Are you wondering what Cryptocurrency trading is? Rest assured, you have come to the right place and your fear of missing the “Next Bitcoin” will finally end. In order to understand what Cryptocurrency trading is, we have to know what Cryptocurrency is.
Cryptocurrency, also known as Crypto, is a form of digital currency that makes use of encryption algorithms in order to process payments. Unlike traditional currencies, Crypto is decentralised this means that it does not have a regulating authority. Like any other currency, Cryptocurrency can be traded and the popularity of Cryptocurrency trading is ever growing. For some lucky few, it has led to early retirement and great riches. This guide will explain how Cryptocurrency trading works and how to get started.
What Is Cryptocurrency Trading?
Cryptocurrency trading is the buying and selling of digital assets in order to make a profit. This all based on block chain technology, which keeps record of all transactions and ensures transparency.
Pick Your Crypto Broker Or Exchange.
A Crypto broker is a financial intermediary used to exchange different Cryptocurrencies or exchange Cryptocurrency for a fiat currency, such as USD, Euro, GBP, etc. They are the intermediaries needed to exchange your money for Cryptocurrency. Crypto Brokers are ensure safe and legal transactions and protect buyers against scams.
On the other hand, Crypto exchanges are platforms where Crypto traders trade directly with other Crypto traders without the use of a third party. Crypto
exchanges are generally better for dealing with small amounts of money, whereas Crypto brokers are better for dealing with larger amounts.
Fund Your Account.
To start your Cryptocurrency journey you will need capital, as you cannot buy or sell anything without it. So now, you should start to save up where ever you can.
Choose Your Trading Platform.
Trading platform is where the actual buying and selling of Cryptocurrencies happens. Most Crypto broker exchanges have their own trading platforms, which are freely available to anyone who registers.
There are many trading platforms out there, so it’s important to do your research on the benefits and tools that they may have and see which one is ideal for you.
Decide On Which Cryptocurrencies to Trade
When choosing the right Cryptocurrency to trade, there are multiple factors to consider. We will briefly explore a few of them, such as market capitalisation, and use case.
Market capitalisation is the total value of the of the Cryptocurrency. It’s calculated by multiplying the number of Cryptocoins in circulation by the current value of the Cryptocoin. In general, the smaller the market cap, the more volatile the price will be.
Use case is how the Cryptocoin will be used. Cryptocoins with a strong use case and demand for their services are more likely to increase in value overtime. People, businesses, and organisations tend to use and acquire coins like this, resulting in an increase in value. For example, if a there’s new Cryptocoin created with the intention of solving a problem, it would be a good idea to invest in it.
Create A Trading Strategy.
A trading strategy, a plan that is followed to execute a trade (buy or sell). These plans have a criteria for what trades to make, how to make them, and how much capital you should use. A well-designed trading plan is essential when dealing with Cryptocurrencies
You are now ready to be a Crypto trader.
This has been a brief overview of how Cryptocurrency trading works. You know have a basic idea of how people get started and the processes involved. I hope that the confusion you was cleared up and you understand what Cryptocurrency trading is.
Disclaimer: This content is informational and should not be considered as financial advice. The views expressed in this article may include the author’s personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.