Crypto Trading for Beginners

Crypto Trading for Beginners

Today, crypto trading is the new avenue people take to invest or trade in the financial market. It involves trading on price movements based on financial derivative products, or buying and selling the coin itself via a cryptocurrency exchange such as Binance. With metals such as silver and gold losing their allure, many investors believe cryptocurrencies as an alternative to secure their investment.

Cryptocurrencies are digital currencies secured by cryptography, which makes it nearly impossible to create counterfeit copies, or to “double-spend” the coin. Most cryptocurrencies are based on blockchain, a type of distributed ledger technology that eliminates the need for an intermediary to process , validate, or authenticate transactions.

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To start your crypto trading journey, you need to have an online digital wallet, as this allows you to keep any cryptocurrency you buy, either from an online platform or from someone else. To begin trading, you will need to create an account on an exchange platform, a form of marketplace where people can buy and sell digital tokens.

How to Trade Cryptocurrencies

When you want to trade cryptocurrencies, there are two main options available – trade a contract for difference (CFD) of a coin or buy cryptocurrencies.

By buying a cryptocurrency, you may be entitled to the benefit that the token bestows. For example, you may be able to stake the tokens and receive periodic rewards, or spend it to perform certain functions on its blockchain. For example, Binance Coin can be used within the Binance Exchange Ecosystem to receive discounts when paying for trading fees. Last but not least, you can also speculate on the price of a cryptocurrency. The familiar adage of “buy low, sell high” applies if you are looking to do so.

Alternatively, you can take the CFD route to trading cryptocurrencies. Here, the broker pays you the difference in the asset's value between two dates - the contract's opening and closing date. You can hold a short position (predicting that the asset's price will fall) or take a long position (speculating a price rise).

It can be confusing for a new trader when you hear about buying cryptocurrencies and trading CFDs on cryptocurrencies. The difference between these two is that buying cryptocurrencies means storing them in a wallet you own, while, trading CFDs on cryptocurrency means you hold these digital assets as a position in your trading account. In this case, you are merely buying and selling a derivative contract.

Where to Trade Cryptocurrencies

Unlike the stock exchange, most cryptocurrency exchanges run 24/7, which means you can trade them at any time of the day. Unlike commodities and stocks, you don’t trade the cryptocurrency market on a regulated exchange. Instead, you are able to trade certain tokens on a decentralized exchange platform through P2P measures. Today, the number of crypto exchanges is on the rise and offers countless possibilities to traders. Popular crypto exchanges platform includes Coinbase Pro, Binance, Huobi, Bitfinex etc.

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Today, all eyes are on cryptocurrency after the surge in Bitcoin and other cryptocurrencies. The market has seen an influx of new traders looking for opportunities to make returns. Cryptocurrency trading offers different options when compared to our traditional fiat exchanges. While these new traders tend to take advantage of the price movement, not everyone will succeed.

Therefore, to succeed in crypto trading, you will have to do thorough research on the coin you want to trade, look for a suitable exchange, and find relevant tools that will enable you to analyze the market. However, if that is time-consuming for you, you can decide to take the shortcut of trading by relying on signals.

Finally, remember the cryptocurrency market is an unregulated market with a high degree of risk. Prices are highly volatile, so make sure you fully understand how to trade before you begin.

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