The EagleFX Guide - Fundamentals of Cryptocurrency Trading

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In simple terms, cryptocurrencies are digital assets that use an encryption technique called cryptography for security. After the advent of Bitcoin, the first cryptocurrency in 2009, over a thousand coins have been created. They are mainly used for buying and selling of goods and services. They are not disseminated by a central authority unlike fiat (traditional) currencies, hence they are not treated as a legal tender. One more interesting feature of cryptocurrencies is that they can be traded in the currency market like the fiat currencies. The fundamentals of trading cryptocurrencies will be comprehensively covered in this guide under the sub-topics below:

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Table of Contents

  1. The Concept of Cryptocurrency Trading
  2. Trading Short Term (Merits & Demerits)
  3. Trading Long Term (Merits & Demerits)
  4. Trade Wisely
  5. Setup a trading Account

 

1. The Concept of Cryptocurrency Trading

When Bitcoin was created in 2009, the possibility of trading cryptos was not imagined since it was the only coin available. Bitcoin became increasingly popular and widely accepted which invariably paved way for the generation of newer coins. The idea of trading began creeping in gradually with the same concept of the real world stock exchange; you simply trade one coin against another and keenly watch for a value increase on the coin you bought. Exchange platforms are being used in matching buyers and sellers; around 0.01% is being charged by exchangers for each transaction.

 

2. Trading Short Term (Merits & Demerits)

This trading method involves buying a cryptocurrency with the mindset of accumulating it for a short time. This could be for a few months, weeks, days, hours or even minutes.

Merits – Unlike traditional currencies where prices take real time to spring, cryptocurrencies rise and fall in a matter of hours. The advantage with this method is to buy and sell off in a short space to make quick profits.

Demerits – Due to the fast speed at which prices move up, you will need to take quality time in analyzing the market so as to avoid losses. Short term traders are not always successful even if they make quick profits.

 

3. Trading Long Term (Merits & Demerits)

The idea involves buying coins with the plan of stashing them for a lengthy period of time. The duration might be minimum of a year and above which brings about the cryptocurrency slang – Hold on for Dear Life ‘HODL’.

Merits – The advantage to this method is that it requires no complex understanding of the market like following trading graphs and charts

Demerits – Missing the opportunity to make quick profits when prices sprout up is a disadvantage to this method.

 

4. Trade Wisely

Due to the volatility of the trading markets, the golden rule according to Eagle FX is –‘never trade with an amount you cannot afford to lose’. Always carry out a detailed research before jumping on any exchange platform. Avoid persuaders and scammers; diligently search for professionals to help you get it right.

 

5. Setup a trading Account

This could be a challenging step as a beginner but that’s the more reason why you are very lucky to have bumped into this guide. We have dutifully done a whole deal of extensive research, click here to check out our recommended platform.

 

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

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