Cryptocurrencies have become a part and parcel of global finance markets as they become more and more popular in making payments across the world. They are well known for their volatility as they change prices rapidly and they have gained a lot of value in the online trading platforms. Clients can now deal with cryptocurrency trading across many online Forex trading markets and stockbrokers like ForexTime. The most common strategy in trading cryptocurrency is the Contract for Difference (CFD).
What Is Cryptocurrency Trading
Cryptocurrency trading can be defined as the act of speculating on cryptocurrency price movements via a CFD trading account. It is also applicable when traders buy and sell the underlying coins via an exchange.
The most common cryptocurrencies are:
The shift to trading crypto rather than normal foreign exchange is caused by the volatility which presents an opportunity to make a profit from a rise or a fall in value. Among these, bitcoin is the most popular trading across many countries across the world including African countries such as Nigeria and South Africa.
How to Trade Cryptocurrency
There are three main steps in cryptocurrency trading. The first step is to obtain cryptocurrency either by share exchange or direct cash exchange. The next step is the storage of the cryptocurrency, and the last step is learning crypto-to-crypto transfers.
When one decides to go into cryptocurrency trading, they prepare the amount of money they want to invest. Crypto-world is linked to the cash world by exchanges. There are a lot of exchanges across the globe working in different countries. However, one interested in crypto purchase needs to ensure a few things before committing to trade in any exchange.
- Validity is important, as some exchanges will operate in some countries and not others.
- The reputation of the exchange and its popularity among the people. This can be checked through social media accounts of people who have had contact with the exchanges.
- Safety is pertinent and the best exchanges are ones that require some form of identification, meaning that their trades are secure.
- Rates are crucial, as different exchanges offer different exchange rates. Compare one exchange with another to determine the best rate available.
- Finding a broker as operating with stocks requires an intermediary.
These checkpoints enable one to choose a suitable exchange. The next step is signing up and opening an account.
After filling out a form with personal details, most exchanges will require a phone number verification or email confirmation or both. The next step will be to add a payment method to the platform, which can range between Visa, MasterCard, as well as online payment options such as PayPal. The next step will be identity verification, which will require you to either upload a passport, a national ID or driver’s license. On completion, log in details and a password will be presented to the trader. Now, the trader is ready to start buying the cryptocurrency of their choice.
Storage of Cryptocurrency
Storage of cryptocurrency is done in soft forms that include hot storage and cold storage. Hot storage is a digital wallet such as the desktop or mobile wallets or even multiple signature wallets. Digital wallets are software developed for the purpose of storing cryptocurrencies such as bitcoins. They are more secure and allow for easy and quick trading. This, however, poses the threat of hackers and loss of the cryptocurrency through fraud. Traders also have an option of cold storage, and this includes hardware and paper wallets that are safe from hackers.
Finally, the investor is ready to join in the crypto-to-crypto trading where they can buy and sell their cryptocurrency for another type of cryptocurrency. This is so much easier for traders who use digital wallets.
Cryptocurrency trading is growing and attracting more and more people. As investors venture into this volatile market, they can earn returns and make even more money from just the finances they set aside for investment. However, they need to be careful and know the process of trading to ensure the security of their investments.