What is Cryptocurrency Trading

What is Cryptocurrency Trading

The cryptocurrency is steadily spreading around the world, attracting new users. Misunderstanding and ignorance of the basic principles of purchasing, storing, and trading cryptocurrency can lead to large losses for traders. Let us help you avoid some common mistakes and make the first steps in cryptocurrency CFDs trading.

First, define your cryptocurrency trading strategy: are you going to invest in or trade any cryptocurrency? In the first case, you make a long-term investment in the chosen cryptocurrency, while in the case of trading, the time for making a profit is reduced.

As for the methods of storing cryptocurrency, you can choose them depending on your strategy.

• You can use cold storage wallets to keep your cryptocurrency safe, which means storing crypto on a computer or USB flash drive. The main advantage of this method is security since no one can steal your digital money without direct access to it. The downside is illiquidity. If the coin rate suddenly drops sharply and the user wants to sell it, it will take time to transfer assets to the trading platform.
• Exchanges are best suited for trading digital assets. Exchanges allow the client to sell or buy cryptocurrency at any time and use some additional features, such as leverage. However, this is extremely risky, as there is a possibility of losing all funds very quickly.

Having decided how to get and store cryptocurrency, you can finally start buying it. Cryptocurrencies can be bought via some payment methods, or exchangers and then transferred to the Exchange or a cold wallet. However, this method is also not completely secure, as you may encounter scammers or enter incorrect data when transferring funds.

Cryptocurrency Trading Tips

Trading digital assets is quite risky as the cryptocurrency prices are extremely volatile: they can fluctuate by 8-25% a day, sometimes even more. This makes inexperienced traders think they can earn huge profits in a very short period. But, as a rule, over 85% of newcomers lose most of their capital quickly and leave the market.

Here are some tips to heed before starting cryptocurrency trading:

• Educate yourself as much as you can: read forex trading tutorial, watch trading video tutorials, get acquainted with technical and fundamental analysis, learn more about cryptocurrency and how the crypto market works.
• Start with demo trading before switching to real trade. This will help you learn more about the market while practicing.
• Deposit a small amount in the exchange, and remember: losses are inevitable. This will help you understand what kind of strategy to choose, what mistakes to avoid in the future and how to learn to control your emotions.
• Try different strategies, investing your capital in an asset in small amounts.

What to avoid when trading cryptocurrency?

Novice traders usually make many mistakes that cost them money. To help you avoid the most common ones, we have prepared a few rules that every beginner should take into account.

1. Don't give in to emotions

Traders often lose because of the loss of control.

2. Don't be greedy

3. Do not buy cryptocurrency on the news

When you hear or read news about price increases/decreases, this has probably already happened.

4. Do not trade with your last money

As a beginner, you should be ready to bear losses, so it’s better to invest funds you can lose.

5. Do not trust other people's signals to buy and sell assets

The authors of such signals are not responsible for the money you invest.

6. Do not let anyone, especially unfamiliar people, manage your funds

But if you decide to do so, sign a contract with them approved by a notary.

7. Keep a record of your trades

Keep a record of your trades to evaluate and correct the trading strategy and avoid mistakes made before.

What is Cryptocurrency Exchange?

The Crypto market develops really fast and offers new ways to trade and store cryptocurrency as securely as possible. As we mentioned above, one of the methods to buy and sell digital money is to make transactions through a cryptocurrency exchange.

But what is it?
A cryptocurrency exchange is a platform designed to ease the trade of cryptocurrencies and digital currencies and allows to change them for other assets, including conventional fiat money. In fact, a cryptocurrency exchange earns money through commissions, acting as an intermediary between buyers and sellers.

Such crypto exchanges usually provide only online services, making all transactions in electronic form. Most digital currency exchange platforms are outside the jurisdiction of Western countries, which allows them to avoid supervision by financial and law enforcement agencies. Anyway, some of the digital currency exchanges are centralized and therefore more reliable (ex. Coinbase, Kraken).

Cryptocurrency Exchanges

We collected some cryptocurrency exchanges that deserve your attention:

Top 10 Cryptocurrencies

IFC Markets currently offers trading CFD on Crypto Futures, but we believe you will find our top 10 cryptocurrencies list useful and interesting.

• Bitcoin - a decentralized currency, invented in 2008, that can be sent between users based on the peer-to-peer bitcoin network. It can be changed for products, services or other currencies.
• Ethereum - the second most popular cryptocurrency after Bitcoin, which is a decentralized software platform. Etherium went live in 2015.
• Litecoin - another peer-to-peer cryptocurrency, an early altcoin, released in 2011.
• Cardano - a public blockchain platform, launched in 2015, which uses the Proof-of-Stake algorithm.
• Binance Coin - the Binance exchange operates on the Binance Coin’s blockchain. This is a suitable and reliable cryptocurrency to diversify your portfolio with if you own other digital money.
• Dogecoin - first introduced in 2013, this cryptocurrency was created as a joke but became one of the most popular altcoins. It offers peer-to-peer transactions.
• Monero - a popular cryptocurrency, released in 2014, which uses an obfuscated (hidden) public ledger. This cryptocurrency is attractive to those users who seek privacy.
• Bitcoin Cash - an altcoin created in 2017, which is also a very successful Bitcoin fork with a peer-to-peer cash system.
• Tron - a decentralized platform, created in 2017 and using the Proof-of-Stake algorithm for transactions.
• Polkadot - a Proof-of-Stake cryptocurrency, which offers interaction between other blockchains.