How to Trade NEO In 2021
The recent increase in the value of cryptocurrencies like NEO has drawn in a lot of new investors, and many want to learn how to trade NEO for a profit. The process of trading NEO involves buying at a low value and selling at a high price. However, this is easier said than done.
This is a comprehensive guide on how you can trade NEO. You will figure out how to foresee future price fluctuations with greater precision using fundamental and technical analysis. In the event that you need to trade NEO tokens, remember that it's an ongoing undertaking that demands you remain mindful of NEO-related news and goings-on in order to manifest large gains.
Table of Contents
What Is NEO Trading and How Is It Different From a Standard Purchase?
Prior to investment in NEO, remember that holding NEO tokens and trading them is different. Buying NEO implies you own the asset and reserve the option to hold, sell, and use it the manner in which you need. However, trading NEO implies you bet on the value of the token through a number of derivatives offered by brokerage websites. In this situation, you don't own the asset outright but basically purchase and sell subsidiary products.
When you begin trading NEO, you will see the top three derivative products of NEO include the following:
- CFDs - Contracts for Difference or CFDs are monetary derivatives that mirror the ever-changing value of NEO without requiring the trader to purchase the asset. You can purchase CFDs when NEO’s cost is low and sell them high to pocket the difference.
- Futures - These are time-bound products that a trader needs to close at a predetermined date. When the value goes according to your expectation, you make a profit, otherwise, you make a loss.
- Options - These give traders the choice to close their orders or let the contract expire on the settlement date. If the trade is profitable, traders will use the contract; otherwise, they will discard it, paying only a small fee for the contract itself and not incurring a significant loss.
Traders can immediately purchase the derivatives and sell them which makes it a much quicker approach to earn than holding NEO.
When contrasted with holding NEO tokens, trading gives users a considerably more advantageous and speedy approach to making profits.
It is suggested that you pick a broker that is registered and regulated to evade any scams. Top brokers furnish you with a wide assortment of highlights to deliver a superior trading experience. You have to remember that the nature of trading instruments and their features rely upon where the brokerage service is legally registered along with your own country of residence.
Numerous new traders go for copy-trading, which allows them to duplicate the moves of prominent traders on social trading platforms. Although this offers a superior possibility of success, as you are following the trading choices of experienced traders, at the same time there's some risk included. Prominent traders regularly have a huge volume which gives them a cushion to mitigate their losses, and following them without assessment may lead you to significant losses. With enormous volumes, their transaction-based charges amount to a negligible proportion of their profits, while that is not the situation with new traders.
Where Can I Trade NEO?
Through a comprehensive review of different trading platforms, we have come up with a list of the best brokerage and exchange platforms for your NEO trading.
Brokers are fundamentally trading websites where you can purchase NEO derivatives when the cost is low and sell them at a higher price. However, when you are trading using brokerage platforms, you never really purchase the NEO tokens. You actually purchase a contract that gives you the right to your initially contributed capital alongside any profit or loss you make on a trade order when it either closes or terminates. Except for a couple of brokerage sites, practically each trading stage today offers crypto derivatives.
Benefits of Using a Broker to Trade NEO
- No need to buy NEO and manage storage and security
- No need to get a NEO wallet for safe holding
- Short-term method when contrasted with holding NEO coins
- A quicker way to make money than holding coins
- Enhanced profits through leveraged trading
- Start your investment with as low as $100
- Brokerage websites are registered as well as regulated for better security
- Transparency regarding expenses, charges, commissions, and fees
- Wide range of technical analysis tools available
Initially, digital currency exchanges that sold NEO were centred on purchasing and selling the cryptocurrency after a simple signup process. Over the course of the last few years, a wide range of services, including exchanges, have extended their services to bring derivatives to the table. You can trade NEO on numerous exchanges without requiring a broker. OKEx and Binance are two of the top derivative exchanges that offer various types of derivative products including futures, alongside the ability to go for leveraged trading.
Benefits of Using an Exchange to Trade NEO
- More flexible than intermediaries as you can purchase and sell a range of coins
- Ability to pull out your NEO coins whenever you need
- Exchanges bring a more extensive scope of digital currencies and altcoin pairs
- More options for depositing and withdrawing your funds
- A user-accommodating experience unlike sometimes complex contracts on broker websites
- Ability to engage in up to 100x leverage trading
- Services of exchange and a broker rolled into one
Our Step-by-Step Guide on NEO Trading
We have created an in-depth guide on how to start trading NEO, with each step carefully explained and detailed for your understanding.
1. Combine Fundamental and Technical Analysis
A wide range of crypto investment strategies requires aptitude in two distinct sorts of information assessment. Your goal is to handle the two kinds of data and settle on an educated decision regarding your trade.
The first one is fundamental information, which includes:
- News - Being a globally traded resource, the cost of NEO can be influenced by a huge number of variables. That is the reason it is essential to watch out for the most recent turns of events, guidelines, analyses, and practically anything that can drive the market.
- Supply and Demand - Just like some other digital resources, NEO can be subject to unpredictability if supply or demand changes. Right now, there's an inventory of 100 million NEO tokens and an increase or decrease in that sum could affect the token’s value.
- Follow the General Rule of Economics - If the demand of NEO increases, the price will also increase, but if the supply increases, the price will fall. Be aware of how these variables interact.
Technical analysis is tied in with contemplating information, stats, and numbers to settle on an authentic proof-based decision. Depending on a different assortment of insights, you can assess the likely future value of NEO, which can help you settle on educated choices. Probably the most well-known technical markers utilised by traders include:
- Moving Averages - This pointer depends on values of NEO that have been set at spans utilising past insights. A moving average implies how the price of NEO moves and what it'll be later on given the value information currently available.
- Relative Strength Index - This exhibits market energy and gives an outline disclosing to you whether NEO has been overbought or oversold. An increase in value with an overbought signal infers that the price of NEO is likely to fall. However, a decrease in value with an oversold signal shows that NEO might be about to take off in a trend reversal.
- Moving Average Convergence Divergence - When we assess the contrast between a 26- and 12-period exponential moving average (EMA), it is termed Moving Average Convergence Divergence (MACD). It is an exceptionally valuable pointer that reveals to you when traders are moving from buying to selling and vice versa.
In the event that you are hoping to turn into a specialist trader, you can assess other technical pointers too including various diagrams and chart patterns, Fibonacci levels, and depth charts.
2. Choosing a Trading Strategy
Although each trader is hoping to bring in cash, you need to recognise the best procedure for yourself. Here are a few of the top NEO trading techniques you can depend on.
- HODL: ‘Hodl’ is just an incorrectly spelt version of 'hold', popular as a joke in the NEO community, which implies that you purchase and hold your NEO coins for a long time. This procedure includes purchasing low and holding for quite a long time, maybe years before you sell at an extraordinary price differential.
- Day Trading: NEO can be very unpredictable for the duration of the day, giving traders plenty of opportunities to exploit. These value fluctuations can be used to open and close orders that can be highly profitable.
- Swing Trading: This is quite like day trading yet the trading times are somewhat longer, as they range from days to a few weeks. This must be done with a profoundly precise technical examination of the data to work out when a “swing” in price will begin.
- Hedging: It is a risk minimisation technique where you secure your capital by opening a supporting position against your initial investment. This may seem counterintuitive, but it ensures that a profit can be made whatever the market’s outcome.
- Scalping: Once again this method is very like day trading except for trading times being as short as a few minutes. This returns smaller gains, however, you additionally have the opportunity to make more trades.
There is a wide scope of trading techniques including news and copy trading. Every technique accompanies its own upsides and downsides. At the end of the day, you have to choose which technique works for you the best.
3. Select an Appropriate Platform for your Needs
You need to be on the right trading platform to be successful as a trader. The primary thing you need to do is choose whether you need to go with a devoted broker or a derivative exchange. While the two are comparable, the broker will have a trading-centred interface. They also take into account bigger trading volumes at reasonable commissions and other trading charges. As compared to brokers, exchanges are more adequate for individuals who are willing to take a higher risk through leverage, or already have an account for buying crypto.
Platforms that aren’t compliant can be shut down at any minute and they can also turn out to be scams or outright frauds, so do your research before signing up to any platform.
4. Setting Up Your Account
After you have gone through the previously mentioned step, you need to sign up on the platform. You just require an email address for the first stage. When the account has been confirmed through your email, you'll go through an identity confirmation measure which is required under Anti-Money Laundering (AML) and Know Your Customer (KYC) guidelines. You can give any sort of government-provided ID to validate your identity.
After you have validated your personal identity, you can set aside the base deposit in either digital currency or fiat cash subject to the trading service you've picked. Go to your wallet and pick the deposit choice from where you can choose any of the payment methods.
5. Prepare your Trading Position
Now, go to the Trade section and you'll see an interface. Various exchanges and brokers utilise a wide range of designs, however you can always see some common options on the interface such as buy/sell, the order book, and so on.
Below are some examples of interfaces:
If you are new to NEO trading, you might feel a bit overwhelmed by some of the trading jargon. Following are a few pieces of trading terminology you should be aware of:
Short or Long Positions?
You open a long position when you think the value of NEO will rise. You purchase low and sell high and keep the profits. What happens when you think the cost will go down? All things considered, you open a short position. For this situation, you sell high then buy low, actually making a financial gain while the market retreats. Shorting can be quite risky so you need to ensure that you are managing your risk.
Limit or Market Order
An order where the NEO token's market value is used when initiating a trade is called a market order. Since you don't set the value, you see only purchase and sell options if you have picked the market order. In the event that you are searching for trades at better value, you'll need to go for a limit order. Here you'll have to indicate the price you are aiming for, along with the total amount of NEO coins. A market order can be executed right away while a limit order may require some time to execute, as the market converges on your chosen value.
Trade Position Amount and Leverage
Trade position sum is essentially the capital you've put into a trade. You can expand the profit potential by engaging in leveraged trading so you can capitalise on a bullish trend. On trading sites, you can see leverage as proportions. For example, 10:1 means 10x leverage. When you put in $100, your loss or profit will be determined based on a $1,000 figure. While this technique can amplify your profits, it can also lead to greater losses.
Risk Management: How to Decide the Right Stop-Loss and Take Profit values for Your NEO Trade
Stop-loss orders empower traders to lessen their losses when the market doesn't line up with their forecasts. You need to type in two key NEO prices — the first is the stop value, and the second is the cutoff, or limit, which is a value at which you want to sell your NEO coins when the trade has been triggered. Depending on your technical assessment, you can employ stop-loss orders just below the support threshold when you realise that the crypto market is likely to bounce back. In the event that NEO’s value proceeds to decrease and arrives at the support level, the trade gets initiated and your position is closed to minimise losses.
Review and Execute Your NEO Order
Re-verify all that you have entered and guarantee every one of the choices is as expected before you put in a trade. After you are sure, you can begin trading by pressing the ‘Sell’ or ‘Buy’ button.
Close Your Trade for Profits or Limit Your Losses
An order that you execute with technical assessment is highly probable to turn a profit. You can either close your orders yourself or depend on the take profit mechanism which consequently shuts the trade when a specific amount of profit is reached. Using take profit limits with stop-losses can reduce your risks.
Frequently Asked Questions
If you’re searching for a secondary income, then trading NEO and other cryptocurrencies might be a good option. You cannot replace your primary income with crypto trading right away, however.
If you believe that the price of the NEO token is going to increase in the long run, then HODLing may be a better strategy.
Futures put a required commitment on the trader to close the order on a predetermined date. In case you're trading options, there's no such commitment, you have the option to buy at a specified date or you can choose not to.
Contingent upon the brokerage or exchange, you can swap your NEO tokens to get BTC and begin trading.