Cryptocurrency is a virtual currency that has taken the world by storm. Many individuals and companies worldwide have started to trade using cryptocurrency. But cryptocurrency trading is risky as it can lead you to lose money. Due to these reasons, some countries have not legalized cryptocurrency yet.
Despite being risky, the community of cryptocurrency has been continuously growing. The trading rate is also growing. But most people use cryptocurrency as an investment, just like Forex and stocks. The properties of cryptocurrency match with that of stocks and forex too.
Now to give you a complete understanding of cryptocurrency trading, let’s start with a detailed analysis of cryptocurrency, its types, properties. In the end, we will provide you with some tips which can be very useful for you in cryptocurrency trading.
What is Cryptocurrency?
To understand cryptocurrency trading and investments, you must first understand what cryptocurrency is.
Cryptocurrency is a virtual or digital currency. It is decentralized and operates based on blockchain technology. With blockchain technology, your transaction records stay safe and secure. Cryptocurrency uses secure methods to verify your purchases. This means there is no room for double-spending and fraud.
Cryptocurrency is not issued by any central body. That makes it safe from any government manipulation and interference. This is probably the main reason why people have started to invest in cryptocurrencies.
If you want to get your hands on cryptocurrency, you have to do it by signing up in an online broker like eToro, Cryptology, and IQ option.
There are over 5000 cryptocurrencies circulating in the world. You may have heard of some of the famous and most used cryptocurrencies, such as Bitcoin, Litecoin, or Ethrenium.
What is Cryptocurrency trading?
Now that we know about cryptocurrency, let’s answer the question of “what is cryptocurrency trading?”
Cryptocurrency trading is similar to stock trading. In cryptocurrency trading, you buy a certain unit of cryptocurrency and speculate the market to see how the monetary value of your unit performs. When the value gets higher than the purchase price, you sell your unit and earn some profit.
The values of this type instrument fluctuate in terms of economical change and trade demands. Traders take advantage of this fluctuation and, with their strategy and experience, they profit from cryptocurrency investments. It is a great means of earning cash with your strategic and observational skills.
Many young minds in the Philippines have joined the crypto trading community. The community is growing rapidly in the Philippines with many successful crypto traders.
Cryptocurrency Trading Platforms
Cryptocurrency trading takes place online because you are trading with digital money. So, the only trading platforms for cryptocurrency are the online brokerage platforms. Outside of that, you can only purchase items with cryptocurrency but not trade with them, according to the definition.
How to determine a good cryptocurrency trading platform
There are many online brokers available worldwide. But you must make your investment in the best ones to get the most profit. How would you determine which one is good? It’s simple. Judge them on the basis of some key areas, which may include:
Fees
Most of the online brokers will not charge any fee for opening an account. But they will charge you in other ways like withdrawing, order changing, inactivity fee etc. We can’t blame them because that’s how brokers make profit. However, you should look at your brokers fee rate. The less fee they charge, the more profit you will make.
Platforms
No matter how much your broker charges, if they don’t give you a safe and interactive platform, it is not worth it. To make a successful crypto trade, you need to have a place to observe the progress and value of your investment. MetaTrader5 is the best open source platform. A good broker must have this platform available to all its clients. MetaTrader4 is also considerable as it isn’t much different from MetaTrader5.
Account types
Brokers offer different types of accounts based on deposit and investment amount. Before choosing any broker, you should look at their account types, costs, and the opportunities they offer.
Customer support
A good broker must be available and responsive to the needs of its clients. Most brokers offer email, live chat, and voice call for customer support. You should look at how efficient and effective each of them is.
Payment options
Payment/transaction options are a vital component in choosing a broker. You should look at their opinions and see if they provide any secure and affordable methods of transactions.
Judging by those criterias, the best cryptocurrency trading platforms in the Philippines are eToro, IQ Option, Cryptology, etc. There are many other cryptocurrency sites that allow you to buy or exchange cryptocurrency in terms of its monetary value. They don’t allow you to sell them, though.
These brokers offer various platforms to trade with cryptocurrency. But almost all of them offer MetaTrader 4 and MetaTrader 5. Besides, they offer their custom-built platforms. These are often designed to be more interactive and user-friendly and also feature easy odds. They can be branded as the perfect platform for cryptocurrency trading for beginners.
Now let’s take a look at how you can get involved in cryptocurrency trading.
Steps in Cryptocurrency trading
1-Open a brokerage account
The only place you can buy cryptocurrency is online brokers and cryptocurrency websites like Cryptology, IQ options, and eToro. Choose any of them and open your account.
But before opening an account, make sure that the broker is legal in your country and has a clean record of operation. And if you are new in this trading field, it’s best to choose a broker that offers demo account copy trading.
2-Research cryptocurrencies
There are currently more than 5000 types of cryptocurrency in the market. Each has different price ratings and demands in the market. You should not directly jump into an investment.
In crypto trading, you should take your time and observe the market. Which currencies are falling in value, which is rising, which currencies are currently undervalued and have the potential of rising in time?
You should master these factors and skills to go for a big crypto trading. Until then, you should stick with relatively small crypto investments so that you can bear the loss if the worst happens.
3-Make the investment
After researching and observing the market, it’s finally time to invest in crypto trading. Always invest in the instruments that will rise in value. In order to purchase cryptocurrency from your brokerage account, you first need to deposit the necessary amount of money in it.
You can deposit money using bank lines or the card options available in that broker. After confirming your deposit, it’s time to purchase some cryptocurrency.
4-Observe the market
Not everything goes according to plan and, in cryptocurrency trade, this rings true the most. After making your investment, you must keep a sharp eye on the market. Most online brokers feature mobile applications to keep track of your trade and change orders from anywhere anytime. You can take advantage of that.
Keep in mind that you want your invested cryptocurrency to rise in monetary value. If things go the opposite way and your investment starts losing value, it’s better to sell that immediately and prevent loss. Small financial loss is preferable in comparison to high financial loss.
5-Make your move
You need to make the right move at the right time. When your cryptocurrency investment rises in value, you shouldn’t rush on to sell it. Instead, wait for it to reach its peak. Then sell it.
The same goes for price decreases. When the price starts falling, observe it for a while and evaluate other factors. If things seem bad, sell it to avoid a big loss.
6-Withdraw money
After profiting from the cryptocurrency trade, it’s time to enjoy its sweet taste. You can withdraw the money using bank lines or other cards they offer. But be aware of the bank charges. Some brokers don’t charge any extra fees for withdrawal while others charge high rates.
Tips for trading cryptocurrency
- Set up a target profit
You should have a plan in crypto trading. Try not to be greedy and set up a realistic profit target. Follow your plan and sell your cryptocurrency whenever it reaches that profit margin.
- Use stop-loss mechanism
Some brokers offer a function named stop-loss, which limits your loss. If your broker has this function, make use of that. You cannot always stay on top of the market. This function will help you to avoid financial loss when the market fluctuates.
- Use trading bots
If you are a beginner, then look for a broker that has copy trading. Copy trading is a bot that mimics the strategy of expert traders. These cryptocurrency trading bots will do the trading for you. And from their algorithms, you can practically learn how to trade with cryptocurrency.
- Avoid fees
You may have earned quite a handsome amount of profit. But withdrawal fees and taxes can leave you a small amount for yourself. That’s why it’s better to use methods that require no fees and taxes.
Final Verdict
Cryptocurrency trading is quite risky. Everyday, many people lose a huge amount of money in crypto trading. But some strategies and experience can help you overcome the risk and enjoy the profit and the thrill.
That’s why you should learn the art of crypto trading with small investments and eventually move onto big ones.