There was a time when the public was unaware of digital currency, but now this is the era of cryptocurrency. There are hundreds of cryptocurrencies available today, and people are trading different currencies.
Is crypto trading safe?
People might think this is not safe to trade crypto, but one thing must be kept in mind that investing your money is always comprised of risks. Every trading activity has risks but the greater the risk, the more significant the profits are. People are trading different currencies and are making profits out of it. Other platforms are available for trading, but the question is, can everyone trade successfully? To answer this question, there are various measures one must take.
What is crypto trading?
Crypto trading is to buy and sell different cryptocurrencies based on the price. It is not an accessible business when there are plenty of digital currencies available in the market. This is a decentralized market and is not backed by the governments.
The market is influenced by the general supply and demand rule, but since the cryptocurrencies are free of economic or political effects, the price moves according to the following measures:
- A total number of the coins available in the market and the set price on which they are released.
- How the media illustrates the significance of that particular coin.
- Tendency of the coin to integrate with the e-commerce payment methods.
- How effective the regulatory updates are and how secure the coin is.
- User’s individual opinion about the coin.
How to trade cryptocurrency?
Foreign Exchange Brokers
Different foreign exchange platforms are available for crypto trading, and the client has to register a CDF account with a particular broker. Still, the client does not own the cryptocurrency anyhow. All the trade profits are against the US dollar.
Trading Via Exchanger
Trading via an exchanger is another form of trading, but the difference is, here, you own the crypto coins and not the US dollars. All you need to do is create an account with the exchanger, get a wallet and deposit the coins. You need to analyze the market for the right move to sell or buy your coins against another coin. The exchangers provide a wide range of cryptoanalysis on charts. These charts need a relevant skill to read and make decisions accordingly.
There are different terms involved, and one must get a proper education to understand these terms to get a profitable return. We will discuss few terms here to give you a basic idea of how crypto trading works.
The spread in trading refers to the price quoted by the exchanger. This spread usually is the commission of the exchanger for the services it is providing. Whenever you want to open a trade, there will be two prices available. You’ll need to open the trade at the buying price, which will extend your position a little above the market price. If you want to sell, you will sell at the selling price, which is comparatively lower than the market.
You trade Cryptocurrencies in lots: the small units of the cryptocurrency tokens. It is always recommended to use small lots to secure your money rather than using huge lots and losing all of your assets instantly. However, some cryptocurrencies can be traded with big lots. But to use a big lot size, you must have a grip over the data provided by your exchanger.
Leverage is the use of borrowed money allowed by the brokers to enhance the profit against your own money. There are various ratios the leverage is provided at by the brokers. This is the method that supports your money management in crypto trading. However, leverage can increases the risk of loss as well. Therefore, this is highly recommended to learn how to trade successfully and manage your risk to reward ratio.
Pips are the small unit that measures the change in the cryptocurrency price and is the last decimal digit in the price. This is the short name for “price interest point” and represents a slight movement in the price. The number of pips calculates the profit or loss moved at a price.
Crypto trading is a comprehensive platform, and we have mentioned only a few basic terms involved in the process. There is a dire need to learn before trading if you want to make profits.