Cryptocurrencies Are Getting More Popular – This Is How You Can Trade Them
Posted on August 1, 2017
Cryptocurrencies are becoming all the rage, but they are still surrounded by a veil of mystery. Besides the fact that founder of the most popular cryptocurrency Bitcoin is still unknown, some traders find it difficult to comprehend basic principles of cryptocurrency trading, so they rather stay clear. However, cryptocurrency trading doesn’t have to be so complicated.
What is a Cryptocurrency?
Cryptocurrency is a digital asset or a currency type that appeared only recently in the online world. They are often seen as an alternative to traditional currency system because they are not only completely decentralized but also very poorly regulated. Some countries accept them as a valid asset, while other consider them illegal. At the moment there are over 700 cryptocurrencies in the world. Most popular cryptocurrency is Bitcoin.
Cryptocurrencies are still not a part of our everyday lives and more than a handful of people involved in online trading feel that they are not safe. This definitely increases the level of mystery surrounding them. Also, another reason why, despite the excellent exchange rate, they are still not considered to be a ‘real’ paid means, but rather something that is more of an obscure trend from the dark web, is the fact that they are almost impossible to use in everyday life. Considering the negative reputation of the dark web that frequently involves insider trading, no wonder that bitcoins are still not welcomed by the mainstream.
How to Trade Cryptocurrencies?
The most basic way to trade cryptocurrencies is to start a mining process and considering that every Bitcoin is worth over $2,000, it seems like a very lucrative opportunity. But to dig a single Bitcoin is not as easy, and it is considered that it will be even harder in the future.
Bitcoin is mined by a software that deals with mathematical equations involved in transactions. The mining process often requires great manpower and technical support, and that is why nowadays the Bitcoin is usually mined by special “Bitcoin farms/mines/factories” that can bring their owners even as much as $1.5. million per month.
Forex Brokers for Cryptocurrency Trading
Great alternative, that is also very approachable for most traders all over the world are Forex brokers. Thanks to the basic principles of Forex and CFDs market, traders never have to actually own the cryptocurrency in order to make money on it. Also, there is no need for mining and hoping for the best while the competition is getting bigger and stronger each day.
Traders can simply trade based on the expected value of a certain contract that involves Bitcoin, and forex brokers allow them to sell or buy contracts as they find it suitable. That way, traders can make a profit on cryptocurrencies without all the hard work of mining and participating on crypto exchanges. Also, considering that cryptocurrencies value often fluctuates, it is completely reasonable to take advantage of this investment opportunity. If it seems that the price will rise, you can always buy more contracts. If the price will fall, you can sell all your contracts. You may lose a small amount of money, but you will avoid great losses.
If you want to trade cryptocurrency-related contracts with forex brokers, all you have to do is open an account with a broker that has such type of contracts in their portfolio. Sometimes is the required minimum deposit as low as $10, but keep in mind that small investments usually bring small profit. Still, it is always a good thing to start carefully and with smaller amounts, and then increase them as you make progress. Also, don’t forget to diversify your trading portfolio and trade other asset types as well. As cryptocurrency market is highly volatile, this approach will reduce risk and help you manage money in a better way.