Taking financial positions on cryptocurrency prices against any physical currency like the dollar is known as cryptocurrency trading. CFDs are a suitable method for trading digital currencies because they provide more flexibility, leverage, and the ability to take positions (both long term and short term).
Although cryptocurrency trading began shortly after Bitcoin’s launch but in the recent five years, it has gained exponential fame. It is primarily because cryptocurrencies are more lucrative than other trading instruments hence people prefer them. With the launch of different cryptocurrency exchanges and Bitcoin brokers, trading cryptocurrencies has become easier than ever.
Is Crypto Trading Safe?
Crypto trading is a relatively newer trading instrument which is why this question is of supreme importance. This question has two factors and I am going to answer according to both factors.
Cryptocurrencies are considered a risky investment only because they are newly introduced trading assets. To some extent, this doubt is justified because people still don’t know how their prices will react in a particular situation. Cryptocurrencies are volatile in nature and this point also raises a safety question but this exact point makes them more lucrative and those people who like to take risks make double profits. But it is advised to mitigate the risk associated with crypto trading by buying less than you can afford to lose.
Now coming towards the other aspect of this question, yes it is true that you might lose your funds if you consider the outer risks associated with its purchase. When it comes to paying with crypto or purchasing the coins, it is scarce in providing legal protection. Cryptocurrency scams and Ponzi schemes are on the rise and traders are required to take each step precisely and carefully otherwise they could lose all the investment in a single attempt.
For safely trading cryptocurrencies, a trader should be able to grasp the main points that influence the price fluctuation of cryptocurrencies such as media coverage, integration, political stability, and energy prices. In addition to these factors, a trader must have ample knowledge regarding key trading strategies such as Day trading, HODLing, Trend Trading, and Hedging.
How to Eliminate the Possibility of Losing Money?
There are hundreds of cryptocurrency exchanges and Bitcoin brokers providing services with various claims. Although only a few are notorious for scamming but prevention is necessary. You can prevent yourself from falling into a ditch by registering with a platform that is compliant with modern security policies such as Know Your Customer, Anti-Money Laundering, and Risk Management policies. Secure and renowned platforms make their customers provide all the required information before using the platform and then verify the information through various databases.
How to Start Crypto Trading?
It is said that the first step in any task is the most difficult. It also applies to trading cryptocurrencies. If you are wondering how to start your career in crypto trading then read the following points carefully.
- Try to fetch as much knowledge about cryptocurrencies and their trading as possible. Avoiding mistaken steps is crucial and this homework will not let you make any blunders.
- Search for a reliable Bitcoin broker or a cryptocurrency exchange. It is even better to go for a platform that has been already used by someone in your close acquaintances.
- Don’t overlook the security features of the platform you decide to trade with. You might own your cryptocurrencies legally but your broker/exchange has to secure them on your behalf so their security needs to be top-notch.
- Watch for the volatility. Although this is the aspect that can earn you more than your expectations you need to be extra careful as it can take away your investment.
- Make up a long-term risk management plan for your trading. The long-term mentality helps the investors to maintain a position.
- Don’t invest more than what you can afford to lose.