IOTA Trading Guide For Beginners
A micro-transaction friendly cryptocurrency, IOTA has been developed by a team of four, Dominik Schiener, Serguei Popov, David Sønstebø and Sergey Ivancheglo in 2015. A third-generation distributed ledger technology, IOTA doesn’t use blockchain, but its own node confirmation technology called Tangle. Tangle is based on the Directed Acyclic Graph (DAG) that's handled by the IOTA Foundation.
IOTA trading is popular with its MIOTA (IOTA tokens) ranking in the top 30 coins by market cap. User friendly and practical, you can also trade IOTA easily by going through this guide made specifically for you.
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3 Reasons to Trade IOTA Now!
Tangle, the technology powering IOTA has been designed to have no miners and no blocks, negating the incentive that is paid for noting down transactions on the distributed ledger. Nodes that approve a transaction must approve two previous transactions to validate. This takes out the fee equation, making it the perfect cryptocurrency for micro and daily transactions.
With devices today having numerous sensors built into them that can collect a massive amount of data for anything from smart cities to good governance through the Internet of Things (IoT), IOTA is IoT friendly and has attracted some big names such as Jaguar, Land Rover and Bosch.
With a total supply of just a tad under 2.78 billion MIOTA, all the IOTA tokens have been pre-mined and released. With no new supply to come at all and demand steadily increasing, deflationary tokenomic is achieved that will likely push the IOTA price up in the long run.
IOTA Trading vs. Investing
Since there are no miners in the IOTA network to process transactions and earn fees, the only way for the public to make earnings and profits off MIOTA is to invest and trade only. Like all cryptocurrencies, IOTA is also subject to notorious volatility. That is something you can take advantage of when you buy IOTA at a low price and sell it off at a higher one.
This type of investing means you will need to own IOTA and will need to buy the tokens. You can use a cryptocurrency exchange to buy and sell easily, but since exchanges are not safe for storing valuable digital assets in high volume, you need to frequently shuttle MIOTA in and out. This means you will need to set up crypto wallets, understand what are private and public keys before you can send and receive the IOTA tokens. Then there is the onboarding process. Not all exchanges have fiat support and that will simply add in another struggling step for you to locate an IOTA purchase service provider that supports your preferred payment method.
All that hassle isn’t for everyone and you might also find it too cumbersome to invest in IOTA. This is where IOTA trading comes in. Instead of using actual IOTA tokens, trading is all about using agreements and contracts that rely on the MIOTA price at its core. Called derivatives (since the agreed values are derived from IOTA price), these contracts are an easier, faster and much friendlier method of leveraging the ever-changing price of IOTA. No wallets, no keys—just traditional mainstream trading environment.
Another advantage of using derivatives to trade is that these contracts can use the IOTA value as a basis to form complicated financial instruments. CFDs are complex instruments that are a good example. As the name suggests, traders open a contract and then close it in the future, pocketing the difference between IOTA prices at the time of opening and closing.
Another popular contract is Futures, where a trader agrees to buy (or pay out the value of) IOTA at a fixed and agreed price in the future. Futures give the traders the obligation to honour it, meaning they cannot back out. This can be a deal-breaker for many traders and they would tend to avoid taking that much of a risk. Options is another contract like Futures, but grants the ability to cancel the trade if it is not going in your favour. The only catch is losing the premium that is paid for every Options contract, a much better alternative than incurring massive losses.
Perpetual is another variation of the Future contract where the obligation exists as before, but there is no expiration time, letting the trader run it indefinitely until a favourable IOTA price is reached.
IOTA Analysis: The Key to Success!
Though the recent crypto boom has pushed the IOTA price in the bullish market that has been profitable, IOTA has had its fair share of red markets in the past. If you follow or trade cryptocurrencies, you will have noticed that these digital assets have large fluctuations in their prices in comparison to any other traded asset. You can rapidly run losses if you trade on the fly and open and close positions relying more on hope than analysis. There are two ways to analyse IOTA price. Both have a different approach and yet if you want to mitigate your losses and maximise your profits, you will need to work with both in tandem.
The mathematical approach of technical analysis involves numeric data that is collected from past IOTA performances and are processed through different functions to produce a trend of what the future might hold. Using inputs from periodic time frames, IOTA price, traded volume, network activity, active wallets etc. can be taken and projections created. MACD, EMA, Fibonacci, Golden ratio, Stock to Flow and RSI are just a few examples of technical indicators. The analysis can give different metrics for you to understand. Even if they are the same in nature, the values will differ. You will need to take all of these into account to predict a sound move of IOTA.
While technical analysis relies on hard number based facts, the fundamental analysis is based on the human factor. Different inputs from IOTA and its development team can affect the confidence of MIOTA trading. The launch of an upcoming upgrade, for example, is something that will likely pump the price of IOTA. Even news not directly coming from the network connected people can have an impact, such as a listing/delisting of IOTA pair in any major exchange.
Other information and data can affect IOTA, but not connected to it directly. For example, news of a hack, overall market sentiment and regulatory updates. To have a good analysis that is most likely to give a true picture, you will need to cater for all these into your one solid analysis output. What weights you assign are something that you will learn over time.
Choose a Trading Strategy
Now that you have an idea of how to analyse IOTA past movements and be able to predict the future price, it is time that you sit down and decide your trading strategy. Buying and selling IOTA derivatives is not just about buying low and selling high (though that is at its core), but when and how to buy low and sell high. For this, there are a few strategies that you can adopt that best fit your profile, profit target and time commitment.
- Day Trading
The aim of day trading cryptocurrencies is to make as many profitable trades as possible in a single day’s session and liquidating all assets before the end of the day. Day trading orders can be as short as a few minutes and can last a few hours. Orders are not left open overnight to prevent traders losing money against slippage as IOTA continues on trading all day long and all year round.
- Swing Trading
When a trader keeps orders open for longer periods with eyes set on to capture larger profits due to the volatility of IOTA, it is called swing trading. The orders can last days and can even be kept open during weekends or during long periods of inactivity. Stop limits orders come in real handy here.
- Position Trading
With longest open order periods, position trading is like digging a trench and waiting for the right time to strike. Traders make long period calculations and analysis, deciding the optimal time to place an order and sit patiently, waiting for the predicted “moon”. This means orders lasting weeks, with some position traders even sitting for months.
Sitting on the other side of the fence to position trading is scalping. Short, intense and multiple orders are placed simultaneously, closing only a few seconds, perhaps a minute later, taking in the slight upwards movement of IOTA. Like grains of sand, every single order doesn’t give much in terms of profits, but the combined money raked in can join up to be a good profit.
Sign Up on an Online Broker or Derivatives Exchange
So you have matched your trading strategy with what you believe is best for you and are all ready to trade. But wait, you still have to register on a trading platform!
Even here you have options that you must choose from. You can register on a derivative exchange where you can directly do all of your trades or go for a middleman and select a broker who will be doing all your trades for you, you only need to discuss your goals. A cryptocurrency broker, as a middleman, seems irrelevant when you can trade directly using the exchanges, but these intermediaries can be worth the extra step. Brokers can give you higher levels of leverages, exposing you more to IOTA’s price shifts and enabling higher profit levels.
Brokers will be able to give you other advantages such as the use of advanced automated trading software and can even give you credit extensions.
With your decision of using a derivative exchange or a broker finalised, you must register and clear any KYC and AML steps. A good trading platform will always comply with regulations and require basic information on the traders such as their residence and source of funding.
After signing up and clearing all regulatory steps, you can head over to your platform’s wallet and deposit funds.
Platform dependant, you may have more than one option to deposit your fiat. The most common methods are credit or debit cards and bank transfers. If using your cards, you will need to enter the card details, such as card number, expiry date and the secure CVV code along with the amount to be charged. A bank transfer option would see you taking their information, like the bank name and account number so you can log in to your banking portal and transfer over cash. Some platforms also accept other funding methods, such as PayPal and even selected cryptocurrencies. Explore all options for your ease.
There are a few tips for funding you should keep in mind. First, check the platform’s terms and conditions if you are going to use a card or a bank account that is not in your name. To ensure AML rules are followed, the registered trading account holder’s name should match with the bank or card ownership. Secondly, if sending money for the first time, only fund the minimum amount possible. This will help you identify any wrong entries you might have done. This way if things do go wrong, you lose only a small amount.
Open Your First Ethereum Trade
By now your strategies are locked, analysis giving you confidence and the account all funded and ready. The only thing you have to do is to select the IOTA trading pair. The most common ones are IOTA/USD, but there can be others. When you select the trading pair of your choice, the platform will take you to the relevant trading pairs. You will be shown different graphs and numbers which can be overwhelming understandably, but these are very basic things that you should be able to understand without a hitch.
The centre of the action is the order placement section. You will see at least three types of orders. A market order will let you buy or sell contracts at the going price, you only have control over the amount you want to commit. A limit order is what you will want to use if you are not happy with the market rate. It lets you set the price of the contracts as well. Stop limit orders come in really handy if you want to mitigate your losses when a market turns bearish or capture the upward movement in a bullish scenario. Many trading platforms also give advanced order types, such as trail, fill or kill and take profit. Check out each order type and note down how these can be used to your advantage.
Leverages are something that can come in quite handy. When you are sure that an order you intend to place will result only in profits, you can use the leverage option to increase your exposure. Be warned though, leverages can quickly wipe off your money if the IOTA price drops, leaving you without any money.
Long and shorts positions are also beneficial for a trader. Long positions are regular traded ones where you open low and close high to earn profits. Shorting is the complete opposite, betting that IOTA value will fall and you open high to close low. Since you put your money on IOTA going bearish, you make a profit in a sinking market.
Before placing the order, look at the graph and determine any new changes that you will need to incorporate in your analysis. At the same time, have a look at the order book too. This is the complete information of all posted, but pending orders for both buy and sell ones. All orders are aggregated with respect to the prices asked and the total amounts. Once you are happy, click the buy button and place your first order.
Experts Insights: Common IOTA Trading Mistakes and How to Avoid Them“ IOTA is a volatile digital token just like any other regular cryptocurrency. As such, there are some typical mistakes that new traders make. That being said, there are ways to avoid these. Before registering on a platform, do a bit of a background check. Make sure it is registered and follows the local regulations. A good trading platform will comply with all rules. A regulated platform can be a bit tough to sign up on, since it will have much tougher KYC, AML and other checks and restrictions, but in the end, the security (both from the technical side and money matters) offered will be worth it. Always depend on your analysis, not your gut feelings. Technical analysis will take care of the numbers and fundamentals will cover the human aspect, so you don’t need to let emotions control your trading. Stick to a strategy and don’t change it, even if you run losses a couple of times. Take the losses as a lesson and improve your future trades. Shifting strategies on the fly will only result in you incurring more losses. Leverages, as defined before, are a good choice to increase your exposure, but that same elasticity can go against you. Many platforms will automatically execute a margin call after a certain threshold and liquidate your orders to protect their money, often leaving you bankrupt. Never leverage more than you can afford to lose. ”- Saad Ullah
Our Favourite Platforms to Trade IOTA
To help you get started on trading IOTA, we have looked at a few of the best trading platforms for you and these are listed below.