In the last couple of years, the term cryptocurrency has become quite common and more and more people are expressing an interest in it. Put simply, encrypted decentralized digital currencies that are transferred between people are referred to as cryptocurrencies. These are virtual currencies since they are not tangible and can only be found in an electronic form. Crypto is a digital asset that remains and exists only as data. People can send money just like they send an email when they use cryptocurrencies and they have no middlemen, minimal fees and reduced transaction times as compared to the bank. The joint bookkeeping process is known as ‘Blockchain’, which is public and is distributed across the network to all those who have the same cryptocurrency.
For instance, anyone who owns some Bitcoin will have a copy of the ledger and all transactions, which builds a community of trust. Each cryptocurrency has a complex digital code, which makes it easily identifiable and programmable. Bitcoin is the first cryptocurrency that was introduced in the market and gained immense popularity. However, these days you can find a range of altcoins that are also taking up market share gradually and some of these include Litecoin, Ethereum, EOS, Ripple, Bitcoin Cash, Bitcoin Gold, etc. You can log on to TradeFred, for instance.
How to Trade Cryptocurrencies
The initial way of crypto trading required traders to set up a cryptocurrency wallet, buy some crypto in exchange for tangible currency and then exchange this cryptocurrency on a cryptocurrency exchange for the altcoins you prefer. But, these digital wallets that existed on the exchange website were not very secure and were often targeted by hackers. Nonetheless, things have changed considerably since then and now traders can invest in third-party cryptocurrency wallet and also sign up for exchanges that have implemented strong SSL encryption to ensure your transactions are not compromised in any way. Furthermore, crypto exchanges are now offering traders the opportunity of crypto trading via CFDs, which is a revolutionary option.
Factors to Consider when Trading Cryptocurrencies
One thing to bear in mind about cryptocurrencies is that their market changes rapidly and new coins appear and disappear rather frequently. Some people are drawn towards these cryptocurrencies because they can be used for protecting yourself against the devaluation of your national currency. The applications of cryptocurrencies are also increasing day by day as a number of ecommerce stores have begun to accept them as a form of payment and people have chosen to use them more widely as they have received approval of some governments.
Previously, crypto such as Bitcoin was only used for suspicious activities, but now legitimate businesses are recognizing its value. More and more businesses have started accepting it as a form of payment, which indicates that cryptocurrencies can change the entire financial market. They can draw away control of banks, other financial institutions and even governments. As far as prices of crypto are concerned, there are a number of factors that can have an impact on them. Similar to Forex, the higher the demand of a particular crypto, the higher its price will be.
Apart from that, media reports can also cause the price of cryptocurrencies to move up and down. Nonetheless, an important fact that traders should remember is that the market is on the rise and they need to decide what crypto they wish to invest in after weighing the pros and cons of each.
Crypto Trading Online on an Exchange
There are a horde of crypto exchanges that you can find these days and each of them offer you different features that can help you decide what exchange you go for. For instance, some people look for an exchange that offers them the option of signing up for a demo account. Similarly, others want an exchange that allows them to buy cryptocurrency with credit card. The fees charged by exchanges also tend to vary and you can select one that offers you the most reasonable rates. The security of a crypto exchange is also important as you don’t want your personal information to be compromised or your crypto to be stolen, if you are storing it with the exchange.
General Tips for Crypto Trading Online
Once you have selected an exchange, you can get started with your crypto trading. In some ways, it may be quite similar to forex or stock trading, but there are some precautions you need to keep in mind as it is still a relatively new market. You should remember the rule of buying low and selling high and it is essential to be patient in order to do so. Furthermore, it is vital for traders to be cautious and not invest all their money in one go, especially when they don’t have any experience in the crypto market.
Cryptocurrencies are quite volatile and there is no clear cut regulation for this investment vehicle. Therefore, there is some degree of uncertainty associated with them. Hence, it is not wise to put all your eggs in one basket. You can spread out your investment and buy different altcoins to ensure your portfolio is diversified. Likewise, you should not pay heed to rumors or reports unless they are from a credible source and even then, it is better to do your own research. This will help you understand what cryptocurrencies may be a sound investment.
You should also familiarize yourself with fundamental analysis and technical analysis because they can have an impact on your decision. Technical analysis refers to the research that you do with every other financial asset whereas fundamental analysis is aimed at measuring the susceptibility of the crypto market and how it can be manipulated by industry leaders to their advantage. Last, but definitely not the least, you should also come up with an exit strategy in order to ensure your losses don’t get too high. Know when it is time to leave the market and follow through.
Follow this guide and crypto trading online will become easier and will give you the results you desire.