Crypto trading has gathered a lot of attention lately and there are definitely a lot of reasons why. Though crypto trading had been going on in the economy for quite some time, people became more aware of it when bitcoins made their appearance in the international finance sector.
Tread your path with caution
Millions of dollars are pumped into cryptocurrency trading each day, making it a highly lucrative avenue for the new traders. But what needs to be understood out here is that just as it may be easy to earn lots and lots of money by spending on cryptocurrencies in the right way, similarly, it is equally easy to lose a lot of money on cryptocurrencies as well. Hence before you make your entry into the world of crypto trading, it is essential that you understand it to its core and understand all the pros and the cons that are involved in making such transactions.
What is a cryptocurrency and how did it come into being
The first cryptocurrency that made its appearance in the market was none other than the bitcoins which made their debut in 2009. But since there was only one type of coins that were available at that time, it was not possible to start any form of active trading or exchange it with the other cryptocurrencies.
However, owing to the wide popularity of bitcoins, very soon the other type of cryptocurrencies also began to make their appearance in the market. It was only then that so many cryptocurrencies became available that people began to trade with it in an active way.
Crypto-currencies: A new form of the stock exchange
To understand the way the market of cryptocurrencies work, you may compare it to the real world stock exchange and how it functions on a day-to-day basis. However, while the stocks are exchanged in the real market, over here, the traders keep exchanging the cryptocurrencies according to the rising or the falling values of the currency. So for instance, if a person holds a bitcoin, he or she may get it exchanged with someone else who may be holding an Ethereum coin.
Transactions cost money
The various exchanges and trade that you carry out with the cryptocurrencies is not free of cost. In fact, each transaction that you make has a fee involved which usually costs no more than .1% of the actual value of the total transaction.
That is why each time you make a new transaction, you have to ensure that the amount of profit must be able to cover this cost of the transaction and give you some additional monetary benefits. People who are able to catch hold of the mechanics of the market are not just able to sell it by covering the transaction cost but are also able to earn millions out of their crypto trading. It is no wonder that so many people have now made cryptocurrency trading as their full-time job.
Use of tools
However, the seasoned crypto-currency traders can tell you that merely having knowledge of how the trading procedures go on is not enough. The well-established traders who deal in cryptocurrency can say that they use different types of tools that are available on the internet so that they may be able to procure the right coin at the right rate and at the right time. Not just this, they also keep analyzing every new change in the market and make their investments accordingly.
Market analyzing software
If you think that keeping an eye on the market constantly will prove to be too much of a hassle for you, then you may even go for the software programs that have been made for this purpose. In fact, some of the seasoned traders use software to analyze the market and understand the pricing trends that are there.
When you are aware of these figures, you will be able to make more informed choices and though you may be new to it, it will reduce your chances of incurring any form of losses in crypto trading.
Short term and long term trading
When you acquire a cryptocurrency, you may either opt for short-term trading or you may follow the long term trading procedures. Short term trading refers to the process when you buy a cryptocurrency but you keep it only for a short amount of time. This time may differ from a few minutes to a few months but in general, the short term traders do not keep the currency to themselves for more than a period of six months or so.
In long term trading, people do not acquire the cryptocurrency with the view of getting it sold in the market in a short amount of time. They keep it to themselves for periods that can range from one year to several years.
Which is better?
If you want to compare short term trading and long term trading, you need to understand that the goals that are involved in each of them are different. While the short term traders buy it because they feel that the prices may soar up within a few months and they will be able to enjoy the profit, long term traders are of the view that the prices will go up several-fold over the period for which they wish to hold it. So, which type of trading you must choose totally depends on how you view crypto trading and what are the objectives that you are looking forward to fulfilling.
Make your debut
Now that you are aware of all the aspects of crypto trading, make your debut into the market and earn profits. Remember, even the biggest trader first made his entry through a small transaction. Quite naturally, it is highly imperative to make the debut. Unless you venture out into the market, it won’t be possible to learn the mechanics of the trade and earn high profits.
We wish you a Happy Trading!