If you are one of those people who are always searching for more opportunity to make more monies online, you would be interested in knowing about cryptocurrency trading.
Cryptocurrency trading involves buying and selling of digital assets such as bitcoin and ether. This is quite similar to the stock market in that it allows investors to speculate on the future price of these assets.
However, cryptocurrency trading is different in that it is conducted over the internet, rather than through a traditional financial institution.
In this article, we explain what is cryptocurrency trading in detail; we also show you how to kick-start your trading journey without having to lose funds first.
So, if you’re interested in getting involved in cryptocurrency trading, read on for more information!
What is Cryptocurrency trading?
Cryptocurrency trading is the process of buying and selling of cryptocurrencies on exchanges. In most case, people trade cryptocurrencies using a centralized exchange or decentralized exchange. There are different instruments with which you can trade your way to success, and you can spot trade or future trade cryptocurrencies.
What is an Exchange?
Cryptocurrency exchanges are websites where you can buy, sell and exchange cryptocurrencies for other digital currency or traditional currency like US dollars or Euros.
Exchanges can be centralized or decentralized.
Centralized exchanges are those that are owned and operated by a single company, e.g. Coinbase while decentralized exchanges are those that are run by a network of users such as Pancakeswap, Uniswap, Position exchange etc.
When choosing an exchange, it’s important to consider the type of coin or token they offer.
The Risks of Trading Cryptocurrency
Cryptocurremcies as digital asset are designed to work as a medium of exchange using cryptography to secure the transactions. In all honesty, trading cryptocurrencies are not without risk— And one major risk in cryptocurrency trading is price fluctuation.
Prices of coins like Bitcoin can rapidly increase or decrease in value within a split second resulting in you losing money.
Also, cryptocurrencies are subject to hacking and theft. — Cryptocurrency exchanges are frequently targeted by hackers, and individual cryptocurrency wallets can be stolen.
In 2021, hackers exploited a vulnarability in Poly network and made away with coins worth about $600, though the fund was later retuned.
With this in mind, it’s advisable to carefully research the cryptocurrencies you want to trade and the exchanges on which you will be trading with.
Additionally, take extral measure to protect your cryptocurrency holdings, including using strong passwords, in the case of centralized exchanges. While your passphrass for web 3.0 wallet should be kept private— No connetion with exchanges or websites that you do not trust.
How to Trade Cryptocurrency
Trading of cryptocurrency is the process of buying, selling and exchanging cryptocurrencies. It can be done through a variety of online platforms, and it’s important to familiarize yourself with how cryptocurrency works before getting started with the process.
There are several exchanges that you can start trading with right away. In other to get started you need to follow the steps below:
- Do your research and compare reviews to find the one that best suits your needs. Once you’ve found a platform, you’ll need to create an account and fund it with Bitcoin, USDT, and Ethereum or fiat currency using your credit card.
- Next is to start your analysis /trading once your account is funded.
Each platform has its own interface, platforms like Binance has a session called Binance academy, and it is tailored for beginner traders, if you follow the lessons you will become a profitable trader overtime.
Trading Cryptocurrency on an Exchange
Cryptocurrency trading can be done on centralized exchanges or decentralized exchanges. Centralized exchanges are those that require users to register with the site and undergo a verification process before they can start trading.
These exchanges also require users to deposit their funds into the exchange’s wallets. Centralized exchanges offer a wide range of cryptocurrencies and fiat currencies for trading.
Decentralized exchanges, on the other hand, do not require users to register or undergo any verification process.
They simply allow users to trade cryptocurrencies directly with each other without the need for a third party, in this type of exchange you simply have to create a wallet with either trust wallet or Metamask [two most popular wallet], and from the wallet Dapp option you will connect to the decentralized exchange of your choice and start trading immediately.
When creating your wallet with decentralize exchange, you need to write down your 12 or 24 seed phrases and store it in a safe place where only you have access to, also, if you misplace it there is no remedy and your funds will be lost forever.
What is CFD Trading?
CFD trading is a form of trading that allows traders to trade cryptocurrencies without having to own the underlying asset. With CFD trading, traders can trade Bitcoin, Ethereum, Litecoin, and other cryptocurrencies.
Trading Cryptocurrency on a CFD Platform
Cryptocurrencies are often traded on decentralized or decentralized exchanges and can also be traded on traditional exchanges like the New York Stock Exchange and the Chicago Mercantile Exchange. Cryptocurrency trading is the practice of buying and selling cryptocurrencies.
Traders can buy cryptocurrencies like Bitcoin and Ethereum on exchanges, and then sell them when the price goes up. Cryptocurrency trading can be profitable, but it is also risky. Cryptocurrencies are volatile and can experience.
In a simple term, cryptocurrency trading is a process by which you can make money by buying and selling cryptocurrencies.
When you buy a cryptocurrency, the aim is to make a profit from the difference in prices. And good traders will regularly buy their coins or tokens when the price is down and sell off when the price goes up. This also depends on what kind of trader you are, either sport or future trader.
Having describe the process involved in trading cryptocurrencies, you can go ahead and create your trading account with Binance —the number one bitcoin exchange in world. I personally trade here, the exchange is secure and the trade execution is faster with low transaction fee.