Cryptocurrency Trading

How it works

A long time ago, exchanges worked like "sellers". They held a bunch of Bitcoin. They sold that Bitcoin at a fixed price. Depending on the demand, the price would fluctuate based on their internal algorithms.

Nowadays, exchanges have a marketplace where they match makers and takers.

Makers create buy or sell orders. Their orders are placed in the order book.

Takers pick from this order book.

Think of makers as shopkeepers setting up stalls in a flea market. They are either "selling" cryptocurrency in exchange for dollars or "selling" dollars in exchange for cryptocurrency. In either case, the exchange is happening on the makers' terms.

All orders on the order book are makers. You cannot see takers. Makers are never going to meet each other. So if you are a maker but want to buy or sell immediately, you'll have to cancel your order from the order book and pick someone else's order instead, as a taker.

Do note, that makers get to buy or sell for free whereas takers have to pay a small fee in addition to the price they are dealing with, at least in GDAX. Some other exchanges might charge makers as well.

If you want to trade however

That is a different beast all together. That means you're looking to get in and out of the market. The rules of the game are simple:

Buy low, sell high.

Duh, you say.

Easier said than done though.

There are two parts to this game:

• Making money
• Keeping it

Most people crash and burn on the second part. Everyone makes money in a bull market and then most give it right back afterwards.

So does that mean you shouldn't trade? No way. I love trading!

Trading option A :

Trading option B :

Trading option C :

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