Cryptocurrency trading in recent years has been a source of great satisfaction for smart traders as well as losses for those who have made the wrong decisions. In any case, the high number of traders who have achieved spectacular results (many have even become millionaires) always keeps the interest in cryptocurrency trading very high.
What is Cryptocurrency Trading?
Crypto trading is a particular form of digital currency that is handled using cryptography. In the vast majority of cases, cryptocurrencies are based on a blockchain and a distributed database. In practice, the management of the typical cryptocurrency such as Bitcoin or Ethereum is completely decentralized. The only major cryptocurrency with a higher level of centralization is Ripple.
Cryptocurrencies, with Bitcoin in the lead, are regarded as the currency of the future. The fact that they are not subject to inflation makes them very attractive for investors looking ahead.
In any case, it is a very new and very volatile financial asset: this means that the price can rise or fall quickly.
For smart traders this is not a problem, indeed it makes cryptocurrencies a particularly valuable asset: trading cryptocurrencies means, in fact, taking advantage of any price change (both positive and negative) to make a profit.
How to Trade Cryptocurrencies
Many beginners think that to make money with cryptocurrencies it is necessary to buy when the price is low and sell when the price is high. It is certainly a strategy that works but the price of cryptocurrencies is subject, from time to time, to even severe collapses.
For this reason it is important to be aware of the fact that there is not only traditional investment. Alongside direct purchase, which is a long-term-oriented strategy (the classic buy & hold), today we can also turn to CFD trading.
Especially for volatile assets such as cryptocurrencies, contracts for difference represent an opportunity not to be underestimated, because they allow you to invest both upwards and downwards through short selling.
We are talking about a speculative operation that allows you to make a profit when the price of a financial security (in this case cryptocurrencies) decreases. Conceptually, it is equivalent to selling something you don’t own.
Trading cryptocurrencies with CFDs allows you to amortize any sudden market collapses, investing directly in the trend of cryptocurrencies without the need to buy them and store them in a wallet.
Where to Trade Cryptocurrencies
Obviously, cryptocurrency exchanges do not allow you to carry out any short selling operations: with exchanges you can only buy and keep.
An even bigger problem of exchanges is the lack of any security standard: unfortunately, the history of exchanges is literally full of scams, failures and hacker attacks with disastrous attacks.
In short, trading Bitcoin with exchanges is not safe and not easy. This is why most of the more savvy traders much prefer to operate with more traditional trading platforms that also offer the possibility to operate on cryptocurrencies. Using these platforms for cryptocurrencies has several advantages.
These are platforms that have already been operating for many years in traditional markets such as the Stock Exchange or Forex and which are supervised by the competent authorities.
Some of these platforms have recently begun to allow Bitcoin and other cryptocurrencies to be traded online, providing several benefits to traders:
- Safety: they are authorized and regulated platforms
- Possibility of always earning, even when the price of cryptocurrencies falls
- Great simplicity – some of these platforms are simple and intuitive (or offer advantages for beginners)
- Convenience: the best platforms allow you to operate, exchanges on the other hand are usually quite expensive.
- Ability to operate directly in Dollars/Euros: with these platforms, it is possible to buy any cryptocurrency directly with dollars or euros, exchanges often require the passage in dollars, and, in most cases, to buy emerging cryptocurrencies it is necessary to first buy Bitcoin and then use them. Obviously, this involves the payment of a double commission.
- Ability to apply leverage to further multiply profits