2.4.0. Trading Platform
This is where you can buy and sell cryptocurrencies as well as check for the history of your purchases and sales. Some crypto exchanges simply name their trading platform “Exchange” or “Spot/Futures.” Hence, don’t be confused with such slight name variations.
Some exchanges have more than one trading platform for different levels of trading sophistication. Hence, you may see Basic, Standard, Classic, Advanced, Professional, etc. as different trading platforms for different categories of traders.
For beginners, Basic and Standard may be sufficient for transactions.
A Trading Platform often has seven basic components. These are:
1. Baseline Currencies:
These are the cryptocurrencies by which all other cryptocurrencies in that exchange will be paired to. For instance, in Binance, the baseline currencies are Binance coin (BNB), Bitcoin (BTC), Ethereum (ETH) and USD Tether (USDT).
The baseline currencies are usually seen at the top in the Trading Platform.
2. Trading Pairs
Below the Baseline Currencies, you will see all the trading pairs available on the exchange. This is where you will select the cryptos you want to buy or sell.
3. Trading View
This contains the graphs and all other marketing tools that can assist you in making decisions about a trade. Many newcomers feel overwhelmed once they open an exchange and see all these fanciful charts. But you don’t need to feel frustrated at all if you understand the following simple fact.
The simple fact is that the default pattern of trading view in crypto exchanges is virtually the same. The default pattern has three components:
(a). Price chart
This gives a visual picture of the price movement of a trading pair over a specified time. The three common charts used by exchanges are:
• Line Chart
This is simply a line graph that runs across a trading chart surface.
• Bar Chart
This is a bar graph, which is a type of graph plotted in columns in which each column (often plotted vertically) represents the opening and closing price of a currency trading pair in a given time.
• Japanese Candlestick
This is a variation of the bar chart. Candlestick charts show the same price information as a bar chart but in a prettier, graphic format. Many traders like this chart because not only is it prettier, but it’s easier to read.
A Candlestick pattern appears as a series of columns well displayed on the trading chart view with each candle representing a trade – a sell or buy – at a specific time. To make it easy for a trader to differentiate a sell from a buy trade, the candles are displayed with two distinct colours – sell candles often appear in red or purple while buy candles are usually blue or green. Note any trader can change the colours to any type he likes.
Because it gives far more information, most exchanges use the candlesticks as their default pattern for price charts. Few exchanges use bar charts and rarely will you see line charts as the price chart default.
(b). Technical Indicators
These are the trading instruments or marketing tools to assist a trader in forecasting his trades. There are many technical indicators that are used by traders and they are often found in exchanges.
However, most crypto exchanges use only one technical indicator as the default in their trading view. The most commonly used technical indicator is the Moving Average followed by the Bollinger Band.
• Moving Average (MA)
This appears as a line graph running across the trading view. There are two kinds of MA – Simple and Exponential. An exchange may use anyone as its default. Exchanges often use more than one MA, each complementing the others’ forecasting activity. For instance, Binance uses three MA while MEXC uses four in their trading view.
• Bollinger Bands
Bollinger Bands are a technical indicator developed by John Bollinger in the early 1980s, used primarily to measure a market’s volatility and identify “overbought” or “oversold” conditions.
Bollinger Bands are typically plotted as three lines: an upper band, a middle line, and a lower band. The middle line of the indicator is a simple moving average (SMA).
(c). Trade Volumes
At the bottom of the trading view you will see a histogram. Most times they appear in two colours just like the Japanese candlesticks. A red or purple colour often depicts a sell while a blue or green represents a buy.
When there are more people selling, you will see the red histogram becoming more pronounced while, if there are more people buying, the blue histogram will become prominent.
Note!!
If you are interested in knowing more about these trading instruments, you can study them for free at the School of Pipsology. Their website is: www.babypips.com.
4. Order Book
This is the section where you will see all the existing trade orders that have not yet been executed or finalised. From the Order Book, you can actually see what prices traders are willing to buy or sell a crypto.
The red/purple colour numbers show the sell orders while the blue/green colour numbers show the buy orders. In between the sell order and buy order is the current price of the crypto pair.
5. Order Platform
The Order Platform is where you input the amount of cryptocurrency you want to sell or buy and execute the trade. Usually there are three ways you can buy or sell a cryptocurrency, which are:
(a). Market Order – if you click here, it means you are buying or selling the crypto at the current market price.
(b). Limit Order – if you click here, it means you will set the price at which you would like to buy or sell the crypto.
(c). Stop Limit – this is an advanced way to set your trade such that it does not go above or below a range you want to sell or buy.
For beginners, it is advised to use the Market Order since it is quite simple. In fact, most local crypto exchanges utilise only Market Order.
6. Open Orders
This is where you will see the trades you have ordered that have not yet been filled or finalised. If you change your mind about a trade order you have placed, you can easily cancel it from here.
7. Trade/Order History
This is where you will see all the trade orders you have executed or finalised.