Virtually every commodity that has value is traded in some way, shape or form. After all, from the beginning of time, we invest in natural elements and property that we have created from people. So when cryptocurrencies like Bitcoin took over the world, it was only natural that the investment world wanted a share.
Although digital coins are now popular with both retail and institutional investors, there is also widespread doubt about the legitimacy of cryptocurrencies as asset classes. That skepticism should no longer exist – especially when you consider some of the major players now involved in space.
However, if you want to be exposed to the space to invest in cryptocurrencies, you need a trading platform that can execute your orders as well as offer reliable resources about the cryptocurrency market.
How to trade cryptocurrencies?
In its most basic form, cryptocurrency trading is the exchange of cryptocurrencies. The operating concept is very similar to trading stocks or foreign exchange, where you speculate about the price of a financial instrument and hope to profit from it.
Many cryptocurrencies are available on the market today. However, the two most dominant coins are Bitcoin and Ethereum. Most cryptocurrencies are driven by blockchain technology, and each has different levels of volatility. It is currently estimated that their potential greatly affects the financial market, opening up opportunities for investment and human trafficking of all shapes and sizes.
Although the mechanics of cryptocurrency trading could be the same as others, strategies that predict market movements are quite different. This is because crypto is not affected by moves that affect other trading markets. For example, a country’s economic position can have a significant impact on the US dollar or the British pound, but rarely on the crypto.
On the other hand, when looking at factors such as security deficiencies or the legal ban on cryptocurrencies – this could potentially affect the investment status of the coin in question.
What are cryptocurrency trading platforms?
The cryptocurrency trading platform allows the investor to participate in cryptocurrency trading. You can buy and sell these cryptocurrencies by opening an account and doing business. Once you know which cryptocurrency you want to trade, you will forward the information to the trading platform and that will basically make your job easier.
An investor can access cryptocurrency trading in two ways. The first is to buy digital currency in its original form. As crypto files are completely digital, you will keep them in your crypto wallet. Another option is to trade using CFDs, which allows you to go long or short to the selected cryptocurrency without taking ownership.
As cryptocurrency trading is still relatively new to the investment sector, you will find that not every trading venue is regulated. This is especially the case if you want to invest in cryptocurrencies and buy a fixed asset in its truest form. As such, if you are willing to trade cryptocurrencies through CFDs, then there is no shortage of trading sites licensed through regulatory bodies such as the FCA and CiSEC.
Much like a traditional brokerage system works, you will be required to pay fees and commissions on your chosen trading platform. This depends on the trading location as well as the size of your investment. However, it is not that difficult to find trading platforms that offer zero trading commissions along with a competitive fee structure.
Why should you trade in cryptocurrency trading places?
Although direct purchases are available in the cryptocurrency arena, there are more benefits if you opt for a CFD trading site. First of all, many of these trading sites give you access to other assets as well. So, if you want to try your luck in crypto, continuing to trade other financial instruments, you can choose a trading place that covers both bases.
Here are some benefits of CFD cryptocurrency trading:
- Join the cryptocurrency trading industry
- Possibility to use CFD both long and short
- Operative 24 hours a day
- Different payment methods are available
- Easy registration process
- Competitive fee structures
- Choice to work with regulated investment platforms
On the other hand, cryptocurrency trading is still considered risky. If you do not have a basic knowledge of the cryptocurrency and the investment industry, it can be quite challenging to make money. There are also occasional cases of security breaches that can significantly affect the wider prices of cryptocurrencies, so keep this in mind.
Above all, given that an industry is largely unregulated, it is crucial that you adhere to trading platforms that are licensed by first-tier bodies.
Types of cryptocurrency trading platforms
In the previous section, we mentioned two different approaches that investors can take to investing in the digital currency space – traditional ownership and CFD trading.
We will consider these two approaches in more detail below.
1. Possession of cryptocurrency
Traders can always buy and own cryptocurrencies to trade later. Investors are looking at the long-term trend in the market, hoping that the price will rise in the future. Although cryptocurrencies are only 11 years old, they have taken a positive direction to multiply their value