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Cryptocurrency trading: what is it?

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Crypto trading is a good way to make money with cryptocurrencies. Income in this type of trading means understanding the growth and fall of currencies and trying to speculate on the rates. It is also important to understand the perspective here: it can be short-term, medium-term, long-term. Thanks to each of them, you can earn income, but the approaches to these principles are very different from each other.

The key is to use the proven crypto trading platform.

Where should you start?

First, you need to evaluate the market itself – which cryptocurrencies are the most popular, their volume and liquidity. You will work with trading pairs. It is a special feature where one cryptocurrency can be exchanged for another or fiat currency.

Where to trade?

The main option is cryptocurrency platforms.

Exchanges can also act as marketplaces, i.e., platforms where traders can sell digital assets to each other.

Each exchange has its own listing – that is, a certain set of cryptocurrencies and trading pairs. Each platform can independently choose which assets users can share. The most popular cryptocurrency for listing, of course, is bitcoin, which is available on every crypto exchange.

Once you have decided on a trading platform, you can start opening the first orders. But for this you still have to know a few points.

Crypto trading tools

In crypto trading, the same instruments and assets are usually used as in classic trading, they are just linked to cryptocurrency. One of them is derivatives – special agreements on future prices for cryptocurrency assets.When buying a derivative, neither you nor the other party actually owns the asset, speculation is carried out around the rights to exercise the contract. Depending on the terms of the agreement, the main types of derivatives include:

Let’s explore each of these processes.

Futures

There is a way to protect yourself from the consequences of the cryptocurrency market volatility – to conclude a futures contract. It ensures that you will be sold a specific asset (cryptocurrency) at a fixed price and in the future. It’s like asking the seller to postpone the goods until tomorrow, because right now you don’t have enough money. But at the same time, no one guarantees that the price of this asset in the foreign market will not change – it may turn out to be much higher than the real one. One disadvantage of  futures is that you are required to purchase the asset at the agreed price on the specified date.

Futures may also be indefinitely — that is, you agree on a price, but not on a purchase date.

Options

An option is a contract that gives you the right to purchase an asset at a specified price, and it is not necessary. So this is a futures game in which you can always change the way you buy it.

Swaps

A swap is a double contract. You are sold a crypto asset if you promise to sell it back to the same trader on the same or excellent terms.

The trading market is large, and in order to understand it, you need to figure it out. And for complete security, you should use only proven platforms.


Interesting Related Article: “How to Use Crypto Apps for Cryptocurrency Trading?“

Source: Market Business News