What You Need To Know About Cryptocurrency Trading
Cryptocurrency is a digital coin that was first introduced by Satoshi Nakamoto in the form of Bitcoin in 2009. This currency is an intangible asset which means that it does not have a physical form like forex. Cryptocurrencies are generated using special software and utilize a lot of energy. However, when Bitcoin stirred up the financial market, many people invested in either Bitcoin or in mining their own cryptocurrencies. Now, there are thousands of verified cryptocurrencies available in the market.
Online crypto trading has not been present in the financial market for a long time. However, it has gained the interest of many investors. So, you will find many online brokerage firms that support cryptocurrency trading. In addition, some online trading firms are solely dedicated to the trading of this digital asset and are called crypto brokers or exchanges.
Difference Between Crypto Brokers And Crypto Exchanges
Crypto brokers like Eiro-group provide CFD trading with cryptocurrencies. If you are unfamiliar with the term CFDs, then let me tell you. CFD stands for Contract for Difference and it is a form of trading that allows you to participate in trade without investing any of your capital. Instead, of using money to invest in an asset, CFDs allow you to sign a contract with the broker. When the period of the contract ends, then you can collect or pay the difference in the market value of the stock.
Using CFDs for cryptocurrencies is a great way to earn high returns as well as reach your goals faster. However, the high volatility of the market makes it difficult to predict the outcome of an investment. Furthermore, as profitable as trading with CFDs may seem, it can bring you equally as huge losses. So, you should keep the risks associated with trading cryptos using CFDs in mind.
On the other hand, when you purchase or invest in cryptocurrencies via a crypto exchange, you buy the ownership of the coins. While still not a tangible entity, your “coins” are stored in the vaults of the crypto exchange that you create an account with. This allows you direct authority over the selling price of the cryptocurrency. The downside of trading cryptocurrencies via exchanges is that the account for managing the cryptocurrency can be quite expensive.
The main difference between trading cryptocurrencies with a broker and an exchange is that with a broker, you are provided the buying and selling price of the coins that the broker sets. However, when using crypto exchanges, you have authority over the selling price of the cryptocurrency.
Benefits of Cryptocurrency Trading
If you are considering online trading, then you can’t go wrong with choosing cryptocurrencies as the asset to trade with. This is because trading with cryptocurrencies brings forward various benefits. The cryptocurrency market is one of the most volatile market spaces in the financial world. While it has not been available for as long as some other assets, it has proved to be a great way of earning large profits.
In addition, it is a great choice for new traders because the market hours of cryptocurrency are unlimited and can be accessed at any time of the day, this allows you to trade at your own convince. Cryptocurrency is one of the only tradeable assets that allow you to go ‘long’ or ‘short’ with your trades. So, you can buy or sell a coin depending on its rising or falling price. Short selling is referred to as the strategy when you sell the coin because according to your prediction, its market value will drop in the near future.
You can perform leveraged trading with cryptocurrencies which is a great way to secure high profits. However, the volatile nature of the market may go against you and cause you extreme losses that may be hard to overcome.
The crypto market is constantly developing and if you play your cards right, you can become rich overnight. However, this is only possible if you keep track of the volatile crypto market space. With the right broker or exchange, cryptocurrency trading is one of the most profitable and exciting forms of trading.