Trading crypto currencies has become increasingly popular, especially since Bitcoin took off in the second half of 2017, and many investors are wondering how to trade crypto currencies as beginners. To make your first investment as profitable as possible, we have compiled this guide for you. The table below shows the best crypto trading platforms currently available on the market for Bitcoin, Ethereum & Co.
Why trade crypto currencies?
Trading in crypto currencies has been possible for many years, but has met with increased interest among potential investors since the end of 2017. In principle, there are two ways to access crypto currencies. On the one hand, they can be produced by mining, but this rarely pays off. The alternative is to trade a crypto currency, for which special platforms are available. There is a good eBook called cryptotradingbook.com for beginners. Before getting started, it is recommended that you closely monitor the desired crypto currency rate and weigh up the advantages and risks.
Trade crypto currencies: Three options
We present you three types of trade with which you can invest in crypto currencies: CFDs, Exchanges and Futures Trading. All options have different characteristics that you can use to your advantage.
Outside of stock exchanges, crypto currency trading is carried out with CFDs (Contract For Difference), which is a great advantage for the trader. The latter usually operates in the market regulated by the EU and can buy or sell directly with a CFD broker. The market maker provides the trading options in the background and determines the necessary crypto currency prices and conditions for buying and selling. Our recommendation for CFD trading is the regulated broker eToro, on whose social trading platform people from over 140 countries trade in crypto currencies.
Thanks to their popularity, Exchanges mainly trade market-leading currencies such as Bitcoin and Ethereum. We have created an overview of the best Exchanges for you, as all Exchanges have their own advantages and disadvantages. The differences include currencies offered, server security, liquidity, fees, deposit options, customer service, etc.
Futures are a cost-effective way to trade on the financial and commodity markets. Standardized contracts exist here with which an asset is bought or sold at a certain price. This happens in the future to a certain quantity and quality. Futures are intended to reduce risks and generate profits in rapidly changing markets, which certainly fall under the crypto currency rankings.
Trading strategies for crypto currencies
Bitcoin is a particularly striking example of how crypto currencies, unlike equities or currencies, are only minimally affected by external factors such as the economic situation of a particular country. The decisive characteristics can be read directly from the development of the crypto-currency course. These are the basics of crypto currency trading:
- Tracking news: Crypto currency rates are very reactive to corresponding messages at short notice.
- Understanding numbers: Influences of figures such as active wallets, trading volumes, etc. on long-term price development and the crypto currency ranking.
- Technical Analysis: Analyze historical price charts in the crypto currency list for patterns.
Technical action vs. fundamental action
In the technical analysis, historical developments of a price are analyzed in order to finally predict future patterns. The fundamental analysis looks at economic and financial factors that may have an impact on the crypto currency ranking. The latter trading method is a long-term principle, while the technical analysis is rather short-term. Analysts use official documents from companies, such as income statements, balance sheets and cash flow statements, for detailed preparation of fundamental actions. The technically oriented traders are convinced that the necessary figures are already integrated in the crypto currency rankings anyway.
What is a technical chart?
Charts are simple graphical representations of a price history within a specified time period. For example, a chart can display the crypto currency price of a particular stock over a period of one year. Each point would represent the final value on each day. The price is usually displayed on the Y axis while the time is on the X axis.