided, the group then selects a time when they will be doing the pump. Once the time strikes, multiple trades are being made and then the price of such coin starts to rise. This is usually followed by a massive sell-off, which will then crash the coins.

For coins with low volume, a single trade can easily determine the price directions. To avoid getting caught in a pump and dump setup, try to avoid coins with low volume. 

Once you can wrap your head around these differences and you are cool with it, you are good to go. If you have a problem with any of these differences, it is better you stay out of the crypto market, at least for now. 


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