Decide whether you want to Buy or Trade Cryptocurrency
Buy or Trade Cryptocurrency
Cryptocurrencies have nothing if not exciting for many investors. They have simple appeal: they have gone up a long way, and chunky returns on offer lure investors. Their volatility offers lots of opportunities for those looking to trade on price movements. If you want to try then here are the steps you need to take whether you want to buy or trade cryptocurrency.
If you are thinking of investing in cryptocurrency, then consider whether you want to buy or trade cryptocurrency. Below we explain what you need to know before buying or trading cryptocurrency.
You can decide to own units of cryptocurrency or to trade cryptocurrency on the price. You can speculate on the price by trading without ever taking ownership, using derivatives trading tools called cryptocurrency CFDs.
You have to pay the full price of the asset with a unit of cryptocurrency. With trading, you only have to put up a small proportion of total position size. It allows you to take a leveraged position on the price, gaining a higher exposure than might otherwise be available with investment amount. This approach can be cheaper – investors don’t have withdrawal or deposit fees to access the currency.
Click on Below Video: Buying vs Trading Cryptocurrencies
There are many tax advantages to trading over investing. You don’t need to pay capital gains on profits of cryptocurrencies trading, whereas you do if you profit from trading (Buying and Selling) cryptocurrency direct.
On the other side, the trading approach can magnify losses if you get your trading strategy wrong.
Setup your Account
To buy Cryptocurrency, you need to create an exchange account to buy and sell via exchange the cryptocurrency and to store it in your digital “Crypto Wallets“.
If you want to trade cryptocurrency, you need a brokerage account, rather than accessing the underlying exchange. The broker will be exposed to the underlying market on your behalf. This is easier and simpler to set up.
Click on Below Video: How to Set Up and Fund your Cryptrade Account
Decide which Currencies you want to Trade
You won’t be able to buy and sell all the cryptocurrencies. However, you should able to trade all the major currencies – including bitcoin, bitcoin cash, Ripple, Ethereum, and Litecoin and new currencies are being added all the time. It can be best if you choose those that you know something about it and become a master in their price movements, rather than taking the broad-brush approach.
Decide on Trading Strategy
You need to understand the market. The cryptocurrencies pricing depend on a whole host of factors. In the past one year, prices have been influenced by concerns over government regulation, media coverage of sector and the fortunes of the US Dollar – as well as statements from influential business people or government ministers. Many people involved in cryptocurrencies, the more influential these different factors will become.
Apply your Trading Strategy by Placing Trades
Having settled on a strategy, you need to define your ‘close’ conditions – i.e. the point that you will exit a trade. Cryptocurrencies are volatile and running on large open positions is dangerous. Once a position has reached to your target, or you have hit maximum loss, you will need to close out the position. These filters can be set in place to happen automatically. Starting with small or testing your knowledge with a demo account can help you to get a feel for how these markets work and what influences them.