7 Things to Know About Cryptocurrency Trading

Cryptocurrency has been a hot topic for several years. Today, you can see an increasing number of people participating in crypto trading. However, experts mention every trading comes with advantages and disadvantages, and digital currency trading is no different. Click here to learn more about the benefits and risks of cryptocurrency exchange.

Before participating in any trading, you should gather information about it that will act as a guide to make the right investment decisions and earn huge profits. Here are seven things to know about buying and selling cryptocurrencies.

1. 1. What Is Cryptocurrency Trading?

Cryptocurrency trading refers to speculating the prices of various cryptocurrencies in the market via a CFD (Contract for difference) account and buying and selling crypto through an exchange.

CFD is a financial contract where the buyer agrees to pay the seller the difference between a cryptocurrency asset’s current value and its value at contract time.

1. 2. What Is Spread?

It refers to the difference between cryptocurrency’s buying and selling price quoted. Like traditional financial markets, when you open a position in the digital currency market, you are presented with two prices.

When you are trading at a long position, you buy cryptocurrency assets slightly higher than the market price. When you switch to a shorter one, you sell the assets at a somewhat lower price than the market price.

1. 3. What Is Lot?

Cryptocurrencies are traded in batches of crypto tokens known as lots. It is done to standardize trade size. As these currencies are volatile, lots are smaller, and most are just one unit of the base cryptocurrency. However, there are exceptions, and some cryptocurrencies are traded in bigger lots.

1. 4. What Is Leverage?

Leverage refers to a trading practice where you can gain more exposure to large amounts of cryptocurrency without paying the total value of the trade upfront. Instead, the trader puts a small deposit known as a margin. Then, when you close the leveraged position, the profit and loss are based on the trade’s full size.

1. 5. What Is Pip?

Pip refers to the units used to measure the price movement of cryptocurrencies. It is a one-digit movement in the price at a particular level. Generally, popular digital currencies like Bitcoin and Ethereum are traded at the dollar level. If the price of a specific crypto has moved from $150 to $151, the cryptocurrency has moved one pip. In some lower-value cryptocurrencies, the value of a pip can be equivalent to a cent or a fraction of a cent.

1. 6. How to Buy and Store Cryptocurrency?

You can buy and sell cryptocurrencies at a crypto exchange. The exchange acts as a facilitator for trading and charges a small fee for the trade. Users have to sign up with cryptocurrency exchanges to buy and sell the currencies.

When you register, you also get a digital wallet that is used to store your digital coins. You can buy crypto with traditional currencies or sell it and get traditional currencies.

1. 7. What Moves Cryptocurrency Market?

Cryptocurrencies’ market movements depend on the demand and supply of crypto assets. However, as they are decentralized assets, they are not affected worldwide by economic and political events.

To sum up, gathering knowledge about cryptocurrencies trading will help you master the tips and tricks and formulate innovative strategies for investment.