How to trade cryptocurrency

How to trade cryptocurrency

What is cryptocurrency? How to Trade Cryptocurrency? Cryptocurrency is a digital currency traded online using cryptography to verify cryptocurrency trading. It uses a decentralised network based on blockchain, where all the transactions are recorded in a distributed ledger over networks of computers. They work without any interference from the government or any other authority, making it smooth and easy to trade. It is a digital currency with encryption to secure cryptocurrency trading. These are the virtual token securing online payments.

There are several cryptocurrencies, and the first one is bitcoin, based on blockchain technology. It is a popular currency to trade cryptocurrency. Other than this, there are Ethereum, Litcoin, Ripple, Stellar and NEO to trade. 

Types of Cryptocurrency

There are several types of cryptocurrency to trade in the market. We’ll discuss some of the main cryptocurrency trading instruments.

Bitcoin

A digital currency is traded mostly in the cryptocurrency exchange. It has since its launch in 2009 has made its place worldwide. No physical coin is provided in this to the investor, but they have a balance on the public ledger with transparent access. Although it is not a legal tender, it is used globally and has many altcoins available in the market. Referred to as BTC, it has a huge capitalization making it the most traded coin.

It is a collection of nodes that are executed on bitcoin’s code and stored with blockchain. This minimizes the chance of cheating online and securing the network of crypto exchanges. How To Invest In Bitcoin And Make Money.

Ethereum

A decentralised software and the second most famous cryptocurrency. It enables smart contracts and decentralised applications to work without fraud and interference from any other party. Being freely accessible to the general public, ethereum does not have any boundation for cryptocurrency trading. This allows countries with low infrastructure and state identification to get bank loans, accounts and other facilities.

Ethereum runs on an ether platform which is used by developers to run their applications on ethereum. Launched in 2015, ethereum has marked its place in crypto exchanges with the most efficient cryptocurrency trading and growth.

Litecoin

As it followed the footsteps of bitcoin, it is second to bitcoin. Litecoin(LTC) was launched in 2011 before ethereum came into cryptocurrency trading. Referred as silver to bitcoin’s gold, litecoin is created by Charlie Lee. It works on an open-source global payment network and uses script to decode with customer grade CPU’s. It is the sixth-largest cryptocurrency with fast block generation.

Cardano

Cardano is created by cryptography experts who are well trained and have a base knowledge of crypto trading. Charles Hoskinson is one of the members who founded Cardano. Proof of stake cryptocurrency, it has its own blockchain to trade freely. The blockchain created is worked out through experiments and peer review research. With their aggressive research, cardano is a known cryptocurrency traded.

Polkadot

It is also a proof of stake cryptocurrency. With its core component being a relay chain, Polkadot allows the interoperability of varying networks.  It has the facility of parachains with native tokens to trade. Created by Gavin Wood, Polkadot has a market capitalization of $11.2 billion. Cryptocurrency exchange to trade in digital currencies.

Other than these, there are many other trading cryptocurrencies that are offered in the market to help investors have a smooth experience while trading CFDs or trading crypto.

Advantages and Disadvantages of Trading Cryptocurrency

Cryptocurrencies make trade easy and accessible with their unending advantages. We have always heard about how difficult it is to trade in these currencies and just one profit over these is the generation of capital. But there are many we have not come across with.

The first and the most primary advantage to trade cryptocurrency is that it makes the transfer of funds easy between the parties in the cryptocurrency market. There’s no need for a third party to have a certificate to have the retail investor accounts over these platforms of the cryptocurrency market. The second point to the trade is, it allows the trading of many instruments, from trading CFDs to fiat currencies and digital coins. Thirdly, the transfers and payments are secured by encryption with public and private keys. The fourth point to this advantage of cryptocurrency is there are incentives like proof of stake and proof of work. The fifth advantage is the use of digital wallets to store and secure the funds deposited. Finally, the advantage is there are minimal charges applied on the investor for trading cryptocurrency. 

The most obvious advantage of this cryptocurrency trading is profits.

With the full hand of the advantage comes some disadvantages. As the trading cryptocurrency is semi-anonymous in nature, it has a green flag for illegal activities and, lastly, as volatile nature of trading cryptocurrency. Due to its uncertainties, the investor faces huge losses.

How to Trade Cryptocurrency?

For trading cryptocurrency, there are certain steps that are required to be followed by the trader. These steps include:

Decide over the process of trading

The trader is flooded with options in cryptocurrency to choose from. The first option that is available is trading CFDs. In cryptocurrency CFDs, the trader trades on a contract where the difference of prices is exchanged in the position it opens to its closing position. It basically works on speculation of the prices in the market and does not take ownership of the currency. It works on the short and long positions of the CFDs in the cryptocurrency market.

The second option available is trading cryptocurrency by buying at the cryptocurrency exchange. It is the best way to trade as it has the option of not taking complete ownership of the virtual currency.  When the value increases, the trader can benefit from the same.

Know the Cryptocurrency Market

The market for trading cryptocurrencies is different from other financial markets. With this, it is highly erratic to deal in crypto trading. So, the trader should be well versed with its terms and workings before stepping in. It works on a decentralised network with a peer-to-peer transaction check and the central server. Blockchain technology secures the transaction and records them, making it feasible for the trader. 

Cryptography, on the other hand, verifies the transaction and encrypts to protect the funds of the traders.

The trader must have their eyes open to have every news and update to trade in the cryptocurrency market, fiat currencies and CFD trading.

Opening Account

Cryptocurrency has the best option where the trader, instead of purchasing the currency, can hold positions. The trader is not required to have an account and wallet for conducting such trade. The trader with an account and who wants to purchase and sell should hold an account and wallet for secured trading.

Accounting opening is a simple process online with just a few minutes of the trader. The account opening needs some details of the trader and internet access to quickly start the trade. Name, address, email ids and contact number are the basic requirements of account opening.

TradedWell, TradeATF are some of the best CFDs Crypto trading platforms that offer exceptional trading services.

Trading Strategies

A trader with professional knowledge of the business and a beginner all can have a plan to trade in the cryptocurrency market. As the market is volatile, losing money rapidly is also common. To avoid this situation, the trader must analyse and plan before stepping into crypto trading. The demo accounts help the trader in getting to know the virtual trading and have a strategy to trade online.

Trading cryptocurrencies offers some facilities of the demo account and risk management tools to make it simple to buy bitcoin, ethereum, trade stocks, and know about the digital asset.

To buy cryptocurrency, traders must have a technical analysis of the stock market and cryptocurrencies. The digital asset could lead to capital gains with selling cryptocurrency and trading with the fiat currency.

Technical analysis and fundamental analysis are two main tools of the trade. With this trading, the profits could be doubled, keeping in mind the market and its proper analysis.

Trading Platforms

The high prices and risk of losing money worry most of the traders, so to overcome these difficulties, the trading platforms are designed. Trading platforms help to analyse and know the price movement of the market. Trading of cryptocurrencies CFDs and other instruments of the crypto market is quite volatile, and to minimize these risks, trade uses the trading platforms.

Cryptocurrency trading platforms are advanced, and new traders can understand these quickly. As it involves complex instruments, the retail clients or traders can use many techniques like swing trading, candlestick approach and scalping etc.

MetaTrader4 is the most used and basic need for traders. One to be advanced and know cryptocurrency mining should use these facilities online. It has a number of time frames, an automated system and expert advisors with other basic functions to secure the trade and have perfect analysis at the same time.

Positions

With account opening, it is not compulsory for a trader to have a wallet or account in any brokerage firm. The trader can hold positions with these cryptocurrency projects and trade without the stress of transaction fees. A trader can have a coinbase account to trade where they can add their wallet if they have any.

Selecting a Cryptocurrency

A trader looks for a broker first before jumping to cryptocurrency trading. The brokers they choose are reputed and regulated by authorized authorities to make the traders trust in them. There are authorities like FCA and Cyprus securities proving secure trading with standard norms and strict regulations. So, the next step is selecting the cryptocurrency.

There is no cryptocurrency that guarantees profit all the time; that’s why we need to choose before investing. There are some currencies that are best to trade depending on the condition as the trader trades in. The trader should know that knowledge is the first thing to get before trading in the market. Next comes the opening of an account and linking that with a bank account to deposit funds and profits.

The trader should be well prepared before investing as it could lead to a loss so, the investment made should be as per the investor; that is how much could be handled by them in case of loss.

Selecting cryptocurrency requires knowledge of that crypto traded in the market. Its value, the risk involved, availability and investment to be made for a return.

To get these details, the company’s return on investments, annual accounts, and worth could be analyzed. The different types of cryptocurrencies and cryptocurrency CFDs could be evaluated. Bitcoin is most traded, followed by Ethereuem. So these things should be acknowledged before making any decision. The cryptocurrencies should have a solid team backup, and the whitepaper should be frequently read to be updated on cryptocurrency. The risk should be evaluated as well.

There are different altcoins in the market, also known as decentralized finance. A team of altcoins expect bitcoin, which are based on the Ethereum blockchain. Some of the popular altcoins are:

  • Uniswap
  • Aave
  • Synthetix
  • Maker
  • Solana

Cryptocurrency vs Stock Trading

Stock trading is an older trading market than Cryptocurrency, so both have their own differences. But trading is beneficial in both Cryptocurrency and the stock market.

In the stock market, a trader holds shares of a company in which they have invested. The trader keeps an eye on the shares of the company and its value. This helps to know when to buy and sell a share in the market. Compared to Cryptocurrency, the stock market is more reliable and less risky. But it also depends on the cryptocurrency instrument and stock one trades. So, before choosing stocks or cryptos, other options should also be considered.

Cryptocurrency vs Gold

There has been a lot of buzz about trading in cryptocurrency for some time now, but still, gold has a stronghold over the market. People globally invest in gold as a storehouse of investment. In gold, the price and worth are always rising, making it the best choice over any other trading platform. In addition, gold is more liquid in nature than other trading instruments. So, we can say that gold has the upper hand in this field.

Cryptocurrencies, on the other hand, are more volatile and do not offer a return with every transaction done. These are not that liquid in nature as gold and keeps changing the price in the market.

Cryptocurrency vs Fiat Currency

Fiat is a common currency used in the world. The value of fiat currency is determined based on the government that has issued them. With no intrinsic value and no decentralization, the fiat currency is still good to invest in. Cryptocurrencies, on the other way, are more trustless; they are decentralized which makes it secure but the market it is traded in is highly uncertain.

Greenbacks, Cheddar, loot are some of the money ones has in the wallet. Though the forms are different, the value they have is of a fiat currency. These are the coins or paper bills used as fiat money globally. The US dollar, Euro, Sterling and Pound are some of the most traded fiat currencies. Some of the fiat currencies are issued by government-backed by no other commodity.

Crypto, on the other hand, is a digital currency with online trading. There are different types of cryptocurrency in the market which hold various values. Cryptocurrency has more advantages in comparison to fiat currency.

Cryptocurrency vs Forex

Cryptocurrency belongs to Forex trading and shares many similarities, but there are differences as well. The first difference is the market size; the market size of a Forex would be wider than the cryptocurrency. The market worth also differs due to this reason. Making Forex more preferred to trade. Forex has more currencies to trade and more risk as well. The liquidity of both as well differs as Forex is more liquid than the crypto market. The size of the market is also small for cryptocurrency and has less liquidity due to its volatile nature. Cryptocurrency moves small amounts in the market in comparison to Forex.

How to Trade Cryptocurrency?: Conclusion

Cryptocurrencies are easy to trade with so many facilities available in the Forex market. The scalping, hedging and analysis tools are incredibly beneficial for the trader who has just joined in. In the above discussions, all the details of cryptocurrency are mentioned with its types, how it could be traded, and comparisons with other market trading options. A trader has to know the advantages and disadvantages of its legal process and the country it could be traded. 

Cryptocurrency has, in a short time, occupied the market with tremendous success. The traders must try investing in these to have profits doubled due to its highly volatile nature, which works as a benefit and drawback. A trader must try and invest in cryptocurrency to take advantage of the differences between the currencies. The trader can use future and options contracts to make the trade smooth. It is a simple way of trading with online functionalities. Cryptocurrency has a small market with trading platforms and tools to cater to its traders with the best options and simplify the process. The forex market has a huge worth with capital value and being the world’s number one trading instrument. Cryptocurrency is part of it, and so, we can visualize its worth. 

Get a Callback

A trusted broker will contact you today.

Trading View

Top Brokers