Date:
26th Aug 2020
Author:
CryptoGT
Everything You Need to Know Before Trading Cryptocurrencies
With a total market cap of $364 billion and over 6000 tokens and coins, as of August 25, 2020, the cryptocurrency market is a unique global financial market. Cryptocurrencies are decentralised, making them free from the political and economic factors that impact traditional fiat assets. On the contrary, factors like demand, supply, and changes in network infrastructure, regulatory updates and integration into real-world platforms determine crypto values. This makes them great assets for portfolio diversification.
However, like all financial markets, trading digital assets comes with its own share of benefits and risks. Here’s what you should know.
However, like all financial markets, trading digital assets comes with its own share of benefits and risks. Here’s what you should know.
Cryptocurrency exchanges allow traders to buy and sell digital currencies through direct ownership of these coins. There are various types of exchanges, such as crypto-to-crypto or fiat-to-crypto. The biggest and most popular exchanges offer an exchange-broker-wallet hybrid, which allows traders to invest, trade, store, send and receive coins all from the same platform.
But many exchanges have limits on how much a trader can deposit and accounts could be expensive to maintain. Moreover, custodian exchange wallets have been prone to thefts and hacks in recent years. This is why many traders invest in cryptocurrency derivatives like Contracts for Difference (CFDs). CFDs allow traders to speculate on crypto price movements, without having to take physical ownership of the underlying asset.
But many exchanges have limits on how much a trader can deposit and accounts could be expensive to maintain. Moreover, custodian exchange wallets have been prone to thefts and hacks in recent years. This is why many traders invest in cryptocurrency derivatives like Contracts for Difference (CFDs). CFDs allow traders to speculate on crypto price movements, without having to take physical ownership of the underlying asset.
CFDs are derivative products that allow traders to speculate on the price movements of chosen cryptocurrencies. Here are some important terminologies to understand:
Cryptocurrency prices are quoted in terms of fiat currencies, like the US dollar. Traders take positions in asset pairs, like BTC/USD or BTC/ETH. With BTC/USD, traders can buy Bitcoin with US dollars or sell Bitcoin for US dollars. Many combinations of crypto-crypto pairs and crypto-fiat pairs exist. To trade them, it is important to know all factors that impact individual asset prices in a day.
Leverage can help traders gain larger exposure to the crypto market, by investing only a fraction of the full value of the trade. Traders need to open a margin account by depositing a small amount, known as initial margin. The margin denotes a percentage of the full position. By increasing exposure, traders can also multiply their profit potential. However, losses will be multiplied too if the market moves in the opposite direction.
Like any financial market, crypto prices are quoted in terms of bid and ask price. If traders want to buy a crypto pair, they trade at the ask price, which is usually a little higher than the market price. For short positions, traders look to the bid price, which is usually below market price. The difference between the two is the spread. Sizes of crypto trades are denominated in lots (in terms of the base currency), which are usually small, since crypto prices tend to be volatile. This price volatility can be measured in terms of pips, units referring to a one-digit price movement at a particular level.
Crypto prices are extremely volatile. This provides traders with multiple opportunities, while requiring robust risk management strategies too. In this respect, platforms like MetaTrader 5 offers plenty of trading tools, not only in the form of stop-loss and take-profit orders but also through technical analysis indicators and charts to keep track of market movements.
By learning to use technical indicators and charting tools, traders can gauge short-term and long-term crypto price trends to make informed trading decisions.
By learning to use technical indicators and charting tools, traders can gauge short-term and long-term crypto price trends to make informed trading decisions.
If the crypto wallet gets hacked, traders can lose all their funds. This is why security is of utmost importance in crypto trading. This includes:
• A strong account username and password
• Strong KYC/AML practices by the CFD broker
• Two-factor authentication (2FA) through platforms like Google Authenticator
• Storing of assets across different wallets
• A strong account username and password
• Strong KYC/AML practices by the CFD broker
• Two-factor authentication (2FA) through platforms like Google Authenticator
• Storing of assets across different wallets
Not all coins are worth trading. Strong research and understanding of the market drivers can help traders choose promising digital assets. Apart from basic knowledge of blockchain, mining and cryptography, it is important to know the long-term benefits of a token or coin project. For instance, Bitcoin thrives as a deflationary asset during economic uncertainties, while Ethereum rides high on the success of dApps and other protocols, like DeFi, based on its platform.
The choice of trading platform and broker can also make a significant difference. Ease of deposits and withdrawals, range of trading assets and prompt customer services can enhance the trading experience.
The choice of trading platform and broker can also make a significant difference. Ease of deposits and withdrawals, range of trading assets and prompt customer services can enhance the trading experience.
This website cryptogt.com is owned and operated by Hatio Ltd. Hatio Ltd is a registered company in Marshall Islands, with registration number 90645 and has its registered address on Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Republic of the Marshall Islands MH96960.
Cryptocurrency trading can be extremely risky and can lead to large and immediate financial losses. Crypto assets are highly volatile and can result in significant losses of your capital over a short period of time. Cryptocurrencies markets are unregulated services which are not governed by any specific regulatory framework. The provision of such services is not being directly provided by the Company but through licensed third parties.
CryptoGT does not provide its services to residents of various jurisdictions such as but not limited to the United States of America, North Korea and Cuba.
CryptoGT currently accepts only cryptocurrencies as method of deposit.
Cryptocurrency trading can be extremely risky and can lead to large and immediate financial losses. Crypto assets are highly volatile and can result in significant losses of your capital over a short period of time. Cryptocurrencies markets are unregulated services which are not governed by any specific regulatory framework. The provision of such services is not being directly provided by the Company but through licensed third parties.
CryptoGT does not provide its services to residents of various jurisdictions such as but not limited to the United States of America, North Korea and Cuba.
CryptoGT currently accepts only cryptocurrencies as method of deposit.