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UncategorizedTrading Cryptocurrency

Trading Cryptocurrency

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Photo by Nicholas Cappello on Unsplash

Crypto trading means taking a financial stand on the price direction of a distinctive cryptocurrency against the dollar or other cryptocurrencies. Most crypto traders use Contracts for Difference (CFDs) to trade cryptocurrencies as they can take short or long positions, use leverage, and are flexible. If you wish to know more about crypto trading, read on.

The Growth of Cryptocurrency Trading

Since the debut of Bitcoin, crypto trading has become increasingly popular. Numerous platforms like Kanga Exchange have made it possible for people to trade cryptocurrencies. Cryptocurrencies are digital values made by blockchain or peer-to-peer technology. Cryptocurrencies use cryptography for security to protect users’ data.

Cryptocurrencies differ from other currency forms issued by local governments as they are not tangible. They are made from data bits and do not have a central authority like central banks that regulate or allocate them to an economy.

Since there are not issued by local authorities and government bodies, they are not considered legal tender. Despite this, they have a strong influence and the ability to change the financial landscape. They have also released new investment opportunities for traders to get into.

Types of Cryptocurrencies

In the last few years, numerous cryptocurrencies have come up. However, only a few cryptocurrencies have captured financial investors’ attention. Among the cryptocurrencies, the most popular crypto is Bitcoin. Bitcoin was the first cryptocurrency, and it branched out to two other virtual coins. Other popular cryptocurrencies among traders include Litecoin, Dogecoin, and Ethereum.

Cryptocurrencies can be divided into different groups. Some offer an alternative to fiat currencies like Bitcoin and Litecoin. However, other cryptocurrencies like Ethereum can only be used in forums that use Ethereum smart contracts platforms. This makes it more of a utility token than a fiat currency. Here are the types of cryptocurrencies available;

Bitcoin

Bitcoin was the first cryptocurrency, and it was started in 2008. It was the first to adopt blockchain technology and has become one of the most valuable cryptocurrencies in the crypto world.

Bitcoin Cash

This is a branch of Bitcoin and was started in August 2017. It was created due to a hard fork that occurred with the original Bitcoin. It was designed to allow larger blocks on the first blockchain, Bitcoin, to make faster transactions.

Bitcoin Cash ABC

This is another hard fork result of Bitcoin. It was started in November 2018 and is an upgrade of the Bitcoin cash blockchain. Bitcoin Cash Adjustable Blocksize Cap is one of the largest software clients for Bitcoin. It was designed to allow non-cash transactions like oracle prediction services and non-cash transactions. The developers wanted to replace canonical money transfers with topological transactions.

Crypto 10 Index

This cryptocurrency was designed to provide a tradable benchmark for cryptocurrency asset value. It featured the ten most extensive, most flexible tokens and cryptocurrencies with an average price of other significant trades.

Ethereum

Ethereum was designed to process transfers faster. The blockchain network was created on the original Blockchain basis of Bitcoin. It was designed in 2013 by Vitalik Buterin.

Litecoin

Litecoin was introduced in 2011 to enhance cross-border transactions. It offers faster verification of transfers than Bitcoin.

Crypto Trading Fees

There are two types of fees you will pay when trading crypto. They include withdrawal fees and trading fees.

Trading Fees

Trading fees are applied as flat percentages of the amount of the crypto value. They can also be charged as an exchange between orders that are makers or takers, charging different rates accordingly.

Makers add liquidity to a transaction and do not fulfill standing orders. Takers reduce liquidity from transactions by completing orders while waiting for a trade. Maker fees are often lower than taker fees, but it depends on the transaction.

When picking an exchange with lower costs, it can be counterproductive to dwell on the ins and outs of the fees. You cannot choose whether the order is a taker or maker. You are better off holding an exchange’s initial crypto value.

Withdrawal Fees

Most exchanges require payment to withdraw value from their forums. This can be a problem if you instead transfer your crypto to a secure third-party wallet. The fees vary by the cryptocurrency used.

How To Trade Crypto

If you wish to trade cryptocurrencies, follow these easy steps to trade cryptocurrency.

1.      Open a Cryptocurrency Brokerage Account

If you already own cryptocurrency, you can skip this step. However, if you do not have a cryptocurrency, you have to open an account with a crypto brokerage. The best crypto brokerages include Kanga Exchange, Coinbase, and Gemini. They have a simple user interface and numerous altcoins to choose from.

When signing up for an account, you have to provide personal identification data, just like opening an account with stock trading. Some of the details that will be required include email address, date of birth, social security number, and physical address.

2.      Fund The Account

As soon as you open your account, you will have to fund it. You can do this by connecting it to your bank account. Most crypto brokerages provide payment options via wire transfers and debit cards. Wire transfer is often the cheapest way to fund the account as it is free on Gemini and Coinbase.

3.      Choose Crypto to Invest In

The most active crypto investors put their funds into Bitcoin and Ethereum. They are also easier to predict than other smaller cryptos, and trading them with technical indicators is more straightforward.

Most crypto traders put some of their funds into smaller cryptos. Even though they are riskier than more prominent altcoins, they often have higher upside potential. The smaller cryptos have had 100% profit within a few months, making them attractive for risk-takers.

4.      Choose A Trading Strategy

Cryptocurrencies have numerous trading indicators. You have multiple alternatives to choose from, but you must consider several factors when trading cryptocurrency.

If you have never invested in cryptocurrencies, consider taking some trading courses. Good examples of forums that teach about cryptocurrency trading are Asia Forex Mentor, The One Core Program, and many more.

If you are used to trading, you can use several strategies to trade crypto. The same technique used for stock trading can be used with cryptocurrencies. One of the best strategies is Elliot Wave which focuses on the market sentiment.

5.      Try Out Automated Trading

One of the best crypto trading strategies is automated crypto trading. Trading bits use a particular strategy to give you the best out of the crypto investment. Automated offers conservative, neutral, and aggressive options where you can make money quickly and diversify your portfolio.

6.      Store The Cryptocurrency

When trading actively on cryptocurrency, you have to preserve value to access them. If you buy crypto to store for the mid or long-term, consider getting a cryptocurrency wallet.

They often come as software wallets, and they offer secure means of storing value. However, hardware wallets also provide excellent security because they hold your weight in a physical device offline.

Ledger is a great hardware wallet, a brand most investors entrust their crypto assets on. When looking for software wallets, you can find numerous Android, Google Chrome, and Android options. A good example is ZenGo which uses a 3-factor authentication to protect digital value. ZenGo also lets you buy, sell and get interest on digital assets directly from the software wallet.

Conclusion

Crypto trading is often seen as a higher risk than a stock trade. However, this highly depends on the cryptocurrency you are trading and how to deal it. Before trading cryptocurrency, ensure you equip yourself with the proper know-how of crypto trading.

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