As digital currencies become increasingly more significant in the world, the values of Dash (symbol: DASH) and other altcoins have seen a huge increase since the early days of crypto. Prices have also been impacted by speculation, as both new and experienced traders are currently keen on trading digital forms of money in order to capitalise on the inherent volatility of these assets.
In this guide, you can find all the information and tools necessary to trade DASH in an informed and ultimately profitable manner. You’ll learn the basics of fundamental and technical analysis, price predictions, and limiting your risk when trading.
The main difference between buying Dash tokens as an investment and trading with them is your intention. You may make a standard purchase if you want to hold onto Dash tokens as a long term investment, however you will focus on trading if you wish to generate more frequent profits from short-term price movements.
Furthermore, most traders will use derivative products such as CFDs, options contracts, and futures to speculate on DASH’s price. This means that traders rarely own the underlying asset itself, but just derivatives products that are linked to its price. This relieves the trader of the responsibility of securely storing and managing the coins themselves, but also imbues him with some counterparty risk.
With regards to derivative products, there exists a wide variety. That being said, three sorts of derivative contracts are broadly used for trading Dash, including:
One of the significant advantages of trading derivative contracts is that you don’t need to manage the issues related to purchasing and storing Dash tokens. You neither need a crypto wallet nor need to stress over the security of your coins. Trading permits you to bring in cash in a straightforward manner.
When you select a cryptocurrency broker, you have to make sure that it’s registered as well as adherent to Know Your Customer (KYC) and Anti-Money Laundering (AML) guidelines. These regulations, though annoying and time-consuming at first, prevent predatory actors from defrauding you, so are actually a net positive.
Bear in mind also that the range of derivatives available to you may vary depending on your geographical location, and the jurisdiction in which the broker or exchange is registered.
Copy-trading can be a great introduction for a lot of new traders, and is a feature offered by many socially geared trading platforms. Sites with this feature allow you to mimic the trades of veterans who choose to share their moves, giving you a helping hand in beginning to understand the way the cryptocurrency market works.
This can be a great first step on your DASH trading journey, but don’t follow experts blindly: some trades may be part of a larger strategy that you can’t see, and many pros will have in place risk mitigation protocols to which you will not have access.
Here is a shortlist of the best Dash brokers, curated for your convenience.
Online brokers offer a frictionless entry into the DASH market, and you can start speculating on price movements with ease. One thing that you should know about is that when you trade with the help of a broker, you’re not really purchasing DASH. What you’re purchasing is an agreement that entitles you to the capital you’ve contributed alongside any profits or losses you make when the position is closed. Most brokers will offer CFDs and other similar derivatives, allowing you easy exposure to DASH.
One of the biggest advantages of trading cryptocurrencies like Dash through a broker is that you don’t need to worry about securing and storing your coins, which can be an intimidating process for new investors. The broker will take custody of coins for you, and allow you to speculate on their value indirectly. You can begin your trading venture with just $100, or sometimes even less, providing a low barrier to entry. Reputable brokers will always be KYC and AML compliant as well, meaning that you needn’t worry about the safety of your funds.
Although cryptocurrency exchanges initially existed for the sole purpose of buying coins with fiat money, most now offer advanced trading features including derivative products. If you have an account with a leading exchange such as Binance, Poloniex, OKEx, or Coinbase, you can start speculating on Dash’s price right away without setting up an account elsewhere. Exchanges also accommodate leveraged trades.
Modern derivative exchanges essentially combine the functions of a traditional exchange with a brokerage, offering diverse financial instruments as well as high liquidity for swaps. Futures and options contracts allow for easy exposure, and offer you the opportunity to magnify your profits using leverage. Due to their crypto-specialised nature, exchanges typically offer a large number of trading pairs, allowing you to trade your DASH tokens against a wider range of other assets.
To make your DASH trading a lot simpler, we have made an outline of central topics that you have to know about.
Fundamental and technical analyses will form the backbone of your trading strategies. Fundamental analysis refers to the assessment of the qualitative properties of Dash: non-technical factors, usually at the macro level, that could affect the token’s price.
While fundamental analysis can often help to illustrate the big picture, it is technical analysis that will give you the most insights as to the movements of the market itself. The indicators below are some of the most used by traders, and will help you to better anticipate price fluctuations.
While every trader out there is attempting to make profits, everyone takes a different approach and uses a different strategy for success. There is a wide range of trading methods that you can use to ensure that you can yield consistent returns through DASH trading.
When deciding on the platform you are going to use, first choose whether you want to use a broker or an exchange. With a broker, you can trade with fiat money, and you don’t need to endure the complications of managing the actual Dash coins yourself. With an exchange, however, you will likely have greater access to leverage, as well as a wider range of trading pairs.
Regardless of your choice, you should only ever use AML- and KYC-compliant platforms, as these afford you protection from both regulatory woes and scammers. You should also consider the fee structures and features of all individual platforms, in order to choose the service that meets your needs the best.
Whenever you’ve picked your platform, join and verify your account through email. You’ll have to validate your identification by uploading a copy of your government-issued ID, such as a driver’s license or passport. This is done to ensure consistency with KYC and AML guidelines. After the validation procedure, you will be permitted to deposit your money using conventional or digital currency, subject to the service you are using. You should simply go to the service’s wallet and pick the correct payment method.
When you have made your account and made your deposit, you can start trading DASH by tapping on the ‘Trade’ button. Here, you will see different sorts of user interfaces depending on the platform you have chosen. There are some commonalities between all platforms, however, including a trading graph, the order book, and a price index.
A long position refers to a position opened in the expectation of a price surge. You will buy when you think the price is low, and aim to sell high for a profit. Conversely, a short position allows you to profit when the price of DASH decreases.
This is done by borrowing DASH from the exchange or broker and selling it immediately for the market price. Later, after the price falls, you will repurchase the asset, returning to the lender to write off your debt. The price difference is yours to keep as profit.
Be careful though: if the price of Dash increases while you have a short position open, you will face the possibility of losing money. Always employ robust risk mitigation protocols when shorting Dash.
You will see that there are two types of order available to you on most exchanges or brokerage sites. The first is a market order, which allows you to purchase the asset instantly, at the market price. Simply enter the quantity of Dash you would like to buy or sell, and execute the trade. A limit order allows you to specify the price at which you would like to buy or sell. This type of order may take a while to execute, as it requires the market price to converge with your limit price.
The position amount is simply the amount of capital you would like to invest in a trade, and leverage can be used to amplify this. Leverage involves borrowing capital from the broker or exchange, in order to increase the size of your position. If you use 10x leverage, your position size will increase by ten, meaning your profits and losses will be magnified tenfold. Be careful: although bigger profits are attractive, improper risk management here can leave you penniless.
Stop-loss and take profit orders are handy tools for managing your risk. Both are automatic orders that you can set up on any trading platform in order to lock in risk-appropriate profit targets and loss tolerances. A stop-loss will trigger if the price moves below a certain level, specified by you. This prevents an incorrect prediction from costing you excessively. Take profit orders, on the other hand, allow you to “fire and forget”, and will lock in profits for you when your desired target has been reached.
Before you execute your trade, make sure to check every one of the values you have entered. Human errors can end up being exceptionally detrimental with regards to trading, particularly when you’ve leveraged your position.
Once your trade is underway, keep an eye on it. When the trade has reached your expected level of profits, close it to seal the deal. Alternatively, you can use a take-profit order to make this automatic. On the flip side, if things don’t go to plan, cut your losses early, in order to avoid a more significant financial blow. Stop-loss orders make this a lot more efficient, and prevent you from losing out to a rapid market crash.
You should always do extensive research on your chosen platform before you actually begin placing trades. What are the fees? Are your funds secure? Is the exchange or broker prone to hackers or scammers?
When you have begun trading, make sure you employ a wide range of analytical techniques. A key insight is that you should never rely on just one technical indicator: RSI and MACD, for example, should usually be used as confirmations of a pattern, rather than outright evidence. Until you have a better feel for the movements of the market, you should rely on as many indicators as possible, but with that said, experience is the best teacher — and that may include making your first loss!