Cryptocurrency Trading

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Cryptocurrency Trading
Cryptocurrency Trading

With the recent boom in the crypto industry, a lot of beginners have been trying to get into cryptocurrency trading, but they won’t get their hands on many resources they are unable to do so.

Cryptocurrency trading for beginners is what today we are discussing. It involves playing the market on price movements with the help of a CFD trading account or trading the underlying coin via an exchange. If you are looking to get into this crypto market, then the first thing you need to decide that what you want, if you wish to buy digital assets, or speculate on their prices. Take a look at some of the basic fundamentals of trading and discover how you can be a pro at this.

What is crypto trading?

Let’s start with the basics. It is the act of speculating about cryptocurrency price movement via a CFD trading account or buy/sell of prime coins on an exchange.

CFD Trading

CFD trading is a form of derivative that helps you to gamble on the price of cryptocurrencies without buying them. Going long or selling short totally depends upon you. If you think your cryptocurrency will rise, you can buy (go long), and if you don’t, you can sell (go short).

Both are invested products, which means you only need a small fee (known as margin) to gain maximum advantage over the underlying market. Your profit and loss depend on the full size of your position, so your leveraged goods will magnify both.

Buy/Sell using an exchange

You’re simply purchasing the coins while you purchase cryptocurrency on an exchange. To open a spot, you’ll need to open an exchange account, deposit the full value of the asset, and keep the cryptocurrency tokens in your own wallet until you’re ready to sell.

Exchanges have their own steep learning curve because you’ll need to get your head around the technology and figure out how to interpret the data. Many exchanges also have limitations on the amount of money you can deposit, and maintaining an account can be costly. Also, there are several trading platforms available on the web but make sure you use the best cryptocurrency trading platform so that you get the best values for your bucks.

Understanding the working of Markets

Cryptocurrency markets are localized, meaning they are not issued or backed by a central body like a government. Instead, they’re distributed around a computing network. Cryptocurrencies, on the other hand, can be purchased and sold on exchanges and held in ‘wallets.’

Cryptocurrencies, unlike standard currencies, only function as a digital cryptographic document of ownership held on a database. Whenever cryptocurrency is traded between two users, The transaction isn’t considered complete before it’s checked and applied to the blockchain, which is done by a method known as mining. This is can also be called the process for creating new cryptocurrency tokens.

What is cryptocurrency mining?

Cryptocurrency mining is the process of tallying recent cryptocurrency transactions and adding new blocks to the blockchain. Mining computers choose the pending transactions and check the sender account for sufficient funds.  Once everything is good, they initiate the transaction and then compile the valid transactions into a new block.  Any user in the world with a computer having a 6GB of GPU can mine cryptocurrency. Mining has become such an easy way to earn that the latest RTX 3000 series  GPUs from Nvidia are in shortage, and company are thinking to reduce the capability of mining on their GPUs.

The backbone of cryptocurrency market

These markets work according to supply and demand. We can say that the biggest pro here is that these markets are decentralized, so the ups and downs here won’t affect the traditional currencies in any economic or political way.

Following are the factors which can have a significant impact on their prices:

  • Supply: The total number of coins with the rate at which they are created, destroyed, or lost.
  • Market Capitalization: The total value of all coins in circulation and how people consider this to be changing.
  • Press: How cryptocurrency is portrayed in the media and the coverage it is getting.
  • Integration: The ease with which blockchain can be integrated into current infrastructures, such as payment networks for e-commerce.
  • Key Events: All the major events like regulatory updates, security breaches, and economic setbacks.

Conclusion

So, you have reached the end of this digital guide on cryptocurrency trading. Now having all the information in your mind, you’re ready to trade on the exchanges. Also, these days, you can trade crypto using your smartphone with some best cryptocurrency trading apps like Binance, WazirX, and CoinSwitch. I’ve listed some FAQs below which will clear most of your doubts, and if you still have one, comment down, and it will be solved as soon as possible.

FAQs (Frequently Asked Questions)

How to start cryptocurrency trading?

To start crypto trading, firstly you need to create a cryptocurrency brokerage account. Currently, the best crypto brokerages on the markets are Coinbase, Gemini, and eToro so you can use one of them. After creating funds for your account. I suggest you fund via wire transfer as it is the cheapest option available. Once you’re done with the basics, pick crypto, choose a strategy, and then you are good to trade.

Currently, in India, the crypto market is booming. The trading here is not illegal. Anyone can buy, sell and trade them. It is just that we don’t have proper rules and regulations. We do not have any regulatory framework to govern the crypto functioning for now.

Is cryptocurrency trading profitable?

An investment having low risk and good profit is what we call a good investment. Cryptocurrency may not seem profitable if you look for the short term, but it’s much more in the long term. Every investment has some risks, and cryptos are none other, but the risk here can be easily diminished through research and by diversifying your portfolio.

What is day trading cryptocurrency?

Day Trading Cryptocurrency is just like day trading in stock trading. The day traders use intraday trading strategies to try and earn some profit from market volatility, and they won’t hold the position for more than a day. It is a popular and commonly used trading strategy nowadays.

How safe is cryptocurrency trading?

As I’ve already told you, each investment has somewhat risks, and so does crypto. It depends upon you, how you buy, sell, or trade. How much you are investing and why you’re investing in that particular thing. Make sure to research well before trading your cryptos, as this will help a lot in decreasing the risk.

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