In this informational article a lot of questions are answered about cryptocurrency trading with the intention of educating traders. Moreover, a step by step procedure is presented by showing screenshots of actual trades on a cryptocurrency trading platform so that beginners and advanced traders can experience what it is like to place a trade with a trusted and regulated broker so that they can keep their peace of mind when making a deposit as well as having the best trading experience possible.
What are Cryptocurrencies?
Cryptocurrencies are essentially digital money that exists in cyberspace. In other words, cryptocurrencies are cryptographic tokens that exist on distributed computer networks. Moreover, without the need for third parties, facilitating peer to peer exchange without any central points of failure or control cryptocurrencies allow anyone to freely exchange value and information. Blockchain or distributed ledger technology is the primary technology that has made this possible.
What is a Blockchain?
Blockchains are distributed computer networks, consisting of participants that verify, maintain and secure all transactions and changes made within the network. In addition, information saved on a blockchain cannot be changed, creating an immutable history. For this reason, blockchains are perfect for the digital representation of value, without the problem of double spending.
Why invest in cryptocurrencies?
There is an unlimited number of the practical applications of cryptocurrencies. A large sum has already been invested in companies building new businesses on top of these cryptocurrencies. Nevertheless, it is believed that there is simply more potential value in investing directly in the cryptocurrency networks themselves instead of having to invest in these numerous companies. In the end, added value will be added to the entire network by every successful business built on top of a cryptocurrency.
How to trade cryptocurrencies with a CFDs/Forex broker?
The trading platform used for this step by step informational guide for trading cryptocurrencies is none other than the IQ Option one since it is preferred by several traders and they are already familiar with it. Traders can place a trade with a wide variety of instruments, using top-notch instruments and analysis tools. Below is presented a step by step procedure on how to trade cryptocurrencies. To start with, signing up and creating an account with a broker which offers crypto trading is essential. For this procedure a platform is chosen as already explained since it is one of the most used among many traders for several reasons such as offering a free demo account, allowing low $10 minimum deposit and also, having good interface and thus, by using a familiar platform trader can follow the example easily.
1st Step: Select the cryptocurrency of your choice, such as Bitcoin.
The chosen Forex broker offers several cryptocurrencies. For example, Bitcoin, Dash, Ethereum, IOTA, Litecoin and Ripple and many more as shown in the screenshot below. Moreover, it is pretty obvious that, the cryptocurrency selected for this example is the world-famous Bitcoin.
2nd Step: Choose the investment amount and set a stop loss for Bitcoin.
As it can be seen from the screenshot below, the amount to be invested in the account currency is $100. As always, and as any other asset, the amount to be invested needs to be entered. It can be pretty obvious that the buy is for $100 worth of Bitcoin CFDs and that a stop loss at -5% has been set. What this means is that if the investor loses more than 5% (or 5USD) the trade will automatically close in order to stop further losses. In the same way, it is obvious from the same screenshot below, that another position of auto closing has been set in case the position reaches the specified level of 5% or $5 profit. This is done to avoid losing the profit in case the position reaches a high level of profit but then suddenly drops below the buying value and thus, lose the profit.
3rd Step: How to place a trade by selecting Buy or Sell Bitcoin CFDs
As soon as the investment amount and the stop loss position of auto closing is set then, the last step is to decide whether the chosen cryptocurrency, Bitcoin in this instance, will rise or fall. If the belief is that the price of Bitcoin will rise then, BUY needs to be chosen. On the other hand, if there is an expectation of the price to fall then, a SELL order is placed. As shown in the screenshot below, for this example, the decision was for 0,0179 Bitcoin to be bought for 5577,48 USD /Bitcoin with the intention of being higher when the trade is closed. If the expectation was for the price to fall then, the decision would have been to sell instead of buying.
To sum up, this article explains the basic of cryptocurrency trading by giving step by step instructions. In addition, cryptocurrency terminology is explained in order to educate traders and thus, be able to take their trading into the next level. Last but not least, a recommendation is given to always search for the best trusted and regulated Forex and CFDs Broker with Cryptocurrency trading before placing any trades. Furthermore, careful consideration must be taken when deciding whether or not to buy or sell as well as to remember setting reasonable stop loss to minimize the risk of losing the capital.