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How To Trade NEO - Step-by-Step Guide

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NEO, also known as Chinese Ethereum, remains a highly popular coin, with its daily trading volume regularly surpassing $2 billion. In other words, many are using it for trading and just outright enjoying what the coin has to offer. If you’re wondering how to trade Neo, then this guide will offer some insights into various aspects of trading Neo. 

As you know, trading mostly revolves about buying low and selling high, but to be truly successful, you need to understand the nuances—price predictions, analysis and more. It can be quite time-consuming, and requires patience and knowledge.

NEO Trading Summary

To successfully trade NEO, you need to start by creating a plan. To do that, of course, you first need to learn about NEO, and find a way to take advantage of its price volatility. You can also go for NEO derivatives, such as contracts for difference, futures and options.

Regardless of the path you take, you will still have to educate yourself about the coin and learn how to use the price volatility of NEO to its full advantage. 

Remember that trading is easy, but trading successfully is time-consuming, difficult and often quite stressful. But, in the end, traders claim that it is worth it, as they get a reward that they were striving to achieve the whole time they were working on improving themselves and their strategies.

Start Trading in 3 easy steps

1. Choosing a Trading Strategy

Once again, the trading strategy is the most important weapon in your arsenal. Without it, you might as well give up right now, as trading without a strategy is the equivalent of throwing money away. In other words, if you don’t know what you are doing, you are wasting your hard-earned money, instead of using it to increase your wealth.

2. Set up a Trading Account

Once you create a plan, you will also need somewhere to start executing it. Essentially, you need to select a trading platform, create an account on it and verify your identity. This is necessary on all licensed and regulated platforms, and if the platform you are on does not ask you to do it, you should consider moving to another one.

3. Start Trading

Lastly, you need to fund your account and start trading. Remember to stick to your plan if it is a good one, and you better make sure that it is a good one before you start trading. The crypto industry doesn’t wait or forgive, and so you must advance with competence and confidence in order not to be left behind.

NEO Trading Explained

To properly understand NEO trading, you must first understand trading terminology. Crypto has introduced some new terms into the trading language, but most of it was taken from the traditional financial industry. Even so, if you haven’t had much experience with traditional finance and you only entered the crypto sector due to its current popularity, you might not know what some of these terms mean, and how things work.

For example, there are concepts such as trading positions, which signify whether you are looking to buy or sell, go long or short.  Essentially, a trading position shows what you are doing in the market. Then, there are crypto derivatives such as CFDs, options and futures that we mentioned earlier.

Derivatives are essentially trading products that are contracts that have no value of their own. What they do is borrow value from underlying assets, such as cryptocurrencies. By using them to trade, you do not buy actual cryptos, and so you don’t have to bother with storing the coins, managing them or keeping them safe. 

Furthermore, derivatives allow you to bet on the coins’ future price, whether it goes up or down. As long as your prediction is correct and precise, you can easily make money even if the prices are dropping. This is not something that you can count on in regular crypto trading. If you own the coins, and their price drops below the price they had when you bought them, you are clearly at a loss, and that is that unless you decide to hold them locked up in your wallet and wait for their price to recover.

Cryptocurrency exchanges and brokers are platforms where you can trade. Exchanges are singular platforms that allow you to trade based on their prices. Brokers, on the other hand, are intermediaries tied to multiple exchanges that can offer different prices and let you select the best ones. However, they also charge for their services. Brokers and derivatives exchanges offer derivatives products of NEO such as futures, options and CFDs.

And, let’s not forget trading with leverage, which allows you to buy more NEO than what you can pay for with your account’s value. This is done by borrowing money from the trading platform, which can secure bigger rewards but at a greater risk of losing the trade.

Trade NEO: Establish a Proper Plan

A trading strategy is the basis of successful trading. You need to select a strategy and follow it to see some success. Even if the strategy seems to bring only losses at first, most of them work in the long run. Of course, not every strategy fits every trader, so you need to think long and hard and select one that will work for you. Apart from that, you also need to know how to analyse the market. There are two types of analysis to be aware of—fundamental and technical, which will help you predict the market movement.

Understand What Moves the Price of NEO

First, let’s talk about what makes the price of NEO move—the fundamental analysis. Basically, you need to keep an eye out for anything that would give investors a reason to buy or sell. That means news that might cause them to want to buy or sell NEO, or anything else that might make them think that the coin’s price will move in one way or another. So, if there is positive news that might want to make investors start buying, then you need to be among the first to buy and wait for the rest of them to follow. This will push the coin’s price up, and you will be able to sell.

Apart from news, other factors can help move the coin’s price, such as supply and demand, new regulations, rules, and laws, exchange listings or delistings, technical outlook, increased or decreased adoption, hashrate, network stability, a hacking attack, major partnership and celebrity endorsement.

Technical analysis: Read the Charts!

Reading the charts is boring for most people, but if you want to become a professional trader, you better get used to it, as charts are goldmines of information, if you know where to look. They can show you if the price is bullish or bearish, they show the price’s past behaviour and help you recognise trends.

Knowing the patterns that the price tends to make can help you recognise them early on, and predict what will happen next. You can see whether the trading volume is growing or dropping, and realise if the price will go up based on interest. You can recognise which resistances are going to prevent the coin from progressing, and which supports are going to protect it from falling.

There is a lot that can be learned through charts if you know how to read them. With that said, keep in mind that the situation can always change. Charts are only reliable if the price is left to move on its own, and there are no major events that would disrupt the coin’s behaviour. This is why you cannot rely only on fundamental or only on technical analysis. A combination of the two works best. 

Common Strategies to Trade NEO

Scalping

Scalping is a popular strategy that is a sub-category of day trading. It involves buying and selling coins in a very short period of time, often only a few minutes. The point is to earn any money, no matter how small an amount, from even the smallest price fluctuations. Scalpers do not usually rely too much on the fundamental analysis, as this type of trading involves reacting to the market behaviour than anything else.

HODL NEO

HODLing is pretty much the exact opposite of scalping, where the goal is to invest in cryptocurrencies, lock them up in your wallet and forget about them for years. HODLers are deeply convinced that their coin of choice will grow to be huge someday and that buying it now is buying it cheap. Essentially, they are in it for the long run

News Trading

News Trading is extremely dependent on fundamental analysis. It is pretty much the way it sounds, you get the money ready, and read the news waiting for positive development.

As soon as your coin of choice gets mentioned in a positive light, you buy as much of it as you can, and hopefully, do so before its price starts changing. Once the news arrives and makes the price go up, you wait and try to figure out where its peak is going to be and then you sell. 

Choose a Platform that Fits your Trading strategy

Choosing a platform typically comes after you pick a trading strategy, as not every platform will fit your needs. For example, if you wish to engage in scalping, you will want to choose a platform that doesn’t charge trading fees. 

Alternatively, if you don’t want to own cryptocurrencies but merely trade them, you will likely be better off just trading crypto derivatives contracts. But, if you wish to HODL, then you need a platform that will allow you to buy coins, so it’s back to the exchanges. You also need to select a regulated platform and the one that is licensed by the regulators for your own protection. Exchanges are not always licensed, while pretty much all legitimate brokers are.

Set Up Your Trading Account

The next step is to set up a trading account on your platform of choice. There are three steps that you need to follow to set everything up and be ready to trade:

  1. Register on the platform
  2. Verify your identity
  3. Fund your account

Do these three things, and you will be ready for the final step which is:

Open your First NEO Trade

You have reached the step where you get to enter a position and actually buy or sell NEO. However, before you actually do that, allow us to point out a few more things that a trader ought to know before they put their money on the line.

Also, keep in mind that your trading experience will differ somewhat from platform to platform, but the basics are always the same everywhere. With that said, here are some things that you should know before entering a trade.

Order Type

First, you should start by selecting the proper order type. There are various types, such as Immediate or Cancel order, Market Order, Stop Loss/Trailing Stop Loss order, Limit order, All or None order, Take Profit and more.

These differ by what they do, and can be combined with various strategies to help you make the most out of any situation. For example, a limit order can help you get a better Buy/Sell price than, for example, a market order. This is why most traders tend to prefer it. 

Buy or Sell?

Buying and selling are the very core of the crypto industry. You buy when the price is low, and sell when the price is high. On different types of platforms, you may encounter bids and asks, which are also essentially buy and sell orders, only they are named differently. 

Then, there are things like order books that you should be aware of. This is essentially a list of all existing orders, which may help you better understand market sentiment.

Amount

The amount you use to trade is an important detail when it comes to trading, especially if you trade as a novice. If you are in your early days of crypto trading, you would do well to start working with small amounts only. Find out what is the minimum investment/deposit amount for your platform of choice, and start with that. 

The reason we advise this is the fact that the crypto industry can be rather risky and unforgiving. If you make a mistake, it could cost you, so if you are already taking a risk, at least risk as little of your money as possible. At least until you gather up enough experience to know how things work, what to expect, and how to behave while trading.

Leverage on NEO

The crypto industry also offers trading with leverage, also known as margin trading. We mentioned this briefly before, explaining that it is essentially taking a loan from the trading platform or brokerage to buy a greater value in crypto than what you can purchase with your own money.

As a result, you get much higher rewards if your trade works out. However, chances of that happening are significantly reduced if you trade with leverage, because the greater reward also comes with a greater risk. Your room for mistakes gets much smaller, and your price prediction needs to be extremely precise for you to win the trade. This is why margin trading is best left to professionals. But, if you keep trading, you will likely gather up enough experience to tackle it someday, too.

Stop-Loss and Trailing Stop-Loss

Earlier when we were talking about order types, we mentioned stop-loss and trading stop-loss. These are order types, as well as risk management tools that can help you protect your funds from major losses. Let’s say that you wish to enter a position, expecting that the price of NEO will grow. However, instead of growing, it ends up dropping. By the time you realise what is going on and exit the position, you have already experienced major losses. 

But, if you use stop-loss, you get to select a specific price below NEO’s price at the moment when you entered a position. If NEO price ever drops enough to reach the selected level, your position will be closed automatically. Trailing stop-loss works in a very similar way, only it moves with the price. So, if the price goes up, the trailing stop-loss order will follow, and reposition itself at a higher level.

Take Profit

Take profit is another order that works similarly to stop-loss, with the biggest difference being that you are not going to select a price below NEO’s market value, but above it. This is a tool that you will use if you expect the coin’s price to grow, and you wish to have your position closed automatically once it reaches a certain level. 

Finishing Touches

Those were the main things that you ought to think about when entering a trade. There are, of course, some more details that you should be aware of, such as triggers, which are market signals that will tell you when to act and when to wait. Typically, traders decide on certain events, such as the crypto price reaching a certain level, or trading volume growing, and alike, before they enter a trade. These signals serve to show them when the price growth is a certainty, and when it is a risk to react.

Then, there are things like commissions. Essentially, trading often comes with trading fees, which is how exchanges and brokers earn money. You should take them into account when entering trades, and make sure that you know how much your trade is going to cost you.

Open Your NEO Trade

Once everything is set up, you are almost ready to open your first NEO trade. Before you do, however, make sure to check all the data once again. It is not unheard of for a trader to make a mistake while preparing their order, and such mistakes can cost them dearly. It doesn’t hurt to check things out one more time, and if you are satisfied with how everything looks, you will be ready to execute the trade.

Closing Orders

One last thing to note is that you can close your order manually or automatically. You can close trades  manually by simply clicking a button. But, if you want your trade closed automatically, you will have to use stop-loss, take profit, or some similar order, where the system will automatically close your position under certain circumstances.

Final Thoughts: Ready to Trade NEO?

NEO is a cryptocurrency that used to be quite popular back in the day. In this guide, we have explained everything you need to know about trading NEO, including why it matters to pick a trading platform with care, as well as why you need to have a proper strategy. Trading is risky but if done with proper risk management can also be rewarding for a user.

Manage risk in a proper manner and always invest only what you can afford to lose. Use the button below to trade and start your trading journey. 

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Frequently Asked Questions

  1. No one can say for certain. Price uncertainty is common throughout the crypto industry, as sudden events can significantly impact the price positively or negatively. In the end, it depends on investors—whether or not they will decide to buy NEO, but also on NEO’s team, which might make it more or less attractive through developments further down the line.

  2. NEO is supported by numerous trading platforms, both centralised and decentralised. It can also be reached through brokers. It is not difficult to find a platform that supports NEO.

  3. NEO has a total supply of 100 million coins. At the time of writing, the coin has 70.5 million units in circulation.

  4. NEO came as China’s answer to Ethereum. Both use smart contracts, although NEO’s blockchain comes with improvements that make it faster and more scalable. Basically, this means that it can do everything that Ethereum can, and do it better, provided that developers are interested in switching from ETH network to NEO network.