What is cryptocurrency trading?
First, let’s start by clarifying what cryptocurrency trading actually means. Namely, it is more than just buying and selling various cryptocurrencies on the global market.
Rather, trading with cryptocurrency refers to the practice of using a trading account to speculate on the price developments of cryptocurrencies. It also refers to the practice of buying and selling a variety of coins of cryptocurrencies on exchanges in an attempt to make a profit. Trading cryptocurrencies with CFDs
CFDs, or contracts for difference, are an extremely popular form of derivatives trading that has been used in equity and bond markets for decades. As derivatives, they do not actually refer to the asset value (e.B. the stock or the Bitcoin) itself. Rather, it is a contract between a buyer and seller that allows the trader to speculate on the price movement of an asset, in this case a cryptocurrency.
By going “long”, one assumes that a certain cryptocurrency gains in value and one bets on this result. If, on the other hand, you go “short”, you speculate as a trader that said cryptocurrency will lose value in a certain period of time. To trade CFDs for cryptocurrency, leverage is required, which is basically a deposit (called margin). The margin amount determines your profits or losses when the CFD transaction is carried out. Buy and sell cryptocurrencies through an exchange
Unlike CFDs, buying and selling cryptocurrencies through a licensed exchange consists only of actually buying and selling the coins in question. You get ownership through the cryptocurrency you acquired on the exchange and therefore you own it in full. Once you have purchased your cryptocurrencies on an exchange, it can be added to your cyber wallet.
From there, you can wait for the currency to increase in value to sell it on the stock exchange at a later date. But of course, you can also stick to it as a long-term investment. To successfully trade cryptocurrencies in this way, you need to keep a close eye on the markets and gain a deep understanding of the factors behind price fluctuations so that you should have an idea of when to buy or sell. Examples of cryptocurrencies
There are many examples of popular cryptocurrencies that are worth trading on the global market as CFDs or in any other form. We’ll start with an overview of the most sought-after and most traded currencies currently on the market. Bitcoin
Bitcoin is by far the most traded and valuable cryptocurrency in the world. In recent years, Bitcoin has made headlines with its ups and downs and is traded on exchanges worldwide.
Due to the way Bitcoins are composed – using blockchain – there is a finite number of them: 21 million, to be exact.
If all of them are “mined” from the system, there are no more bitcoins. To make things even more interesting, the Bitcoin value goes through an automatic “halving” (i.e. a halving) every four years when a certain number of blocks have been mined. This finiteness makes Bitcoin highly volatile and is therefore extremely popular among trades that operate with high stakes. Ethereum
Ethereum is the native cryptocurrency of the Ethereum platform, which uses blockchain technology to create secure smart contracts. Similar to Bitcoin, it is a decentralized cryptocurrency and is an extremely popular asset in markets around the world.
Ethereum is generally considered less volatile than Bitcoin and is therefore preferred by traders who plan for the long term. While it has a value of a real currency, the greatest value in the sense of an asset comes from the fact that it is a decentralized supercomputer that lends resources to app developers for years to come, thus driving up its value. Ripple
Ripple (also called XRP) is an exchange network created by a company called Ripple Labs that uses its own native currency to process transactions. Basically, it processes the worldwide transactions of countless assets using its own native currency XRP to keep transaction costs low.
Ripple is one of the cheaper crypto currencies. In general, it is not considered particularly volatile. This is mainly due to the fact that there is currently a huge range of Ripple Colins available – 43,708,646,822 to be exact. It is an emerging cryptocurrency that is likely to become increasingly popular among traders in the coming years. Litecoin
Litecoin (LTC) is an offshoot to Bitcoin that uses a different blockchain. It is faster, easier, cheaper and can handle a larger number of transactions. In the past, Litecoin was referred to as silver in comparison and Bitcoin as gold.
Litecoin may not be as valuable, but it is nonetheless a volatile asset worth owning, selling and trading. Like other currencies mentioned here, Litecoin is a decentralized electronic currency that can be easily purchased from exchanges and stored in a cyberwallet. It is volatile, high quality and ideal for dedicated crypto traders.
Before you set up your crypto wallet and start trading, it’s important to learn more about how cryptocurrency trading actually works. While there are some similarities with trading assets like stocks, bonds, and gold, a lot of things are also unique.
First of all, you should know that before you can start trading, there are some indispensable things you need. In order to actually store the cryptocurrency you have acquired, you need a wallet for cryptocurrencies, from which you can choose from a range. Virtually every crypto exchange in the world offers its own wallet that can be used.
In addition to the wallet, you also have to create an account and join a crypto exchange. Given the complex legal arrangements regarding cryptocurrencies in general, a somewhat lengthy verification process often has to be undertaken. This is done before you get access to an exchange, and often takes at least several days. Once you are verified, you can start buying and selling cryptocurrencies at your leisure. How to Sell Cryptocurrency
If you own cryptocurrencies, you can usually sell them quickly and easily, according to their current market value, on the exchange you are using. Simply open your cyber wallet and select the currency you want to sell.
Often there is a clearly recognizable “sell” button that allows you to exchange this cryptocurrency for a fiat currency such as .B euros. These euros will then be added to your wallet and you can transfer that money directly to your bank account. However, there are other ways to sell bitcoins as well as other currencies if you don’t want to use a decentralized exchange.
You can bypass the middleman and sell your cryptocurrency directly to another person in exchange for money. However, this is associated with your own considerable risks and is not recommended. Alternatively, you can also attend a crypto meeting or conference in your area to find people who are looking for what you’re selling. How to Buy Cryptocurrency
If you want to buy cryptocurrencies, you must first make sure that you have a cyber wallet and are registered with a reputable cryptocurrency exchange. Once that’s done, you can simply purchase the cryptocurrencies of your choice at the current market value through online exchanges.
You can usually choose from a wide range of cryptocurrencies to complete the transaction. Some exchanges also allow you to buy one cryptocurrency with another.
These transactions are usually instantaneous, so the acquired cryptocurrency appears instantly in your cyber wallet. Once you have bought any cryptocurrency on an exchange, it becomes your property. Cryptocurrency Terms You Need to Understand
