Cryptocurrency Trading Tips – How to Trade Crypto Assets?
Although a recent phenomenon, cryptocurrency exchanges have made great leaps and bounds. As trading in cryptocurrencies has grown, some exchanges have become so popular that they keep getting a lot of traffic.
Now it seems no trading in coins and tokens can take place without these exchanges.
Some of the exchanges where the trading of cryptocurrencies can happen include Coinbase, Binance, Bitfinex, Bittrex, Kraken, Poloniex, Swissquote and Z.com Trading. Others are Alpari, CityIndex, eToro, ETX Capital, FXPro, iTrader, and XTB.
With the mainstreaming of blockchain technology, it is important to understand how trading cryptocurrencies on exchanges happen.
In this write-up, we shall discuss the tips to make money online through the crypto markets.
How to Trade Cryptocurrencies?
Trading Bitcoins and the other coins can essentially be done in the following ways:
1. Buying an Actual (Underlying Asset)
This can be done through any of the crypto exchanges with the tokens or coins being held in a wallet belonging to the exchange or to you, offsite.
That means you will be the direct owner of the Bitcoins. To sell the coins or tokens, you can simply transfer to another wallet.
• You have full control of the actual or underlying crypto asset.
• It is highly versatile since it gives you the option to sell, transfer, exchange or convert the tokens or coins.
• You can secure your digital coins or tokens using a private key or by storing it in a wallet provided by the exchanges.
• Holding the offline, the crypto asset ensures all the risks of hackers getting access to it are minimized.
• You have a number of options when it comes to the wallet in which you will store your crypto asset.
• Failure to safeguard the private key unique to your address can expose you to possible risks.
• You must have some technical knowledge to trade tokens and coins in this manner.
• Third party wallets are prone to hacking and attack from phishing and malware.
• Losing a private key stored offline will prevent you from ever accessing your crypto assets.
At the end of the day, this is a long-term investment option for individuals who need to safeguard their Bitcoins.
Make sure you sift through all the exchanges that sell these types of crypto assets so as to pick the best. It is also important that you take deliberate steps to prevent the risk of some hacker stealing your Bitcoins.
As much as the exchanges where cryptocurrencies are sold almost in a similar way, some are more prone to theft by hackers while others might even go bankrupt.
That is a reason for you to consider holding your Bitcoins in an offline wallet.
2. Trading Cryptocurrencies as CFD Derivatives
When traded as a contract for difference (CFD) derivatives, crypto assets allow you to hold a cash margin, either with multi-asset exchanges or online forex brokers.
• You are no longer responsible for the safeguarding of passwords and private keys.
• The leverage on the crypto assets is big enough to allow for greater rewards even amidst bigger risks.
• It is possible to speculate on derivatives especially on the basis of aspects such as the possible decline in prices.
• Some online exchanges charge only a small transaction fee.
• The cost of trading this type of crypto assets are wider than those of underlying assets.
• It is possible for the broker to reverse or cancel transactions where there is a breach of terms and conditions or where the price is faulty.
• The creditworthiness of the online exchange will determine the extent of risk that clients are exposed to.
• Where the online exchanges are declared bankrupt, clients will suffer a lot of losses.
One of the reasons why you should consider investing in CFDs is that you will be able to trade around the clock. Besides, the margins of loss are very low with the option of choosing either the smaller or larger options.
Even as you resolve to make money online, it is important that gaining good knowledge of the prevailing trends.
One of these trends is the split between Bitcoin and Bitcoin Cash, which are now being traded separately.
Similarly, there are quite a number of Altcoins, which you can trade on the various crypto exchanges. With the tips discussed above, you should be able to make a lot of money online.