These are exciting times. Unless you have been living under a rock for the last ten years, you will have heard of cryptocurrencies. The likes of Bitcoin, Ethereum, LiteCoin, Ripple, and others are never too far from the headlines. With cryptocurrency an everyday term and many top brands accepting cryptocurrencies as a form of payment, it is clear that crypto is here to stay.
Forex trading is big business, but the rise of cryptocurrencies has created even more opportunities to make money on the world’s financial markets. If cryptocurrency trading intrigues you, here is a quick introduction to the fascinating world of cryptocurrency trading.
The easiest way to get into cryptocurrency trading is to buy some. There was a time when any intrepid crypto investor would try their luck at mining bitcoin, but it’s no longer profitable to do this. The cost of mining crypto is prohibitive, so most people are better off buying and selling cryptocurrency via a well-known cryptocurrency exchange, such as Coinbase, Kraken, or Bittrex.
You can trade in many leading cryptocurrencies. The exchange charges a fee for each transaction and you pay the price set by the broker. There are also peer-to-peer brokers springing up, which match buyers and sellers.
The general rule is to choose your cryptocurrency trading platform carefully. There have been a number of high-profile hacks in recent years, with investors losing out big-time. The cryptocurrency market is largely unregulated, so if a hacker steals the contents of your e-wallet, there isn’t much you can do.
Your second option is to look for a cryptocurrency trading broker. Forex traders make money from betting on whether one currency will rise or fall in price against another. Many FX brokers now offer cryptocurrencies in their portfolio of currency pairs, so you can trade cryptocurrencies against fiat currency such as USD, or trade one crypto against another.
There are also cryptocurrency Contracts for Difference or CFDs. This is where you make a contract with the broker, which states what the future price of the underlying asset will be. If you are correct, you make money. If you get it wrong, you lose money.
Thanks to the power of leverage, it is possible to make a lot of money trading crypto in the forex markets, but it is wise to start off with a demo account until you understand how cryptocurrency trading works. Most experts advise that beginners use a demo account for at least six months, as this is the optimum time to get used to the different trading terms and financial markets.
Is Crypto Trading Risky?
The cryptocurrency market is inherently risky. The price of cryptocurrencies has risen and fallen in spectacular fashion in recent years and crypto is extremely volatile. This makes trading in cryptocurrency a risky business.
Holding on to too much cryptocurrency in an exchange is risky, but so is ignoring the risks associated with leveraging a trade. However, there are ways to mitigate these risks, so take your time learning the ins and outs of cryptocurrency trading.
Cryptocurrencies are here to stay. Are you ready?