FXTM information and reviews
FXTM
93%
IronFX information and reviews
IronFX
92%
Libertex information and reviews
Libertex
91%
FXCC information and reviews
FXCC
90%
Markets.com information and reviews
Markets.com
89%
FxPro information and reviews
FxPro
88%
EUR/USD
1.1726
BTC/USD
47 042.62
GBP/USD
1.3730
USD/JPY
109.9804
USD/CHF
0.9323
USD/CAD
1.2771
EUR/JPY
128.9586

Choosing a trading instrument: how to trade cryptocurrency


20 May 2021

Cryptocurrency is appealing to traders due to its extreme volatility. Rates can fluctuate by tens or even hundreds of percent per day. Sufficient trading experience + a set of proven strategies + stress resistance = a starter pack for an ideal cryptocurrency trader. Thus, if you are a beginner or simply don’t like to take risks in your strategies, investing in cryptocurrency is hardly a good choice for you. However, we strongly recommend at least trying, because if you choose the right time to enter the market and follow the rules of risk management, cryptocurrency trading can bring you much higher returns than traditional investments. Cryptocurrencies can also be included in your investment portfolios along with more traditional assets. Investing in bitcoin, for example, could have made you a millionaire in a few years. In mid-October 2015, a bitcoin was worth $262. Had you bought just one bitcoin then, you would have made $57,000 by now. Think about it!

Cryptocurrency trading: where to start

How to trade cryptocurrency? In order to join the cryptocurrency rush, you only need a small amount of money and an intermediary on the market. There are two options for making cryptocurrency transactions:

If you want to buy cryptocurrency for personal use, you can do it on a cryptocurrency exchange. There are many different options on the market, so the choice should be made responsibly, otherwise there is a risk of ending up with an unreliable agent. Which cryptocurrency exchange is the best? We recommend giving preference to the most famous platforms: Binance, Bitfinex, Coinbase, EXMO, etc. After choosing a cryptocurrency exchange, you need to create your account, the so-called digital wallet, where the currency will be stored. Poof — you’re a crypto investor now!

To make cryptocurrency transactions, you need to have a set of public and private keys. These keys are similar to the passwords generated by your cryptocurrency wallet. Your public key is associated with your wallet address and allows people to send you cryptocurrency. Your private key is used to confirm transactions sent from your wallet.

If you want to make quick money on cryptocurrency trading, just open a special account in cryptocurrency with a broker instead of a personal wallet on the exchange. It’s faster and easier. For example, at Grand Capital we have Crypto accounts with 68 cryptocurrency pairs available for trading, so that every trader can choose the one that suits their mood and wallet.

How much money do you need to start trading crypto?

If you need to find out just how much money you need to become a crypto trader, the basic formula for initial deposit still applies. The rule of the thumb is that your initial deposit shouldn’t be a significant of your available capital, but it should be enough for you to master all the desired trading instruments and test strategies. A range of $1,000–$2,000 is commonly suggested. This amount is enough to build your method and test strategies that will help you in the future when dealing with large amounts and high risks.

How to choose a cryptocurrency for trading

First, remember that there is no single perfect cryptocurrency, but there are perfect cryptocurrencies for particular goals. For example, bitcoin is the best cryptocurrency as a safe haven asset because it’s the most widespread and its supply is limited.

Cryptocurrencies can be divided into types based on various parameters and the spectrum of use, but they all have one thing in common: their operation is based on blockchain technology, which makes them decentralized.

There are special services for analyzing cryptocurrencies, for example, CoinMarketCap. With their help, you can compare all cryptocurrencies by market capitalization and other parameters, as well as find out a lot of useful information about crypto trading. For investments, it’s better to choose popular cryptocurrencies from at least top 30. This guarantees greater stability and variety of places where this currency is traded.

How to choose a trading strategy for cryptocurrency

Successful trading in cryptocurrency, as is the case with any other asset, is impossible without an effective strategy. However, strategies for crypto trading differ significantly from the strategies used with other instruments. For example, technical and computer analysis, indispensable for currency pairs, require a different approach. Rules of pricing in the cryptocurrency market does not apply to standard analytical methods, an individual approach and indicator settings are needed. Crypto assets are known for sharp price swings. The price can change instantly by several hundred points.

An important feature of cryptocurrency pricing is the frequent formation of price impulses. To make money trading cryptocurrency, it’s important to place orders in the direction of the price spike in time (we recommend using Buy Stop and Sell Stop orders).

The high level of volatility of digital assets creates good potential for ultra-high profits.

So, we’ve already covere various aspects of trading currency pairs and cryptocurrencies. In the following articles in this series, we’ll talk about other popular instruments so that you can make your own decision and choose the suitable assets for your trading.

#source

Related

Olymp Trade's 7 Years of Super Trading
Olymp Trade's 7 Years of Super Trading

Olymp Trade's 7th anniversary will be marked by a unique trading tournament, the Super 7 Quest. Traders can manifest their superpowers and earn rewards!

17 Sep 2021

New Economic Calendar Feature Added to FBS Personal Area and Apps
New Economic Calendar Feature Added to FBS Personal Area and Apps

FBS, an internationally recognized online trading broker, has added a new Economic Calendar feature to its browser Personal Area and the apps: FBS - Trading Broker and FBS Trader...

17 Sep 2021

HotForex offers CFD Trading on 900+ DMA Stocks
HotForex offers CFD Trading on 900+ DMA Stocks

Traders with the internationally acclaimed multi-asset broker HotForex can expand their portfolio by trading CFDs on more than 900 DMA stocks - meaning they can place their...

16 Sep 2021

FBS Becomes Principal Partner of Leicester City
FBS Becomes Principal Partner of Leicester City

FBS, an international trading company, signed a partnership agreement with Leicester City Football Club. The partnership commemorates the mutual vision of the two teams by harnessing...

15 Sep 2021

DAX30 Index expansion
DAX30 Index expansion

A significant expansion is coming to the German DAX, the biggest reform in the index’s history. This change is effective from Monday the 20th of September. As a result...

15 Sep 2021

OctaFX introduces new currency pairs
OctaFX introduces new currency pairs

OctaFX is marking September as the month of the peso by introducing three new currency pairs. Beginning 13 September, the USDMXN, EURMXN, and GBPMXN pairs...

14 Sep 2021


Editors' Picks

OctaFX information and reviews
OctaFX
86%
HotForex information and reviews
HotForex
85%
XM information and reviews
XM
80%
FXCM information and reviews
FXCM
79%
Vantage FX information and reviews
Vantage FX
78%
Moneta Markets information and reviews
Moneta Markets
77%

© 2006-2021 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.