Trading cryptocurrency has become very popular over the last couple years. Many traders now prefer to trade their assets using cryptocurrency rather than fiat currency. This means they don’t have to worry about exchange rates or bank fees.
However, trading cryptocurrency isn’t free. There are costs associated with buying and selling coins. In addition, you also need to consider the risks involved. If you want to start investing in cryptocurrency, then you should read our guide on how to invest in bitcoin.
If you want to learn more about cryptocurrency trading, there are a few things you need to know before you get started. The first thing is that cryptocurrencies aren’t backed by any government or central authority. They are not issued by banks or other financial institutions. Instead, they are created through complex algorithms which use cryptography to secure transactions and create new units of currency.
This makes them difficult to regulate and track. You can’t see where your money goes when you buy crypto. It’s like buying stocks without knowing what companies you’re investing in.
The second important thing to understand is that cryptocurrencies are volatile. That means that prices fluctuate frequently. For example, Bitcoin was $19,000 at one point but dropped to just under $6,000 in December 2017.
The third thing to be aware of is that cryptocurrencies are still relatively new. Most people who invest in them do so because they believe in the future potential of blockchain technology. However, this doesn’t mean that you shouldn’t think carefully before you make an investment.
You should only invest if you fully understand the risks involved. We recommend that you keep some cash aside for emergencies. You could lose all of your money if you invest too heavily.
There are many different ways to trade cryptocurrency. Some people prefer to use online platforms while others prefer to trade manually.
Here we will look at the pros and cons of both methods.
Online Trading Platforms
Pros:
• Easy to access
• Can be used from anywhere
Cons:
• May be expensive
• Not suitable for beginners
Manual Trading
Pros:
• Allows you to control your own risk levels
• Can be done from home
Cons:
• Requires time and effort
• Not suitable for everyone
Which method would you choose?
Online trading platforms are great for experienced traders. These platforms allow you to place orders quickly and easily.
They also offer advanced features such as margin trading and stop loss orders.
These tools help you manage your risk levels and protect yourself against losses.
However, these platforms may be expensive. You will pay transaction fees every time you place an order.
In addition, you will also be charged a spread fee. This is the difference between the bid price and ask price.
Spread fees vary depending on the platform you use. However, most platforms charge around 0.5% per trade.
Some platforms also charge a commission fee. This is usually around 5%.
In addition, some platforms require you to deposit funds into your account. This allows them to cover any losses they incur during trades.
You can avoid paying these charges by using manual trading.
With manual trading, you set up a limit order. A limit order is similar to a market order.
Instead of placing an immediate sell order, you place it at a specific price. This gives you the chance to wait until the price reaches your target level.
When you have reached your desired price, you then execute the order.
This process is much slower than using an online trading platform.
It takes time to find a good entry point. Once you have found a good entry point, you must monitor the price closely.
Once you reach your target price, you must then decide whether to exit the position. If you don’t exit the position, you run the risk of losing out on profits.
If you do decide to exit the position, you must ensure that you take profit at the right time. Otherwise, you could miss out on additional gains.
