Cryptocurrency trading involves speculating on price movements via a CFD trading account, or buying and selling the underlying coins via an exchange. Here you’ll find more information about cryptocurrency trading, how it works and what moves the markets.
Why trade cryptocurrency?
Cryptocurrencies are new, and they have the potential to significantly change the way that the world works. If they do, they will be a successful disruptive technology. Early investors or speculators in successful disruptive technologies often make spectacular returns! For example, $10,000 invested in Microsoft stock in 1986 would have been worth more than $3 million within 25 years. The same amount invested in Apple stock in 1980 would be worth approximately $4 million today. So, over the medium or long term, even small investments can grow into significant, life-changing profits. This is why you should be interested in cryptocurrency investing or cryptocurrency trading.
When we talk about investing in cryptocurrencies; what we mean is buying some cryptocurrency and holding it for several months or maybe even a few years. When we talk about cryptocurrency trading, we mean something with more active transactions, over much shorter time frames. Is cryptocurrency trading worth your time? The answer is 100% yes, and there are several reasons why.
The top ten cryptocurrencies, including Bitcoin and Ethereum, fluctuate in value dramatically, because they are subject to huge short-term speculative interest. Any asset which rises in value by a large amount is statistically likely to either continue to rise or fall by a similar amount soon because of volatility “clusters”. If volatility is high today, it is also likely to be high tomorrow. This means that there will probably be speculative opportunities in cryptocurrencies during 2017 and into 2018 at least, either in buying or in selling short. For example, see this weekly chart of the Bitcoin price, the largest and “best” cryptocurrency, against the U.S. dollar, over the past 2 years leading up to October 2017. Just look at those moves! Big fluctuations in price mean big profits are possible.
2. Volume and Accessibility
The second reason why you should be interested in the larger cryptocurrencies is that some; including BTC and ETH, hit several all-time highs in 2017. Historical research shows that when stocks of new companies make significant new all-time high prices, they usually keep going up higher and higher. This can give a trader a winning statistical edge and can serve as an indicator of how to trade Bitcoin and other major cryptocurrencies.
Good news for cryptocurrency traders: more and more brokers are offering cryptocurrency trading in Bitcoin, Ethereum, and Ripple. Your options as a cryptocurrency trader are increasing by the week, and you can even get leverage for your trading.
Finally, there are some additional advantages in cryptocurrency trading over investing: you don’t have to worry about buying and storing the cryptocurrency securely in a Bitcoin wallet or something similar, because you are just making short-term predictions on the price movements. Even better, you can (and should!) use stop-loss orders, which should get you out of a market that moves dramatically against you. Investors usually don’t have that option.