It’s 2020, but there are still no flying cars. But one important issue which remains unchanged is cryptocurrency. They’re no longer so mysterious and on everyone’s lips. This fact gives us an opportunity to take a closer look at trading.
A cryptocurrency is a virtual currency that acts the same as any other traditional currency. It’s bought and sold. The biggest difference between cryptocurrencies and traditional currencies is that cryptos use other methods to ensure security. This makes the currency decentralized and less vulnerable to scam or hacking. Cryptocurrencies are based on a blockchain.
What Are the Key Ways to Trade Cryptocurrencies?
Cryptocurrencies have been extremely popular since 2016. They also come to dominate the economy. There are two trading options in total. That is, the financial derivative and direct purchase. Since the direct purchase is self-explanatory, let’s consider the financial derivative in more detail.
The financial derivative is mostly leveraged. Digital coins are bought or sold directly on special marketplaces. In addition to the lower risk, there are more advantages. Firstly, coins can also be used to buy goods from online retailers. Secondly, the storage of cryptocurrencies is free of charge. In addition, an investor can speculate in the long term. With a financial derivative, long-term investment over a period of years is rather unusual.
What Are the Main Pros & Cons of Trading Cryptocurrencies?
Cryptocurrency trading has its own advantages as well as disadvantages. We can observe that the price continues to rise, but further development isn’t clearly predictable. Not to mention stability. Therefore, the risk of loss remains high.
High profits are possible within a very short time. However, the first time dealing with the issue is quite a time-consuming process. Many newbies don’t take this fact into account at first.
How Can I Trade Cryptocurrencies?
There are two ways to trade cryptocurrencies. You can buy them and sell them later for a bigger profit.
Also, you can use CFDs to speculate on a change in value. In case you don’t have your own cryptocurrencies, you should choose the second way. It’s impossible to avoid opening a trading account. That is, make sure not to open an account on an exchange, but to find a provider that offers cryptocurrency trading.
You should do some research when deciding to trade CFDs. As a result, you become well familiar with the market. That is, you can find your own strategy and use it safely.
How Can I Find a Reliable Broker?
Now it’s time to compare providers with your own criteria. Here is our brief guide with key aspects.
Although cryptocurrencies are on the rise, many brokers haven’t adjusted their offer accordingly yet. This is mainly due to the cost of spreads and other fees incurred. But like in any trading industry, the share is growing. And this is about the most important part — just observe and compare.
When choosing a suitable broker, you should pay attention to some small but important details. Let’s take a closer look at some of them!
Security
Security is one of the most important features. The main idea is to have a clear understanding of what & when happens with your assets. With a regulated broker, client funds and business assets are managed separately. Of course, all other personal data of users must also be managed securely so that no third parties have access to it.
Costs
A second important factor is a cost. Here you should have a clear understanding of what you’re paying for. The higher the fees, the lower the profit. Here you should definitely take some time to compare different providers.
Demo Account
If a broker offers you an opportunity to open a demo account, you should definitely take it. This is particularly advantageous for relatively new cryptocurrencies, as it’s difficult to evaluate them
This feature is suitable for newbies as well as for experienced traders. With a demo account, you can test, create, and apply your own strategy. In this case, a risk will have nothing to do with you. A demo account is a good option in case you want to test a new trading platform.
What other interesting facts about cryptocurrency trading do you know? Just share your opinion in the comments!
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