The cryptocurrency market has grown in popularity in the last few years, leading to many possibilities for investors to bet on the market's prices. Before you even start a trade, it is essential to understand how to trade cryptocurrency. So, we've made the important information you need to know in order to start.
Steps to trade in cryptocurrency
The cryptocurrency market can be overwhelming for newbies and experienced traders alike due to the sheer volume of jargon, terminology and processes involved. It's been broken into six easy steps to help you know what the crypto market is and the best ways to trade it:
- Decide how you'd like to trade cryptocurrencies
- Learn how the cryptocurrency market works
- Open an account in Cryptocurrency Exchange
- Build a trading plan
- Choose your Cryptocurrency trading platform
- Open, monitor and close your first position
- Decide how you'd like to trade cryptocurrencies
Decide how you'd like to Trade Cryptocurrencies.
There are two ways of trading cryptocurrencies: speculating the value of their currency through CFDs or purchasing digital currencies with the expectation that they'll appreciate.
Trading cryptocurrencies using CFDs
CFD stands for "Cash for Difference." CFD is a type of contract in which you sign a contract to trade the difference in the price of a cryptocurrency, starting when you first begin trading to the moment you end it. It is a way to speculate on the market's value and not take possession of the currency. If you start a long investment and the cryptocurrency increases by weight, you'll be able to make profits; however, when it drops in value, you'll lose The reverse is the case in a short-term position.
Buying cryptocurrencies via an exchange
You could also choose to buy cryptocurrency, which implies you own some digital currencies in total and plan to keep your digital currency within a wallet and make money if it grows in value.
Before you can begin with your cryptocurrency, you'll need to create a cryptocurrency wallet and an account on a cryptocurrency exchange. This procedure has several steps and the requirement to sign up on a waiting list to open an account.
Learn how the cryptocurrency market works
The cryptocurrency market works differently from other financial markets. This means it is crucial to understand how it works and knows the terminology used to describe it before beginning trading.
It is a digital currency network. This means that it runs on peer-to-peer transaction checks, not the central server. When cryptocurrency is bought and sold and transferred to the Blockchain, the transactions are included in the Blockchain - a digital ledger which records information by a process known as mining.
The cryptocurrency market is also known for its volatility. Therefore, it's essential to be aware of what's likely to impact the market. This could include anything from blockchain forks and ICOs to breaking news or government regulations.
Open an account in Cryptocurrency Exchange
If you make a trade-in cryptocurrency instead of buying them, you'll start opening the position faster. You don't require an electronic wallet or an account on an exchange. In reality, all you need to trade using CFDs are an account in a leveraged provider.
With KuCoin, you can create an account in a matter of minutes. There's also no obligation to fund it until you're ready to put in an order.
Build a trading plan
The need for a plan of action in trading is vital to the success of every trader but more than for traders who trade in cryptocurrency because the market can experience large amounts of volatility. This double-edged sabre makes the market appealing, but it can also be challenging to trade. This is the reason why your trading strategy should incorporate risks management tools and the outline of your objectives and the cryptocurrency you would like to trade, as well as an approach to making trades and exiting them that is also known as a trading plan.
The plan must also outline how you plan to analyze the cryptocurrency market, whether through fundamental or technical analysis. The technical research focuses on the price fluctuations and their patterns over time, whereas fundamental study examines macroeconomic and external information that affect the digital currency. Whatever method you decide to use you prefer, it is crucial to stay up-to-date with any news that might affect the market since cryptocurrency is mainly dependent on market sentiment.
Choose your cryptocurrency trading platform.
Our trading platforms offer you a more efficient and more efficient method of trading CFDs in cryptocurrencies - including personalized alerts with interactive charts, as well as integrated risk-management tools. You can trade on the KuCoin trading platform by using:
- Your web browser
- One of our mobile apps
- Advanced third-party platforms such as MT4
Find out more information about the trading platform.
Open, monitor, and close your first position.
Since there is no reason to have digital wallets after you have created your account through KuCoin and selected your preferred platform, you can begin trading cryptocurrency right away.
If you've chosen that you would like to sell Bitcoin, ether, litecoin or other cryptocurrencies, the only thing you have to be able to open the deal tickets of your selected market. You'll find both a buy and price to sell listing. You'll have the option of deciding the size of your investment before deciding whether to buy to start an open position or trade to create the short position. Remember that you can also add limits or stops to end your transaction when it has reached a certain threshold and safeguard your investment from risky trades.
You can check the profit or loss of your trade within the "open positions" section of the platform for dealing. When you've decided that it's time to end your position, all you have to do is make a transaction in the reverse direction.