If you have a basic understanding of what cryptocurrency is and want to know how to trade different cryptocurrency pairs, this short guide will help you reach that destination.
So, what is cryptocurrency trading? The short answer is that cryptocurrency trading is the exchange of cryptocurrency pairs across a marketplace or digital exchange, much like stocks and ETFs are traded through digital brokers and marketplaces online. Many of the same fundamental rules apply to cryptocurrency trading as they do to trading FOREX, or foreign exchange currency pairs.
However, the marketplace for cryptocurrency trading carries a higher risk because of the volatility associated with the daily change in cryptocurrency prices.
Don’t worry though, the future of cryptocurrency trading appears to be on the upswing, and we’ve got you covered with this short guide to cryptocurrency trading basics.
Do You Know What a Cryptocurrency Exchange Platform Is?
A cryptocurrency exchange is a platform that allows you to buy and sell cryptocurrencies. There are different types of exchanges available to you – both centralized and decentralized. Decentralized platforms will almost always provide you with the best exchange rates and are controlled by multiple nodes – or computers – that monitor trading activity daily.
Are You Looking for Short-Term Gains?
Short term trading is essentially buying cryptocurrency at a given price, during a market downswing, in hopes of trading it at a higher price, a market upswing, within minutes to weeks. Your goal is to obtain a marginal profit from your trading activity because you believe that the price will increase within a very short time.
Or, Are You Looking for Long-Term Gains?
Long term trading is more of an investment strategy and requires you to buy and hold a cryptocurrency asset for some time, from several months to several years. You want to hold on to your cryptocurrency purchase because even though you see high volatility and price swings in the short term, you can see a steady uptick in your cryptocurrency pricing in the long-term. You realize a higher profit after years of holding a particular cryptocurrency.
Do You Know What the Risks Are When Trading Cryptocurrencies?
The riskiest aspect of cryptocurrency trading is price fluctuation. Some traders can take advantage of the day-to-day volatility in pricing, while others want to hold out for the long-run – realizing profits after years of holding a cryptocurrency. You need to assess your risk tolerance and knowledge in reading and understanding market fundamentals and technical analysis before deciding which trading style best matches your ability to take advantage of the high price fluctuations in cryptocurrency trading.
What Makes Cryptocurrency Trading So Popular?
You can always find out more about what makes cryptocurrency trading so popular. When in reality, it has outperformed every other commodity in the market today. From Gold and Silver to stocks, bonds, and ETFs. Bitcoin alone has seen a rise in the market value of 1,000’s of percentage points since its initial release in 2009.
Not to mention its growing popularity among mainstream media and its adoption by hedge fund managers across the globe.
Still Wondering What Is Cryptocurrency Trading?
We certainly hope you don’t have to ask the question,” What is cryptocurrency trading?” ever again.
Our aim with Business Blogs is to help you receive the latest news and information regarding the many aspects of cryptocurrency trading. We hope this guide has been a primer in your journey to better understanding cryptocurrency trading.
Best of luck on the road ahead!