Crypto Trading Basics


Cryptocurrency trading is the act of speculation about fluctuations in cryptocurrency prices through a CFD trading account or the direct purchase and sale of underlying cryptocurrencies, through crypto-exchanges.


Trading in cryptocurrencies is very easy but it is very difficult to make money. The reason why is that it is widely known that a significant number of Forex traders fail. Various sites with providers of online trading platforms are required by law to point out on their site that 70%, 80%, and even more than 90% of traders, lose money, thus the potential investors end up abandoning trading.



Many experienced cryptocurrency traders are doing well, but new traders are still struggling to win this market. Cryptocurrency markets fluctuate according to supply and demand. However, as they are decentralised, they tend to remain free of many of the economic and political concerns that affect traditional currencies. Although there is still a lot of uncertainty about cryptocurrencies, the following factors can have a significant impact on their prices:


  • Special offer: The total number of cryptocurrencies and the rate at which they are released, destroyed or lost.
  • Cryptocurrency market capitalisation: The value of all the cryptocurrencies that exist and the way users realise that they are growing.
  • Press and Media: The way the cryptocurrency appears in the media and the coverage it receives from the media.
  • Acceptance: The degree to which the cryptocurrency is easily integrated into the existing infrastructure. As in e-commerce payment systems.
  • Key facts and news: Major events, such as regulatory updates, security breaches and financial difficulties.


CFD trading in cryptocurrencies

CFD trading is a derivative which allows you to speculate on the fluctuations of cryptocurrency prices without acquiring ownership of the crypto subjects. You can open a long position (buy) if you think a cryptocurrency will increase in value, or a short position (sell) if you think the value of the crypto will decrease. Both positions can be opened by leverage, which means you only need to make a small deposit – known as a “margin” – to ensure full exposure to the underlying market. Your profits or losses are still calculated according to the full size of your position. So, leverage increases both profits and losses.

Buy and sell cryptocurrencies through crypto exchanges

When you buy cryptocurrencies through cryptocurrency exchanges, you buy the coins themselves. You will need to create an exchange account and deposit the full value of the cryptocurrency asset to open a position. Then you have to save the cryptocurrency badges in your wallet, until you are ready to sell it. Exchanges have their own steep learning curve, as you have to deal with the technology involved and learn how to understand the data. Many exchanges also have limits on the amount you can deposit, while maintaining your accounts, in some, can be costly.

Why is crypto trading more profitable than investing?

Investing in cryptocurrencies can bring you a lot of profits in the long run. Those who invested in them earlier – and especially in Bitcoin – have now made thousands of dollars. However, the choice of trading with them is safer. Cryptocurrencies are usually more volatile than fiat currencies such as the USD, GBP and EUR. The price of cryptocurrencies can fluctuate a lot, even on a daily basis. Virtually all prices of other cryptocurrencies are correlated with the price of Bitcoin. Therefore, when Bitcoin performs well, the entire cryptocurrency market tends to do the opposite.

Common mistakes traders make

The biggest mistake most traders make, at all levels, is that they trade large amounts of cryptocurrencies. Big losses are also more devastating from any financial and emotional point of view. The size of a trader’s position should never jeopardise a trader’s lifestyle or professional career. Another mistake is when a trader’s desire to be right is greater than his desire to make money, thus making irrational decisions and finally losing trades. Failure to admit that he might be or is wrong could be “catastrophic”.

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