Cryptocurrency trading can be defined as the buying and selling of coins through an exchange.
Trading can also involve speculation of cryptocurrency price movements. The speculation is usually done via a Contract of Difference CFD) trading account. CFD trading involves leveraged products; hence traders only need small margins to operate. However, the market can be highly volatile.
Buying and selling is a more direct form. When traders buy crypto, they get the coins themselves and store them in their wallets. These tokens stay in wallets until the trader is ready to sell. All that is required is opening an exchange account with leading platforms such as Margex.
What makes the crypto market volatile?
Cryptocurrency traders and investors have always wondered why the market is so volatile. This post looks into and analyzes all the reasons behind this troubling yet enticing phenomenon.
There are four main reasons why the crypto market is so volatile. They are:
- Speculation. Most traders and investors make educated guesses on whether the prices will go down or up. This causes sudden money influxes or effluxes. As a result, the market becomes volatile.
- It is an emerging market. The crypto market is not as well established as the fiat system. It is thus affected by fluctuating interests and disinterests from investors. Thus smaller market forces such as prominent people can easily influence the direction of the market.
- It is purely a digital market. All tokens are purely digital and are not backed by physical commodities or assets. Thus it lacks stabilizing factors, and the laws of supply and demand purely control it.
- It is a developing technology. Most of the coins are based on a mode of technology known as Blockchain. Most developers are still working on it, and thus it is still evolving. It is also faced with problems such as scalability, which hugely influence the market by adding pressure to it.
Another reason is that most investors are not experienced or lack the prerequisite skills and knowledge necessary for investment. Unlike the Stock Exchange, most traders buy and sell out of sentiment and wild guesses because they all hope to profit quickly. This makes the market go either way from time to time.
The most important and reliable ways of trading in cryptocurrency.
Just like any other mode of trading, trading in crypto has its tricks and requirements. The best ways of engaging in the trade are discussed below.
- Time the investment. This is the most fundamental thing a crypto trader should master. Knowing when to invest and when to pull out is crucial in determining the profit you make. Dollar-Cost averaging is a great tool that enables investors to keep on trading at regular intervals regardless of the market situations. It is also very important to learn and practice at the right times to exit. Crypto trading is affected by small time frames, and any hesitation or delay could make a trader incur several losses.
- Learn how to exploit price fluctuations. With this, a trader can know the right times to go all in or pull out.
- Research on Costs. With bitcoin being the most expensive coin, investing in it can be a little difficult. It is important to research the prices of other tokens in the market and research them. This includes learning how to make purchases infractions.
There are several market platforms that facilitate crypto trading. Platforms such as Margex utilize the most practical and scalable infrastructure types to enable traders to go on with their activities uninterrupted. Opening accounts is an easy process, and anyone can join a platform of their choice.