Cryptocurrency trading is placing a position on buying or selling a digital asset against another crypto asset or fiat currency with the purpose of earning money. Since the crypto market is unstable, and the asset prices may change rapidly, and even many times a day, such volatility opens plenty of opportunities for profit-making.
Buying cryptocurrency at a low rate and holding it until the price boosts is the most popular way to invest money. Investing in large cryptocurrencies such as Bitcoin requires time and patience. Moreover, it requires an understanding of how the market works and what phases it has. Now that the market shows a downtrend, wise investors purchase coins at lower rates to generate income when the market trend changes upward. That is how long-term investments work in simple terms.
Now let’s talk about trading and cryptocurrency exchanges.
What is a cryptocurrency exchange?
A crypto exchange is a platform where trading operations take place. They can be of two types:
- Centralized (clients’ assets are stored on the exchange servers)
- Decentralized (an exchange does not keep clients’ funds)
Centralized cryptocurrency exchange is a better option for a beginner trader for it offers a high-level of security and much more features for trading.
If you are not interested in long-term investments and want results here and now, you should try trading. There are different strategies for trading: scalping, day trading, swing trading, etc. Most imply trading deals within one day and receiving a profit in small portions from each closer position. Of course, the core of success is speculation about price differences.
Trading allows to make a profit, but it also bears high risks. To reduce risks, use “stop-loss” and “take-profit” functions, available on all credible crypto exchanges. To keep track of the rate changes, configure a trading bot that will monitor the situation for you day and night and make deals according to the parameters you set.
