Trading is not a simple task, if it was easy everyone would do it. Let’s look at different players in the trading industry as explained by 1.
On the buy side we have:
- Individuals, corporate pension funds, insurance funds, charitable and legal trusts, Endowments, Mutual funds and money managers.
- Homeowners, students and corporations
- Farmers, manufacturers, miners, shippers, financial institutions
- International corporations, manufacturers, travelers
On the sell side:
- Market makers, specialists, floor traders, locals, day traders, scalpers
- Retail brokers, discount brokers, full-service brokers, institutional brokers, block brokers, future commission merchants
Now taking this in consideration, most of the traders in the cryptocurrency markets are: individuals, market makers, day traders, scalpers and gamblers. We do not include institutions because we believe they are currently not participating in the market, but we’ll explain this further on another post.
Let’s then define cryptocurrency traders as individuals who market make, day trade, scalp or gamble away their money in these markets.
How do they trade?
Cryptocurrency traders usually employ 2 different methodologies to trade:
- Fundamental analysis which can be defined as examination of the underlying forces that affect the well being of the economy, industry groups, and companies. The goal is to derive a forecast and profit from future price movements
- Technical analysis, is defined, by investopedia, as a trading discipline employed to evaluate investments and identify trading opportunities by analyzing statistical trends gathered from trading activity, such as price movement and volume.
This should be enough information to elaborate an idea of what kind of trader you are. Please comment below and let us know in which category you fall in.
1. Harris, L. Trading & Exchanges: Market Microstructure for practitioners
2. Fundamental Analysis: https://www.stockcharts.com/school/doku.php?id=chart_school:overview:fundamental_analysis
3. Technical Analysis: https://www.investopedia.com/terms/t/technicalanalysis.asp