Cryptocurrency Trading is the exchange and trading of one cryptocurrency for another. It further includes buying and selling of coins and getting flat money exchanged into cryptocurrency. Cryptocurrency Trading is somewhat similar to Foreign Exchange Trading (Forex) which involves trading of different currencies from all across the globe.
- 24/7 Market: Unlike flat currency market, cryptocurrency market is active 24/7 due to traders from different areas of globe entering the market at different times. This also affects the volume of trade which varies from time to time throughout the day.
- A Volatile Market: Cryptocurrency market is extremely volatile. It is only a matter of minutes before the market can skyrocket or before it falls down. In terms of risk, cryptocurrency is very different from stock or forex trading because it puts your money at high risk. Furthermore, unlike stock or forex trading, cryptocurrency is extremely easy and welcoming for beginners despite the fact that it does not always bring the desired profits to its users.
Beginner’s Guide to Cryptocurrency Trading
- Find a Cryptocurrency Broker: Finding a cryptocurrency broker is not exactly an easy task. There are several cryptocurrency companies with multiple attractive offers present in the market. Before you finalize a cryptocurrency broker for yourself, you need to look into few of their features which include Trust and Regulations, Fees, Cryptocurrency you want to deal into, and Leverage. Few of the well-known cryptocurrency brokers present in the market are Plus500, Iq option, Etoro, XM, and Forex.
- Select your Cryptocurrency: selection of cryptocurrency is an essential step of trading. You need to select the cryptocurrency with the highest potential. While selecting a cryptocurrency for yourself, you should carefully check for the features which include: Infrastructure, Technology, Development, and Growing Popularity. These are the most important features which determine the potential of the particular cryptocurrency. A general rule is a cryptocurrency should meet at least 3 of the mentioned features.
- The Best Approach: Not as a Beginner: One of the most famous investors of all time said, “Be Fearful when others are greedy and greedy when others are fearful”.
- Decide your target sell price: When the price of the currency is too low, that is the time when the traders are most likely to buy the coins of their particular cryptocurrency and when the price goes up, that is when you need to sell these coins. Although you can keep hold of your coins after you have asked yourself if these coins are worth more?
- Factors that affect the price of cryptocurrency: Few of the fundamental elements which affect and drive the price of the cryptocurrency up or low include:
- Government Regulations: After a government makes regulations and announcements regarding certain currencies, it is likely that the cryptocurrency market will react to it which will result in the price going up or most likely down.
- Media Exposure: The chances of the price of a cryptocurrency going up are increased when the media says something positive about the particular cryptocurrency.
- Mainstream acceptance: When famous platforms such as Amazon or maybe eBay announce that from now on they will accept payments in cryptocurrency, the prices will definitely rise.
- Technological changes: New advanced technological changes always have a positive effect on the price of the cryptocurrency
- State of the market: Cryptocurrency market tends to get affected by the changes in other markets. Fall of one market may lead to the rising of the other.
Editor of IMD News