How to Trade in Cryptocurrency? – Process, Risks, Steps, Trading Terms & more
In this article, you will learn everything about how to trade in Cryptocurrency.
After learning about Cryptocurrency you must be planning to trade in Cryptocurrency. Well, before you start trading, you need to learn some basics on how to trade crypto currency.
There are no second thoughts to it, but investors do find the cryptocurrency market attractive. But you also need to know that success doesn’t happen overnight.
Cryptocurrency Trading is both Risky & Rewarding
On a serious note, Cryptocurrency trading is a little risky business. No doubt some people earn a lot of money through it while some people lose a lot.
Thanks to the stunning technological developments that people can now work online and make money. It is all possible due to Blockchain technology with Cryptocurrency.
One of the most significant parts of remote earning is Cryptocurrency trading. Cryptocurrency trading is prominent among people who are willing to invest a considerable amount to make a substantial profit.
One of the primary sources of earning profit from Cryptocurrency is cryptocurrency trading.
It is a kind of online trading, and it is similar to trading in stocks, commodities, and currencies.
The main agenda here is to buy when the price is low and sell when the price shoots up.
One of the main differences here is that the volatility is higher as compared to other trading platforms.
When it comes to forex trading, people need to wait for a lot of time to earn a significant amount of profit.
But in reality, traders, especially the ones who are new to the trade, wish to earn a considerable amount of profit in starting only.
In the past few months, cryptocurrency trading has boomed. Additionally, high volatility and trading volume in cryptocurrencies are part and parcel of trading here.
How to Trade in Cryptocurrency?
For instance, you have some extra money that you are planning to invest, then where can you?
Well, we can tell you that the market is enormous for investment in Crypto currency, but with a plethora of choices available, it becomes a challenge to choose one.
Ideally, exchanges are nothing but portals that help people connect the crypto worlds. No doubt, there are several exchanges available, but before you invest, you need to see this checklist:
Validity – Firstly, you need to ensure the exchanges are available in your area before even you choose one.
In India and Asia, coin base is one of the biggest deals. Hence, it is essential for you to look at the validity.
Reputation – It is essential to look for the importance of the exchange before choosing one. Ensure that exchanges are reliable.
Exchange Rates – The exchange rates are different for different exchanges. Hence, before you finalize the exchange, you need to do research.
Safety – You need to choose exchanges that take ID verification from you. It is because they are safe and secure.
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Types of Cryptocurrency used in Trading
All of us by now know that Bitcoin is the first Cryptocurrency, and it was established back in 2009.
But now, there are a lot of cryptocurrencies available in the market. All you need to do is trade one Cryptocurrency for the other.
Basically, the idea is quite simple. Here the concept is quite similar to the standard stock exchanges. You need to use a cryptocurrency exchange if you want to trade here.
For instance, if you have Bitcoin and you plan to sell the same for Etherum, then you need to look for an Etherum seller to trade. For doing the same, the exchanges tend to charge you a fee of around 0.1%.
Hence, you can say Cryptocurrency trading is now quite popular as billions of dollars are bought and sold regularly in the market.
Some of the people who are lucky have made some money, and they are now trading in Cryptocurrency as full time.
The traders have some experience choose to use various tools to help them in picking the right coins that too at the right time. It can also include software that helps investors analyze the trends.
But everyone must begin somewhere, but it is useful only if you are not trading in excess, which will eventually lead to losses.
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How to trade in Cryptocurrency? – Short Term Trading
Under this, you can buy Cryptocurrency but only for a short period of time. By the short period of time, we mean anywhere from a few minutes, days, hours to even months.
For example, you can purchase a cryptocurrency by thinking that it’s price will rise during the short term and you will sell it later.
You can sell only if you feel you can earn the right amount of profit in the short term.
The best part about short term trading is that you can make a high percentage gain. The market here is way different from the fiat currency market.
Because, under those markets for days, prices don’t move up more than 1%. On the other hand, cryptocurrency prices can double in no time.
As of now, the cryptocurrency market is quite popular, so you can get an option to trade in at least 15,000 cryptocurrencies.
In simple terms, you can avail more opportunities to make more profits. Besides that, there are other massive trading volumes for a plethora of coins.
The best part about large trading volumes is that you can always find a buyer or seller. Simply, an enormous amount of currency is not only flowing out but also in of that Cryptocurrency.
The cryptocurrency markets are quite volatile, so there are some pitfalls also, so the prices tend to change quite quickly.
You need to spend a lot of time in research and analysis if you want to make a considerable amount of profits in the short term.
Above all, you need to have some control over your emotions. Well, if you earn huge profits, then you also need to invest a considerable amount, and it is not entirely feasible for newcomers.
How to Trade in Crypto? – Long Term Trading
Under the long term trading, HODL is a quite famous term. It means you hold the Cryptocurrency for the long term and choose not to sell it.
Here you need to hold the currency for at least one year or so. The best part here is that you just need to invest a little amount of time.
Additionally, investors don’t even need to study a plethora of charts and graphs. But the downfall here is that you end up missing the opportunity to gain short-term gains.
Know the Real Differences between various Cryptocurrencies:
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Steps to Start Trading in Cryptocurrency
As you know by now that to start trading, you need to have some coins. Bitcoin is one of the easiest ways to do so.
- Before you start trading about it, you need to decide whether you want to own the currency or get a hunch, which will increase or decrease. You need an exchange if you plan to hold. On the other hand, you need a broker if you just want to speculate.
- Then you start funding your account.
- Whether you want to buy the Cryptocurrency or open the trade for its price, it is all upon you.
What do you need to be careful about?
One of the most important things you need to consider is there is a high chance you can lose entire investment. You also need to know that the crypto currency market is quite volatile.
Hence your success basically depends on how well you handle your losses. Some of the things to consider here are:
- FUD – The term is popular in both real and crypto trading. The abbreviation stands for Fear, uncertainty, and disinformation. Before jumping to any conclusions, you must do thorough research.
- Persuasion – When it comes to trading, you must not get under any influence of the people’s sayings.
How to Trade in Cryptocurrency? – Conclusion
Hence once you understand how to trade in Cryptocurrency, you can avoid the majority of the obstacles that might come up.
For getting income, cryptocurrencies are a fantastic option. But the good thing is that you can start trading even with a minimum amount.
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