Trading in cryptocurrency is daunting to both seasoned traders and beginners. If you want to trade in cryptos, you have to learn more about it to help you make an informed decision.
One question that many beginners ask is whether they can make money trading in cryptos. Of course, it's possible to make money. But that doesn't mean trading in cryptos if free of risks. Sometimes you may lose your investment. You have to play your cards well to make money trading cryptos. If you want to trade cryptos, read on.
Methods Of Trading Cryptocurrency
There are two methods of trading cryptos: speculating on crypto prices using contracts for differences (CFDs) or buying and holding the cryptos, hoping that their values would increase.
1. Trading Cryptos Using A Contract For Differences (CFDs)
Contract for differences (CFDs) is essentially a contract in which the traders agree to exchange cryptocurrency price differences from when they opened a position to when they closed the position. Using CFDs means you won't have to own the cryptos; you only rely on the price differences to make money. To be successful in this method, you must predict crypto price movements.
To make money using this method, you have to open a position and then wait for price changes. If the prices increase, you'll earn. If not, you'll lose. The converse is true if you open a short position.
2. Buying And Holding Cryptocurrencies
Buying and holding cryptos is an easier way of making money using cryptocurrencies. You can identify a reliable crypto exchange, buy some cryptocurrency like bitcoin then keep them in your wallet for some time. The difference between this method and the CFD method is that you'll own the Bitcoin. You'll hold the bitcoin until the price increases, and when you are satisfied with the increment, you exchange bitcoin for cash using crypto trading platforms like Cryptex, which supports cash transactions in 20 countries.
Before you can buy cryptocurrency, you'll have to open a crypto wallet, a special account that you can use to trade, buy, or sell bitcoin. The problem with this method is that it may take too long for prices to rise significantly, and in an unfortunate event, the prices may go down. If that happens, you can lose your investment.
Learn What The Cryptocurrency Market Is All About
The crypto market doesn't operate like other financial markets. That's why you need to learn more about it before investing in it. Cryptocurrencies are digital currencies not controlled by banks or governments because they are decentralized. This means these currencies do not operate on a central server but rather a network of computers that enable peer-to-peer transactions.
In addition, all the transactions are supported by blockchain technology (a digital shared ledger of data), which ensures safety and security.
Cryptocurrency prices are volatile, so you need to keep checking how they move. You can check through news, blockchain forks, ICOs, or friends. If you can do all these yourself, you can trade crypto through a broker.
Choose A Good Crypto Trading Platform
Trading crypto through a broker is the fastest and smartest route to trade crypto CFDs. The first step is choosing a reliable trading platform, then opening a trading account. You'll find many educational and trading tools from the platform to get you started.
In addition, some platforms have demo accounts you can use to practice before graduating to a live account. Most trading accounts also have excellent customer support that you can utilize if you aren't sure about any issue.
Conclusion
Trading in cryptocurrencies is straightforward. You can open an account and start trading as soon as the account is approved. You should start small and increase the amount as you learn new tricks. Above all, approach this form of investment with an open mind - you can either gain or lose.