In order start with Cryptocurrency Trading, we need:
- A cryptocurrency wallet and
- A cryptocurrency exchange to carry out trades.
Wallet
is a place where we can store the encrypted passwords that represents
the digital currency. An exchange is similar to a stock exchange or a
currency exchange available on an airport.
Few popular Cryptocurrency exchanges are:
Cryptocurrency
Trading works the same way, but instead of buying & selling fiat
currencies such as US dollars, traders buy & sell different
cryptocurrencies, like Bitcoin, Ethereum, Litecoin, etc.
For
instance, you might bet on price difference between USD and BTC. Else
you could bet on the difference between two different cryptos, similar
to trading a BTC/ETH pair.
When you think BTC
price will rise in value during its next trading session, you might “go
long”. This means betting will increase in value relative to the
corresponding USD.
When you think BTC price
will dip in value during its next trading session, you might “short”.
This means betting will decrease in value relative to the corresponding
USD.
Thus you can place two types of cryptocurrency trading. Either go long or short.
Below are the advantages of doing cryptocurrency trading:
- Fees will be lower
- Volatility will be higher
- You can trade 24*7
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