Cryptocurrency Trading for Beginners

benefits cryptocurrency trading

Introduction

The news that Elon Musk’s invested in Bitcoin resulted in record high cryptocurrency prices. Elon Musk’s cryptic tweet on Twitter likely caused Bitcoin to reach a record price of $60,000.

The digital currency has become the talk of the town once again and intrigued the interest of investors worldwide.

If you are waiting on the sidelines due to uncertainty regarding cryptocurrency trading, you have come to the right place.

You can learn more about cryptocurrency trading and its significance through this article. With better knowledge of the topic, you can make informed decisions with ease.

What is Cryptocurrency Trading?

Cryptocurrency trading is essentially the act of speculating on the price of digital currencies by buying and selling them.

Bitcoin and thousands of other cryptos are bought and sold on numerous platforms including P2P platforms and exchange marketplaces.

Like stocks and other investments, cryptocurrency also carries risks. But, cryptocurrency trading often feels like a good idea due to its potentially high return.

Most people think cryptocurrency is ideal for purchasing products such as high-quality marijuana flowers online without exposing their identity. The anonymity during the transaction has made cryptocurrency a favorite alternative mode of exchange like debit/credit cards for people.

But, do you know it can also help you make money? Investors like to trade cryptocurrency due to its highly volatile nature. With suitable market conditions, digital trading currencies can offer higher returns compared to other traditional investments.

Investors indulge in trading in different ways, such as:

CFD Trading On Cryptocurrencies

CFD or Contract For Difference refers to the derivatives enabling the traders to speculate cryptocurrency’s price movements. But, you never take ownership of the coins. While trading, you can go long, which means you can buy when you think the digital currency will reach high prices. If you think these coins will fall, then you can sell (short) them. For buying or selling, you need to put in a small deposit or margin. In simple terms, you pay the difference in the digital currency price between the time you open and close the position.

Buying and Selling Cryptocurrencies on an Exchange

Most cryptocurrency traders buy and sell cryptocurrencies like Bitcoin on a cryptocurrency exchange such as Coinbase. These are essentially marketplaces that list different cryptos on different trading pairs. For example, you can send money from your bank to an exchange and buy crypto in US dollar, or even send Bitcoin over to it if you already have some and buy other cryptocurrencies like Ethereum using your Bitcoin.

Buying and Selling On a P2P Marketplace

Another method many traders use to buy or sell cryptocurrencies is via peer-to-peer (P2P) marketplaces such as LocalCryptos. Buying and selling on a peer-to-peer marketplaces differ from exchanges in that you buy and sell with other traders directly. There are quite a few P2P platforms out there.

Benefits Of Cryptocurrency Trading

The recent upsurges of top cryptocurrency prices have invoked interest in traders. Digital currencies appear like a viable investment option due to the high security offered by blockchain technology.

Still not convinced? Then, here are the benefits associated with cryptocurrency trading:

1. High Returns

Compared to other investment options, cryptocurrency trading seems like the more profitable one. In a relatively short period, cryptocurrency has managed to attract the attention of investors. For example, when you invest in stocks in the US stock exchange, you can expect a maximum of 20% returns. It is a good percentage, but cryptocurrencies offer more returns. They have exhibited huge variations in their prices within short periods. While cryptocurrency trading has risk, the returns can compensate for the high risk involved. Remember, you can lose money trading cryptocurrencies when you have no specific strategy.

2. You Have Control Of The Money

Unlike other means, digital currencies offer you a great level of independence. When you deposit money in a bank, you need to depend on the organization and other people. Your access to the rightful money becomes restricted. If the bank goes bankrupt, you lose money. Several external forces have control over your money. But, when you opt for cryptocurrencies, you gain full control of them, and these currencies stay with you forever. You can avoid relying on any financial institution for holding or transferring it. You avoid paying any high transaction fees. In the future, cryptocurrency can become the foundation of a decentralized economy. Hence, investing in it can help you reap benefits later.

3. Simplicity

Investing in stocks, bonds, or others is a complicated and time-consuming process. You need to make an effort to complete the whole process. For example, if you are looking to invest in real estate, you have a high entry threshold. It means you need a significant sum at your disposal to start small investments. For traders who wish for simplicity, cryptocurrency is the answer. The joining and trading of digital currencies have simple steps. You never have to deal with any institutions, visit banks, or sign documents to start trading. You have to choose a reliable cryptocurrency exchange, open an account, get a wallet, and start trading.Due to the simplicity of cryptocurrency, it is entering into the food culture and carnivores society too.

In our Bitcoin community, Saifedean Ammous seems to have been the one to kick it off and has quickly gained a number of followers with the likes of Jimmy Song and Tones Vayes joining him and actually starting a carnivore diet club. They meet in restaurants eat meat and talk Bitcoin with what appears to be a large following of like-minded people.So bitcoin is everywhere nowadays.

Conclusion

The global cryptocurrency market is growing at an astonishing rate. It may have a CAGR (compound annual growth rate) of 30% by 2026. Cryptocurrencies such as Bitcoin have proved their resilience. Hence, many institutional and retail investors are interested in digital trading currencies. You can also join the bandwagon to get high returns from this form of trading.

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