Crypto Trading: Everything You Need To Know Before Trading Bitcoin

 

Trading cryptocurrency is simply the interchange between crypto and another crypto or crypto to fiat currency. At the same time, crypto trading involves speculating price fluctuations through a CFD trading platform or buying and selling cryptocurrencies through an exchange. 

To trade digital assets, you must first ensure you have a cryptocurrency wallet to store the underlying crypto assets. The initial point in trading cryptocurrencies is registering an account on exchange platforms such as Binance, Coinbase, e.t.c. Crypto exchange platforms facilitate the buying and selling of cryptocurrencies.

As such, exchange platforms charge traders a specified amount for every trade executed. The majority of these platforms charge an average fee of 0.1 percent for every trade carried out on the exchange. Many crypto enthusiasts and early adopters have already ripped a lot of fortune by trading cryptocurrencies and have now made it their permanent revenue source.

There are two main types of trading methods in trading crypto assets: Short-term trading and long-term trading. 

Short term trading

This type of trading can last between minutes and months. Short term traders often purchase a digital asset at a low price and later sell it at peripheral gains. In other words, this type of trader buys crypto such as bitcoin with the belief it will rise in value in the short run and later dispose of it for quick profits. 

Long term trading

This type of trading is often associated with traders who purchase a particular cryptocurrency and hold it for a very long time, spanning years. The term HODL, which stands for Hold on For Dear Life, was invented by long term asset holders. The basic notion of long time HODLers is to store an asset for several years regardless of the market volatility with the hope it will significantly increase in value over the years.

Risks associated with cryptocurrency trading

The most prevalent problem in the cryptocurrency market is rapid price fluctuations. Although trading cryptocurrencies are associated with huge gains, they also share risks and challenges that traders face. Before starting your trading journey, you should be aware of them. 

  • High volatility: Prices can significantly change very rapidly in the cryptocurrency market. This means that digital assets don’t have fixed prices for a specified period. However, although price changes can happen fast or slowly, it’s not often that prices drop heavily. 
  • Any government or central authority does not regulate cryptocurrencies: Any government or central authority does not control crypto assets’ supply and issuance. Regardless of that, more and more people are increasingly becoming more curious about it due to its benefits, and it’s becoming globally accepted. 
  • Security risks: Human errors are irreversible in transacting cryptocurrencies. Also, exchange firms are prone to cyber attacks by hackers who steal user funds. Experts recommend users to store their assets in personal wallets rather than exchange platforms in the long term. Also, store the private key to your wallet out of reach. 

Like any other asset, bitcoin’s price is determined by the interplay between supply and demand. To make the best out of the cryptocurrency market, you have to have a trading strategy and learn how to manage risks appropriately. Experts recommend for traders to invest what they can afford to lose.

However, you can also take advantage of automated AI-powered trading platforms. There are hundreds of algorithmic trading platforms, but we recommend Bitcoin Champion. According to expert online reviews, Bitcoin Champion bots generate up to 600 percent in profits from invested capital. 

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