In the past decade, the trend of investing or trading in cryptocurrency has increased multiple times. Cryptocurrency or digital currency is getting popular day by day, traders across the world are actively trading in this to earn profits. There are many currencies in the world and generating higher returns.
Investors can choose from various currencies and earn higher profits from the market. Study the technology on which a cryptocurrency works and then make an investment. Let us understand all the basis of crypto trading and the technology behind cryptocurrencies.
What Is Cryptocurrency or Digital Currency?
A cryptocurrency is also known as a digital or virtual currency. They are a decentralised form of currencies that are designed to use as a medium of exchange. The technology on which it works is known as blockchain technology.
All the cryptocurrencies are developed for a special purpose or project. They use cryptography to record and maintain a digital ledger of transactions related to cryptocurrency. It also controls the formation of fake coins or double-spend coins.
Cryptocurrencies are facing huge criticisms from all over the world. It is because of the decentralised nature, high volatility, and several other reasons. However, they are also praised by traders because of their transparency, profitability, and inflation resistance nature.
What Is Blockchain Technology?
Blockchain is an online distributed ledger that records and maintains a set of cryptocurrency transactions. ‘Block’ means a set of transactions and ‘Chain’ means sharing with all the participants. It is a network that is used to track assets in the whole business network.
The Blockchain network allows traders to track and trade any virtual asset over the network by reducing the risk. The motive behind this technology is to bring transparency and improve the security of online trading. You can see all details of a digital transaction and find greater opportunities.
Are Cryptocurrencies Regulated by the Central Authority?
Cryptocurrencies are not regulated by any central authority or bank. They are decentralised and because of this, only some countries are protesting the use of cryptos. They are not centralised and therefore it is slightly risky to make an investment in cryptos. Traders should prepare and study for opportunities in the market.
Find the right opportunity and then invest in the market. Traders need to use the research and analytical tools to study the market.
What Are the Uses of Cryptocurrencies?
You must be wondering is it worth buying some cryptocurrencies and how you can use them. Here are the reasons because of which cryptocurrencies are getting more popular. They are used all over the world for different purposes, such as:
The first and the basic use for which cryptocurrencies are developed is to use for making a payment. They have the potential to replace cash or fiat currencies regulated by central authorities. You can use digital currencies to make payments for flights, apps, restaurants, and various others.
Many international companies are accepting payments in cryptocurrencies such as in bitcoin and others from their customers. You can easily transfer the equivalent amount of coins to the vendor for your purchase.
Cryptocurrencies are also a great form of investments as their values are highly volatile. This provides an opportunity for investment in these currencies. Many people have earned a huge return on their investments and expanded their capital.
Individuals should know that there is high volatility in these assets and they should not invest in the market without proper knowledge and studies. The prices of cryptocurrencies face quick changes and therefore, need a proper understanding of the market.
Some Top Performing Digital Currencies
This was started in 2009 after the launch of Bitcoin. After that, many cryptocurrencies developed and listed in the market. They are generating huge returns and the currencies are:
- Bitcoin (BTC)
- Bitcoin Cash (BCH)
- Ethereum (ETH)
- Ripple (XRP)
- Litecoin (LTC)
These are some of the best options if you are looking for an investment in cryptocurrencies. Hence, you should study their project plan as well as other things before investing. And while you choose a broker then also compare a few of them to find the right one.
Tips to Invest in Cryptocurrency
As every individual knows that investments are always risky, but risk brings rewards along with. Therefore, investing in cryptocurrencies with proper strategies and tips are always rewarding. The best tips that you should keep in mind while investing in cryptocurrencies are:
Before even investing one dollar also, you should conduct proper research of the market and the exchange. There are various exchanges to invest in cryptocurrencies, but you need to do some research and find the best one according to your requirement.
Storage of Cryptocurrency
If you are investing in cryptocurrencies then you need secure storage for them. You can store cryptocurrencies in digital wallets so that you can use them or earn returns from their values. There are various types of wallets and each of them has its own benefits.
Diversification is the key to a healthy investment, no matter what the asset is. It is about not investing all your money in a single asset. Try to find some competitive assets related to the assets you are investing in. Compare several assets and find the most profitable option.
Rollercoaster like Volatility
Volatility is the nature of every trading asset you must prepare yourself for a rollercoaster ride of volatility. You can face many ups and downs and mentally you need to be prepared for it. You need to study the price chart and figure out opportunities to make investment and when to exit.
Advantages of Trading Cryptocurrencies
There are various advantages of trading cryptocurrencies that traders should keep in mind while trading. The advantages are as follows:
Cryptocurrency Market Hours
The best part about trading cryptocurrencies is that there is no limit to market hours. A trader can trade in cryptocurrencies at any time. The market is open 24 hours and traders are free to invest and withdraw their money from the market.
You should look for dips at the prices of cryptocurrencies and then time your entry in it so that maximum return can be earned.
Volatility of Market
Due to various investment and market participants the prices of almost all cryptocurrencies face high volatility. Short term players of the market make the market volatile and this can also be treated as an investment opportunity.
Traders can buy currencies at the time of dips and then wait for the price to reach high. In the long run, also the prices of cryptocurrencies can make a new high so you can earn higher returns from the market.
Traders have the opportunity to trade with the use of margins that are also known as leverage. Leverage can be used for trading, as you need to make less investment when you trade with the use of leverage.
Traders just need to deposit a fraction of the whole trade for trading. It means with a small investment you can get a large exposure to the market. In this way, you can earn large profits from the market even with lesser investments.
The speed of conversion of your holdings into cash is known as liquidity. The higher the liquidity the higher the profits will be. The cryptocurrency market is highly liquid which means you can enter and exit the market quickly.
Because of volatility also the market is very liquid, traders are ready to take small gains from the market. So, this brings reliability to the market, traders can quickly enter and exit the market according to their targets.
Ability to go Long and Short
Traders can go long or short as per the situation of the market. You need to find from where you can earn a profit by investing in the market. If the market is moving upward then go long otherwise you can also short a position in the crypto market.
Therefore, study the market to find a trading opportunity in the crypto market. Learn how you can use the long or short positions in your trade. Therefore, both trends of the market will bring profit to your investments.
What Moves Cryptocurrency Markets?
Like the rest of the other markets, the crypto market also moves with the supply and demand of the assets. Traders buy and sell plenty of coins all over the world. Coins such as bitcoins, litecoins and many more face daily price fluctuations.
These currencies are decentralised and they are free from political and economic concerns like fiat or traditional currencies. These are some of the factors that have a direct or indirect impact on the price of the coins:
- Supply – The total number of coins that are available in supply play a huge role in the price of a cryptocurrency.
- Market Capitalisation – The current value of all the coins being circulated in the market is also considered during calculating the price of a coin.
- Press and Media – The opinion press or media is sharing about a cryptocurrency also matters in the pricing of the coin.
- Integration – How easily a cryptocurrency can integrate into the existing market helps in deciding the price of a coin.
- Key Events – Some of the major events of an economy have a direct or indirect impact on the price of a cryptocurrency.
These are the key points that have a direct or indirect impact on the price of cryptocurrencies.
How to Trade Cryptocurrency?
Cryptocurrencies are traded all over the world and as a user, you can also invest your money in it for trading. Traders can generate huge returns if they invest their money in cryptocurrencies. You just need to find the right opportunity for trading.
Time your entry and exit from the market in order to make the maximum profits from your trades. The procedure for trading in cryptocurrency is as follows:
- Learn the fundamentals of the market, so that you can easily understand the terminologies used in the market.
- Study old graphs of the cryptocurrency that you are targeting for trading in the open market. You can make the proper decision with them.
- After that select an online broker that you will use for your day to day trades or investing in the market.
- Open your trading account with the broker by completing all the formalities and add a payment method as well as some funds for trading.
- Then you can pick any of the cryptocurrency listed with the broker for trading and enter a position in the crypto market.
- You can hold your position or square off after getting a short term gain on your holdings available in the market.
In this way, you can start trading in the crypto market and earn higher returns from the rest of the financial markets. Don’t ever make a hurry in entering or exiting any position from the market. and prepare yourself for the high volatility of the market.
Leading Brokers for Trading
There are various types of brokers in the market, but you should find the right broker for yourself. Compare different brokers and choose the right one for trading. The brokers are as follows:
CTRL Investments Limited is the parent company of HFTrading. It is authorised and regulated by the New Zealand Financial Markets Authority (FMA) and the Australian Securities and Investments Commission (ASIC).
There are more than 350 CFD trading assets available with the broker. The trading assets cover forex, cryptocurrencies, commodities, shares, indices and metals. Traders can trade on MetaTrader 4 trading platform. You can also access the WebTrader and a Mobile App for trading.
Traders can trade commission-free with this broker. All you need to pay is swaps and spreads charges, which are also lower as compared to other brokers. There is a wide range of educational material and analytical tools if you trade with this broker.
Dedicated 24/5 customer support is also available with the broker. The highest leverage offered by the broker is 1:500, traders can use it for trading their favourite assets in the open market. Traders can even start trading with a demo trading account in the beginning.
Brokereo is the brokerage firm of Concorde Investments (Cyprus) Ltd. It is authorised and regulated by the Cyprus Securities and Exchange Commission (CySEC). Therefore, it is a regulated and secured online broker.
More than 300 CFD trading instruments are available for trading with the broker. Traders can choose from shares, cryptocurrencies, commodities, indices, metals and forex. Trade with a user-friendly trading platform that is MetaTrader 4, WebTrader, and a Mobile App.
Traders can use educational material and analytical tools that are offered by the broker for free. You can enjoy zero commission trading with the broker. The spreads and swaps are also lower than the broker.
The broker is offering 1:500 trading leverage for trading with your favourite assets. You can begin trading with a demo account and then switch to a live trading account. 24/5 customer support is available for each trader throughout the week.
TradedWell was founded and owned by iTrade Global. It is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC). The trading platform of the broker is encrypted to keep your trading data safe and secure.
More than 150 different types of assets are available for trading with the broker. It includes assets such as forex, CFDs for shares, commodities, indices, and cryptocurrency. Trade on a globally recognised MetaTrader 4, WebTrader and a Mobile App trading platform.
The broker offers commission-free trading along with lower swaps and spreads charges. This means you cut a huge cost trading with this broker. Use analytical tools and educational material to find new trading opportunities.
1:500 is the highest trading leverage offered by the broker. Traders can use it in their day to day trades. The broker offers 24/5 dedicated customer support. You should start with a free demo account and then switch to a live account.
The Bottom Line
Cryptocurrencies are getting more and more attention every day. Every individual is free to trade cryptocurrency if he has funds for trading. All you need is some understanding of the market, a broker and some funds for trading. Make sure that you choose the right broker for trading in the market. Use some reliable sources to gather some market information and then make an entry and exit based on your studies from the market.