The cryptocurrencies market is booming in these days. More and more people are starting to trade in crypto. But what is cryptocurrency trading? How to trade cryptocurrency? What is a good cryptocurrency trading platform?
What is the difference between crypto trading and buying cryptocurrencies? How many types of cryptocurrency are there? In this section of our guide, we will answer all your questions about cryptocurrencies and show you the best cryptocurrency trading platforms.
We have done a short introduction about online investing and trading platforms on the homepage as you might have read.
Let’s see everything in detail.
What is cryptocurrency trading?
Let’s start with the first main questions: What is cryptocurrency trading? – How can I trade Bitcoin?
When talking about cryptocurrencies, you should know that there is a big difference between buying cryptocurrencies and investing in cryptocurrencies.
If someone buys a cryptocurrency in a platform, they own it.
For example, once bought Bitcoin, a person can use that cryptocurrency to buy other goods or services in the market on a regular day. So should the value of that crypto rise in the market, the owner will have an increased value and the opportunity to buy more things in it.
However currently the amount of platforms with products payable through using crypto in the market is very limited.
This is a reason why more people started to invest in crypto: to speculate on the cryptocurrency value.
Sources: Coinmap.org and Forbes.com
It works exactly like Forex&CFDs, in fact, bitcoin and all cryptocurrencies can be traded as CFDs in those platforms.
The most important things to do is to trade with the right strategy and to choose the best broker.
How to Trade Cryptocurrency
Are you asking yourself how to trade cryptocurrency? In which platform? You need to know that to get started with bitcoin and cryptocurrency trading you need to follow 3 simple steps:
- Open an account in a cryptocurrency trading platform
- Find the cryptocurrency assets
- Have a good strategy
But let’s see now each point!
1- Cryptocurrency Trading Platforms
After answering the question: what is cryptocurrency trading, let’s move forward and see how to trade them.
To trade cryptocurrency is very easy and similar to the traditional way.
The first thing to do is to open an account with a regulated exchange platform.
Today all the investing platforms offer the opportunity to trade cryptocurrencies and mainly bitcoin..
Here you can find a list of the most important cryptocurrencies in the world and the best crypto platforms to trade with.
|Trading Platform||Rating||Minimum Deposit||Demo Account||Start Trading|
|$100|| TRADE NOW *80.6% of retail CFD accounts lose money |
|$200|| TRADE NOW *Your capital is at risk |
|$200|| TRADE NOW *Your capital is at risk |
|$10|| TRADE NOW *Your capital is at risk |
IQ Option review
Best Cryptocurrency Broker ONLY for American Traders
2- Find the cryptocurrency assets
Once you have opened a normal account, to find the cryptocurrencies among all the assets, you need to write their names:
After deciding which virtual currency you want to trade on the platform, you need to decide if you want to sell and buy.
As we explained how to trade Forex, crypto trading involves the financial leverage concept and the lots in every cryptocurrency trading platform. So for example, if you want to exchange 1 lot of Bitcoin you need enough money in your account to do it.
– Let’s understand this better:
A common mistake people do is to think of crypto trading as the same process as when buying cryptocurrencies- but these are 2 different things!
Exchange cryptocurrency is not like buying cryptocurrency!
In fact traders see cryptocurrencies as a normal currency pair. For example EUR/USD.
If you see it like this you are on the right way.
In this case, all the measurements such as 0.01 BTC or 1 Bitcoin have nothing to do with investing. What is important are the lots in these platforms.
In this scenario, all the crypto trades are measured in lots, minilots or microlots.
Another important thing to set up in crypto trading is the leverage. Most of the brokers have fixed general leverage on their platform for all the assets. This means that a trader uses the same leverage to trade EUR/USD and Bitcoin too.
However, a few brokers also have a different leverage a trader can choose for each different position.
Once the crypto asset, volume, and the leverage are all decided, it’s time to open the position.
There are just two different choices a trader can make: buy or sell.
Also, in this case, every single position can be opened with the relative stop loss and take profit.
Finally, when you decide it’s time to close the position manually in your platform, you just need to click the ‘X’ near the open trade and in less than one second the position will close.
3- Have a good strategy
For cryptocurrency trading, it’s very important to have a good strategy to use in your chosen platform. As we have explained, cryptocurrency trading is very similar to the traditional one.
This means the traditional strategies are also usable for crypto trading.
There are many strategies available, but because of the high volatility cryptocurrencies have, it’s very important to select the right one.
Day trading, scalping and Bollinger Bands indicators might not be very useful for bitcoins and cryptocurrencies because these are short-term strategies.
Some good strategies to follow in crypto trading are long-term strategies. The classic move to buy when the price is low and hold till it grows could be the right move.
Just analyzing the trend Bitcoin and Ethereum had in 2017 make you understand why we are saying that. Cryptocurrencies are still something young in the market that could boom again every time.
This is why a long-term strategy could be the winning move.
Cryptocurrency Trading in EToro
To start your experience, the best cryptocurrency trading platform is eToro.
In eToro it’s possible to trade cryptos such as Bitcoin, Ethereum, Litecoin, Ripple, Dash, and Neo.
A trader can invest in bitcoin in the same way he trades CFDs in these days.
In case you are not an expert trader and you don’t know how to do it, don’t worry!
In the eToro platform, there is the opportunity to trade in Crypto CopyFund.
This new tool consists of a Fund made of different cryptocurrencies. There are many different funds to choose from in the platform, and each of them has different cryptocurrencies in it. For example, some could have 40% of Bitcoin, others just 10% of them.
All the cryptocurrencies included in a fund must be at least $1 mln worth. This means that there are just major currencies in it.
If a currency will decrease and be less than $1 mln worth, it’ll be deleted from the fund.
It’s obviously possible to invest with a small quantity of money on the platform, you don’t need millions.
When you have bought your percentage of the fund, you can sell it every time without any restriction.
A crypto copyfund has the following currencies in it:
- Bitcoin Cash
The crypto copyfund is a unique offer among all the trading platforms, for those traders without time or experience to do cryptocurrency trading by themselves.
Why people only buy Bitcoin?
In 2017 a lot of people started to invest and buy Bitcoin. The Bitcoin market boomed starting in May 2017.
But why people just invested in Bitcoin and not in the other cryptocurrencies?
The answer is very simple. Bitcoin is the most famous cryptocurrency between all the existing one.
As the graphic shows gathering data from all the investing platforms, Bitcoin is the main cryptocurrency by Market Capitalization, Value and Growth Rate.
In 6 months Bitcoin grew from $ 500 up to $ 18.000 which represents a growth of 3500%.
Nothing in financial history has had such an incredible number as Bitcoin. Following the Bitcoin trend, in 2017 the second and third cryptocurrencies were Ethereum and Litecoin in the same platforms.
From the above chart, we can see that in 2018 Ripple entered in the top 3 of the major cryptocurrencies.
These data show how, even if Bitcoin was the most famous virtual Coin, was also the most profitable one to invest in.
In 2018 the general cryptocurrency market situation had a big drop. A lot of people say the Bitcoin bubble exploded, others say it is just a temporary moment before a second growth.
At the same time, a lot of secondary cryptocurrencies appeared in many platforms. We have some examples with Neo, Dash, and Cardano.
The price of those new ICOs is still low and it could boom like Bitcoin last year. This is why they have been added to all the trading platforms.
It’s always a good idea to have a full picture of this world in order to know which one could really be the best market opportunity.
Cryptocurrency Trading or Traditional Trading?
A lot of people are asking themselves if doing cryptocurrency trading is really worth. And if it is better than traditional trading.
There isn’t a definitive answer to this question.
In 2017, after the Bitcoin boom, we can definitely say that cryptocurrency trading was worth to do it and much better than the traditional one.
The prices of different crypto coins grew exponentially for about 8 months bringing a lot of profits to traders around the trading platforms.
Investing in cryptocurrency was considered easy money by most of the people.
But after the crash, we saw at the beginning of 2018 the general thoughts changed. People started to move from crypto trading, back to the traditional one.
How is the situation now at the end of 2018?
What we can say now is that there isn’t a fixed rule to follow, but the best thing to do in finance is diversification.
This means that is better to take a portion of your total capital in the investing platform and use it for traditional trading, and the other portion for crypto trading, which is still potentially fruitful but still new and very volatile as the market.