Trading bitcoin is relatively straightforward once you get your head into it. Some few years back, bitcoin was only a mare project that hoped to challenge the financial system of the world. Jump to 2021, bitcoin has appreciated massively and now leads a trading industry worth millions of dollars. However, trading cryptocurrencies is not as easy, and that is why we have expertly prepared this comprehensive guide to help you buy and trade crypto in 2021.
In this article, we are going to cover the details of how this thriving industry works, the risks and benefits involved, and explain how you can start purchasing and trading cryptocurrencies like bitcoin today.
The first stage of trading crypto assets is to create an account with a regulated trading platform such, deposit funds, choose the cryptocurrency pairs you wish to trade, and you are ready to go. This guide will explain in detail why you should avoid trading cryptos mindlessly without research. However, before we get to that, let us find out what is trading cryptocurrencies.
What is crypto trading?
Put merely; cryptocurrency trading is the act of speculating if the price of crypto will rise or drop in the market. Cryptocurrency trading operates similar to the traditional financial trade instruments such as foreign exchange or stocks. As such, if you speculate the correct movement of the price of crypto will earn you some profits.
The amount of earnings entirely depends on the initial capital invested in the trade and the accuracy of the speculated trade signal. Notably, it is essential to bear in mind that cryptocurrency is like no other. Bitcoin is still a relatively new and mind-blowing invention. It is essential to know what you are doing before indulging.
What do you need to know about cryptocurrency trading?
- Price movements
The value of an asset is determined by the interplay between supply and demand regardless of whether it is a stock, commodity or currency. This law applies in the subject of cryptocurrencies as well. Otherwise stated, if the market sentiment is positive, there will be more buyers in the market compared to the number of sellers. The vice versa is true.
In addition to the demand and supply, developments across the world and news events affect the price movements of cryptocurrencies. For instance, if the United States government reveals it wants to introduce laws to govern digital assets, that would be positive news for cryptocurrencies. The value of digital assets such as bitcoin is likely to appreciate. Bitcoin price fluctuates 24/7, and the market is never closed. You can trade bitcoin at any given time, any day.
- Trading pairs
Trading cryptocurrencies is facilitated in pairs the same as the forex market. Trading pairs come in two different models. In the first place, we have bitcoin trading pairs priced against major currencies such as the United States dollar. The BTC/USD pair is by far the most traded pair in the world.
Some trading platforms pair bitcoin against other major currencies such as the British pound, Euro or the Japanese yen. Secondly, some traders prefer trading cryptos paired against other cryptos. These are referred to as crypto-cross pairs. Some of these cross-pairs include BTC/ETH, BTC/XRP, BTC/LTC and many more.
- Holding bitcoin or CFD trading
There are two primary options when deciding to indulge in the cryptocurrency space. Some investors prefer purchasing cryptocurrencies and holding them for a while with the hope that its value will increase in the long run. On the other hand, some investors are trading cryptocurrency CFDs (contract for differences). As such, they speculate on the future price of digital assets without having to own them.
To purchase and own cryptocurrencies like bitcoin, you need to register with a regulated brokerage firm and purchase the asset. After the purchase, you retain the ownership rights of the cryptocurrency until you sell it. Investors who prefer holding bitcoin do not need to be concerned about short term volatility of the crypto purchased since the investment is suited for the long term.
On the other hand, you can opt to trade bitcoin CFDs. Crypto trading platforms such as Bitcoin Rush allow users to trade hundreds of BTC pairs and generate profits. The good thing about CFD trading is that you can opt to go short. Furthermore, this option allows you to trade on margin. Simply put, you can borrow additional funds to trade than your initial investment amount from your broker.
- Risks involved
As an aspiring trader, you should know that there are risks associated with trading cryptocurrencies same as any other investment. The main risk in trading and buying bitcoin is the rapid price changes. The cryptocurrency market is naturally volatile and time-sensitive. Prices can change at any time, which might result in a loss or profit. Additionally, there is the risk of fraudulent projects and scammers on the internet. Multiple crypto scams exist on the internet such as valueless tokens, fake giveaways, promotions and scam ICOs. New traders should be cautious before they start trading.
How to trade crypto in 2021 – Bottomline
In conclusion, learning to trade digital assets in practical terms can take a while. Even so, trading crypto is a venture worth considering in 2021. All the same, bitcoin is the top-performing asset class so far in 2020. This explains the reason why more and more people are opting to invest and trade bitcoin. An essential thing, to begin with, is to find a good trading platform that caters for your needs. In this regard, we recommend Bitcoin Rush, and you will enjoy automated crypto trading backed by the latest technologies such as artificial intelligence, machine learning and many other unique features. You can contact their support to learn more about the platform.