Dash Trading Guide For Beginners
Dash is an interesting open-source cryptocurrency project, which has been through more than one rebrand during its eventful existence. Dash began life as Xcoin, and was later rebranded to Darkcoin. At its peak in April 2018, Dash was ranked among the top 12 cryptocurrencies, with a market capitalisation of $4.3 billion. It has slipped somewhat since then, but retains a place in the top 50 tokens.
Nonetheless, Dash is a popular coin for trading, so in this article we’re going to examine all of the issues related to Dash.
Table of Contents
3 Reasons to Trade Dash Now!
One of the most compelling reasons to invest in Dash is that there has been a major bull market in cryptocurrency over the last year or so. This was partly initiated by the consequences of the coronavirus pandemic and its related lockdown, but other factors have also contributed as well. Due to the undesirable economic conditions, cryptocurrencies have experienced a massive bull market, with Dash and other tokens significantly increasing in value. With the virus still playing a major fiscal role, this bull market may be far from over, and this can only be positive for the outlook for Dash.
An interesting phenomenon with cryptocurrencies over the last year or so has been the increasingly rapid adoption of some of the most popular tokens. For example, the number of hardware wallets associated with such tokens as Bitcoin increased massively throughout 2020, and continued to escalate in number during 2021. Consumers all over the world are also increasingly utilising cryptocurrencies in order to purchase goods online. PayPal remains hugely popular, but has surrendered some of its market share to cryptocurrencies. This is extremely positive for the outlook for the niche in general, which can only benefit the value of Dash.
Cryptocurrencies were the most successful asset class of 2020, outperforming traditional stores of value such as gold, and burying equities in their dust. Anyone who invested in cryptocurrencies during 2020 inevitably made a massive profit. One of the major reasons for this was the rapid pouring of institutional money into cryptos. Wall Street really caught on to the cryptocurrency revolution over the last 12 months, and this process is expected to accelerate further in the years to come. As institutional money is invested in cryptocurrencies, this can only be bullish for Dash.
Dash Trading Vs. Investing
Trading and investing are two of the possible ways that people can benefit from the Dash revolution. But before engaging in either of these processes, it is important to understand the difference between the two.
Investing in Dash is based on long-term fundamentals. Investors will buy Dash and hold onto it until it achieves price discovery. This takes place over significant periods of time, with those investing in Dash believing in its fundamental value.
Conversely, trading is a fast and dynamic activity, which can sometimes be contained within a period of 24 hours. Investors choosing to trade Dash will monitor the market extremely closely, and make a series of decisions based on immediate fluctuations. Traders can make money in a very short period of time, but engaging in this strategy also requires technical knowledge, and is inherently risky.
It should also be noted that when trading Dash that investors don't receive any actual coins. The usual way to trade this cryptocurrency is to utilise crypto derivatives, such as CFDs, futures, and options.
CFD contracts are probably the most popular, with investors receiving a cash settlement based on opening and closing positions. Futures are used across several markets, and obligate parties to transact an asset at a predetermined date and price in the future. And options are based on the value of underlying securities, with investors being offered the opportunity to buy or sell particular assets, such as equities.
Trading strategies for Dash can be complicated to determine, as many factors can influence the decision-making process. However, the type of derivative involved, the market behaviour and position at the time, the risk profile of the cryptocurrency in question, and macroeconomic factors will all play a role in decision-making. There is no one-size-fits-all approach with Dash, and in this respect it is similar to any equity, commodity, or investment.
Dash Analysis: The Key to Success!
Once you have made the decision to invest in Dash, there are several ways that this can be achieved. Analysis plays a major role in the process, so in this section of the article we’re going to examine two of the most popular methods of analysis.
Technical analysis involves tracing patterns that assets have created with past behaviour. Technical analysts assess charts and other market data, looking for patterns that will give clues to future price direction. Technical analysts believe that it is possible to predict the future direction of a cryptocurrency by understanding its past.
Conversely, fundamental analysis is based, as the name suggests, on fundamental market characteristics. Those who engage in fundamental analysis have a profound belief in the value of a certain token, suggesting that it will increase in value over a period of time. A variety of macroeconomic factors can contribute to fundamental analysis, including news stories, regulation, technical development, and the overall economic climate.
When investing in Dash for the first time, investors should also take into consideration whether or not the token is in a bull market or bear market, the general market sentiment at the time, the amount of money pouring into cryptocurrency, and other indicators of market movements. It can be difficult to balance all of these various factors, but doing so accurately can be considered a critical skill in all successful investing.
Choose a Trading Strategy
There are various ways that cryptocurrency investors can approach trading Dash, and in this section we will examine some of these options.
- Swing trading
Swing trading is hugely popular, and Dash investors attempt to benefit from relatively short-term gains in a stock, equity, commodity, or financial instrument. This definitely includes cryptocurrencies such as Dash. Swing trading only lasts for a few days in most scenarios, although it can sometimes expand to several weeks, or even months, depending on the market necessity.
Swing traders frequently use technical analysis, attempting to identify trading opportunities within the market climate. Swing traders are attempting to capture a short burst of what can be seen as a longer generalised price movement.
Swing trading is rarely settled over a single session, but is still a relatively short-term strategy.
- Day trading
Day trading is the most exciting and dynamic form of trading, but it’s also the riskiest, and arguably the most challenging. In day trading, investors aim to complete all market activity within one trading session of less than 24 hours. Day trading is hugely popular, and is often depicted in movies and TV shows.
In order to engage in day trading, an investor must have a significant amount of technical knowledge. Monitoring the market extremely closely is a necessity with day trading, and the strategy requires a calm and unemotional mindset.
Day trading is more speculative than other approaches to investing in Dash, and is barely based on market fundamentals whatsoever. Day traders often utilise high-frequency trading software and algorithmic robots in order to complete their investments within a short timeframe.
- Technical Analysis
Technical analysis is one of the ways that investors can analyse the market, in order to make Dash and other cryptocurrency trading decisions. It involves analysing the market and predicting price movements by using historical data, often based on stock charts. Those engaging in technical analysis believe that they can project the market into the future by intimately understanding its past trajectories.
Scalping is another popular technique among expert crypto traders. This technique involves placing a large number of small trades over a short period of time, in order to capitalise on what are seemingly insignificant movements in the market. Scalping is a very technical approach to trading, which intends to minimise market risk by spreading capital over a large number of trades. Nonetheless, even though it may be low risk to a certain extent, only expert traders will engage in scalping due to the technical proficiency required.
Sign Up on an Online Broker or Derivatives Exchange
Prospective Dash traders will need to sign up with an online broker or exchange. Brokers allow you to exploit Dash’s price action through derivative contracts. This means you don’t need to concern yourself with keeping the coins themselves. Cryptocurrency exchanges will offer you direct access to Dash coins via spot trading, which can be complicated, but many exchanges now also offer derivatives.
The fees may be different between the two types of platform, and the amounts of leverage and trading tools will vary too, with brokers often offering access to trading bots and social trading features.
In order to begin trading Dash, it is necessary to deposit funds on an exchange, unless you decide to go down the broker route. Depositing funds is pretty straightforward, particularly as modern platforms are designed with beginners in mind.
Registering for the exchange in question is the first part of the process, and this simply involves confirming your identity and providing some proof of address. Government documentation is usually required at this stage. Payment methods are then requested, with the commonly utilised methods, such as debit cards, credit cards, PayPal, Skrill and Neteller all usually available.
You are now ready to make a deposit, although a hardware wallet for storage is also recommended if you will be handling actual coins, as this is simply more secure than relying on exchange storage facilities.
Open Your First Dash Trade
Opening your first trade in Dash is an exciting moment, but it's important to understand the process intimately before engaging.
You must first make a decision whether or not you will hold physical tokens. If you do decide to do this, a cold storage crypto wallet is essential. The cryptocurrency space has become increasingly safe and regulated, but theft is still possible, as with any investment.
Finalising your Dash trading strategy is also important before beginning investment. Your exit and entry strategies should be settled, and you should also have finalised what you hope to achieve from your overall trading activity. Be ready to research the market in-depth, and keep yourself informed of market and macroeconomic issues.
Going forward, you will need to monitor the market regularly if you are executing your own trades. Cryptocurrency is a fast-moving world, and you can't let the grass grow under your feet.
Short / Long Position
Entering into a short or long position on Dash is a classic way to trade the cryptocurrency. This is a form of speculation, in which you effectively gamble on whether or not a cryptocurrency token will increase or decrease in value.
Those entering a long position believe that Dash will increase in value, while short sellers believe the opposite. Entering a long position is effectively rubber-stamping the long-term viability of this token.
Another option for Dash investors is to trade via CFDs - contracts for difference, which are a popular type of derivative. CFDs are popular for several reasons, but perhaps the most compelling is the fact that they allow significant financial leverage, and thus flexibility.
CFDs can also be used as a hedging tool, which can be particularly useful in the sometimes volatile cryptocurrency market. However, investors utilising CFD contracts should be aware that they open up traders to potentially large losses, while also incurring rigid margin requirements.
Anyone engaging in Dash investing must be familiar with order books before beginning. These are extremely important documents, which provide a record of buy and sell orders for any security or financial instrument, along with an authoritative record of market participants.
All the books are used by almost every cryptocurrency exchange, with other markets and assets also supported. In the cryptocurrency space, order books effectively represent digital records of all important activity in a particular token.
Aside from order books, there are also a variety of order types available, which provide indicative information to brokers of cryptocurrency contracts. By using these orders, you communicate to your broker how you wish to proceed. For example, limit and stop orders inform your broker that the market price is unfavourable, and that trades should only be executed once the price has moved in a certain direction of your indication.
Leveraging is another important concept that has been mentioned previously in this article. This effectively refers to investing via credit, with leveraging enabling investors to invest money over and above the funds that they actually have at their disposal. This is popular with professional and institutional investors, as it can result in massive profits, but it also exposes traders to potentially larger liabilities, and can be considered unwise for beginners.
With this in mind, risk management is absolutely essential when operating in the digital currencies space. You need to protect your Dash account from losses, and ensure that you are always trading in a balanced and measured fashion. While the cryptocurrency space is an exciting niche, it is also relatively unpredictable, which means that you need to lessen the potential risk associated with your trading.
Professional and institutional investors engage in risk management as a matter of routine. But amateur investors can sometimes overlook this less attractive and exciting aspect of trading. This is a major mistake, as significant losses can be incurred with relatively small mistakes if risk management is ignored.
Another advantage of risk management is that it helps to remove the emotion from the trading process, a perennial issue for human investors.
Expert Insights: Common Dash Mistakes and How to Avoid Them“ When trading Dash, there are some fundamental errors that you will wish to avoid in your trading strategy. The first of these is risking more money than you can afford to lose. A foundation of all successful trading should be never over-stretching yourself with your initial investment. You should also steer away from unregulated platforms, as these can put your investments at risk. Market fundamentals should be monitored at all times, as these ultimately drive price discovery. Where possible, you should also remove emotion from the trading process, as this is only likely to incite you to make unwise decisions. Finally, if you can engage in a hedging strategy, this is definitely advisable. ”- Chris Morris
Our Favourite Platforms to Trade Dash
There are many platforms available to trade Dash, and these can be bewildering for newbies. So here are some of our favourites.