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What is Cryptocurrency Trading? | It’s Strategy & Platform

What is Cryptocurrency Trading? | It’s Strategy & Platform

Table of Content

What is Cryptocurrency?

Since the inception of cryptocurrency in 2009, a large number of financial institutions and individuals are getting involved in cryptocurrency trading.

A cryptocurrency is a virtual or digital currency, that works as an exchange medium to buy or sell goods or services. Here the ownership records are stored in a public ledger known as blockchain.

Hence, it is highly important for traders and cryptocurrency enthusiasts to know everything about its trading in detail.

So, let’s begin to understand it in Detail.

What is Cryptocurrency Trading?

As the term suggests, Cryptocurrency Trading is the act of buying and selling of cryptocurrencies through the exchange platforms like Coinbase, Binance, etc. or the act of trading through CFD trading account by speculating cryptocurrency price movements.

Let’s take a ride down to each cryptocurrency trading platforms.

Buying and Selling through Exchange

While buying and selling cryptocurrencies through the exchange, you need to have the ownership of crypto-currencies by buying them.

Here, you are required to:

  • Create an exchange account,
  • Open a position by putting the full value of the asset,
  • Store crypto-currency tokens in your wallet and you’re ready to trade.

This trading method carries some benefits.

The Benefits of Trading in Cryptocurrency through Exchange:

  • The cryptocurrency exchange offers you a two-factor authentication, to secure your passwords through captcha measures, etc.
  • You can get rid of hackers by peer-to-peer money transfer protocol of exchange platforms.
  • Your transaction fee is minimal as it terminates the involvement of intermediaries.
  • The exchange platforms allow you to know your customers and thus prevent money theft or other illegal activities.

Since you have known, what cryptocurrency trading is and how does trading through exchange platforms work?

It is also equally important to have the idea of which exchange platform to trade your cryptocurrency in.

Well, here is your detailed answer:

Where to Trade Cryptocurrency?

Choosing the most appropriate cryptocurrency exchange for your trade required a great deal of work and analysis.

However, you don’t need to worry much about that, as we have brought to you the detailed list of 3 best cryptocurrency exchanges to help you trade better.

  • Coinbase:It is one of the safest and most popular cryptocurrency exchange platforms in the world. When it comes to security, it has an excellent track record system.
  • Binance: Founded by a Chinese developer Changpeng “CZ” Zhao, Binance is the choice of an exchange for coin-to-coin trading in cryptocurrency. It does not deal with Fiat currencies at all, which makes it a strict crypto-based exchange.
  • FTX.com: It is a new exchange platform, developed by a cryptocurrency trading firm named Almeda Research. It has created a series of products like leverage tokens (Ethereum based), indexes for trading on prep contracts, BTC Hashrate Futures which are futures that have helped improve the mining difficulty of bitcoins.

Now, moving on to another trading method.

CFD (Contract for Difference)Trading

The CFD (Contract for Difference) Trading can help you speculate the movement of cryptocurrency price. It allows you to trade without having ownership of the currencies.

It can be done basically in two types of cryptocurrency trading:

  • Long Term trading can be done if you speculate a rise in cryptocurrency value.
  • Short Term Trading, if a fall in currency prices is speculated

You just need to deposit a small amount (called margin) for the exposure to the market and you’re ready to trade this way. This is called the leverage trading of CFD.

Now, talking about its plus points and How does Trading in benefits through CFD Trading Works?

The Benefits of CFD Cryptocurrency Trading:

  • You can trade in different cryptocurrencies, without having to actually buy them.
  • Through leverage trading, you can know the market better and gain exponentially as your trading power gets boosted due to it.
  • You can have access to multiple necessary resources of information for free, like daily cryptocurrency trading analysis, market news, update, etc.

After going through the entire article by now, you can easily decide on the type of method you wish to follow. This will help you grow your trading benefits.

Cryptocurrency Trading for Beginners

Are you a beginner and wish to get involved in or know about cryptocurrency trading?

Well then, you’re are just a scroll away!

Since the cryptocurrencies are gaining popularity, it is the right time for beginners to trade in it. Here is the guide that can help you to trade in cryptocurrencies in an easy way.

  • To start with, you first need an exchange platform and a cryptocurrency wallet.
  • Then your account verification is done by the exchange you choose which might take a few days’ time. After which you need to fund your account.
  • And finally, once your account is verified and funded, you can buy and sell cryptocurrencies.

Thus, for cryptocurrency trading, as a beginner, you need:

  • • A Cryptocurrency Wallet, which is a place to securely store your digital currencies. Like those offered by exchange platforms or others like Trezor, atomic wallets, etc.
  • A Cryptocurrency Exchange, to start trading on. Like Coinbase, Binance, etc.

Key-points

So, to sum up, this entire article has helped you in knowing:

  • What is Cryptocurrency?
  • What is Cryptocurrency Trading?
  • How does Cryptocurrency Trading through Exchange Work?
  • How does Cryptocurrency Trading through CFD Work?
  • How is Cryptocurrency Trading for Beginners done?
Some Useful Cryptocurrency Trading Tips

Once you decide to go for cryptocurrency trading, paying attention to certain ground rules can help you do better.

Here are 5 Useful Tips for Effective Cryptocurrency Trading:

  • Stay Informed. The more informed you are about the cryptocurrencies, exchanges, and market, the more likely you are to maximize your profits while trading.
  • You must be updated with the relevant news before trading in cryptocurrencies.
  • Analyze the prize chart and trend thoroughly to identify the pattern.
  • Study the metrics carefully and analyze the number of wallets over the active wallets as well as the current trending volume. This can help you make right and accurate predictions.
  • Be aware of taxes and related rules before trading on cryptocurrencies. Since these currencies are new, many countries have come up with rules and taxes to regulate these.

Frequently Asked Questions

How to Start Cryptocurrency Trading?

To start trading through an exchange, you need to first pick an exchange platform, choose a wallet, fund your account. You are ready to trade now.

Is Cryptocurrency Trading Profitable?

Although trading can help you make huge profits, it is risky at the same time, due to its volatile nature.

How does Cryptocurrency Trading Work?

Cryptocurrency trading involves speculation of price movements, either by buying or selling through exchange or by the CFD trading account.

How to Join Cryptocurrency Trading?

To join trading, you need to have a cryptocurrency wallet, an exchange platform, and funds in your wallet.

How Safe is Cryptocurrency Trading?

The trading risks depend on how well you have acquired knowledge and prize speculation of the cryptocurrency market.

Where to Learn Cryptocurrency Trading?

The best way to cryptocurrency trading learning is to try it once as a beginner on your own with the steps mentioned above in the article.

References

https://www.sciencedirect.com/science/article/abs/pii/S1544612317306992

https://www.sciencedirect.com/science/article/abs/pii/S1544612318303519

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3131702

https://www.mdpi.com/1911-8074/12/2/67

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