What you need to know when trading Cryptocurrencies
The popularity of Cryptocurrency is on the
rise and more and more skeptics are investing in digital assets each day. With
people losing trust in central banks, coupled with the allure of investing in a
digital currency which could appreciate, these factors have contributed to an
industry boom.
What is even more exciting is the options
available surrounding Cryptocurrencies nowadays. In the past, investors would
simply buy a coin and wait/hope for the value to increase whilst running the
risk of having value wiped out of an investment in a volatile market. This is
avoidable now thanks to Crypto trading. Much like traditional Forex trading,
Crypto enthusiasts can now trade on the projected performance of a coin without
necessarily purchasing that asset.
The option of trading Crypto can be far more
appealing than investing which comes with constantly monitor price performance.
Thanks to leveraged trading on broker platforms, traders can concentrate on:
going long and short on a range of Cryptocurrencies opposed to just investing
and HODL-ING.
In this article, we will explore some of the
major Cryptocurrencies which will suit day traders, scalpers, and swing
traders. First of all, let’s consider some factors which contribute to a good
Cryptocurrency to trade
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What factors to consider when trading Crypto
Volatility
This is needed as a trader. Coins that are moving the most will give us
the most opportunities and the largest opportunities to make gains. To find the
most volatile coins we can look to websites with a long list of coins and stats
– from there, go to 24hr change and look at the percentage price
increase/decrease. From there you will be able to search from lowest to highest
and vice versa.
If the volatility percentage is shown in
green, then this indicates the price is moving upwards and it would be best to
input a ‘buy trade’ or ‘go long’.
If the volatility percentage is showing in
red, this indicates a downward price movement and a ‘sell’ trade or ‘shorting’
the asset would be advised.
Fees
What is important to consider if the
transaction cost or fees applied by your chosen broker or exchange. If a
percentage price movement is floating around the 1 – 3% mark, consider these
charges and consider if a successful trades profitability would be damaged by
added fees.
Volume
First off, volume provides liquidity. The more
volume available, the more liquidity – meaning more orders can be filled. If
you were looking to sell vast amounts of Crypto on an exchange, ensure the
exchange can facilitate this. It can often mean that the seller would have to
go somewhere else to sell the remainder of the chosen Crypto and sell at a
lower price.
Available Assets
Ensure that the broker you are trading with
has a wide range of assets to long and short, especially the major ones to
capitalize on. Many altcoins move according to how other coins or tokens within
that network are performing.
Do your
own research
This is critical when considering your next move on
digital currency and the Crypto world as a whole. Use a range of sources to come
up with a sound strategy of how to enter a market and when. Using a range of
sources helps to distinguish one person’s opinion from the general consensus.
Tradable assets
Bitcoin
(BTC)
So let’s get started with the original
Cryptocurrency – Bitcoin.
Bitcoin was the first Cryptocurrency to emerge
as a digital asset. The technology was designed to facilitate electronic
transactions without relying on trust or central authority and uses Blockchain
technology to function.
Bitcoin is now a household name and the
interest surrounding the digital coin has reached fever pitch. With the amount
of news, controversy and online content surrounding Bitcoin, this has only
helped increase interest surrounding Cryptocurrencies.
Big-name BTC investors include the Winklevoss
twins. They were made famous by their depiction in the movie ‘The Social
Network’ where they fight over who created Facebook with Mark Zuckerberg. The
twins own around 1% of the whole circulating supply of Bitcoin making them
Bitcoin billionaires!
Bitcoin is the number 1 Crypto in the world by
quite some distance. The current market cap (Circulating Supply * Price) sits
at a whopping $151,684,062,986.
Current price is $8,394.53 and a volume of
2,933,660 BTC
Bitcoin is the most stable coin out there and
will always provide an opportunity to make gains. The question, however, is to
‘long’ or to ‘short’ BTC?
Enjoy pristine trading conditions, low
deposits, and the tightest spreads by depositing BTC at EagleFX today.
Bitcoin
Cash (BCH)
Bitcoin cash is a peer-to-peer electronic cash
system. This is a fork from the original BTC Blockchain where some developers
who disagreed with how to move the BTC Blockchain forward – so built a new one
and Bitcoin cash was formed. This is a fork of the original Blockchain
containing some additional features including Block size increase and wipeout
protection.
BCH is stable, fees are low and it facilitates
super-fast transactions. The average size of a transaction is around 250 bytes.
BCH can handle more transactions per second compared to BTC, transaction fees
are cheaper – working out around $0.20 per transaction. Also, more people can
use BCH at the same time compared to BTC.
All of these factors make BCH more appealing
as a peer-to-peer payment system for fast transactions. This has helped
catapult BCH to number 4 on the list of Top 100 Cryptocurrencies by Market
Capitalization.
Current price is $308.15, up from an all-time
low of $75.03.
BCH reached dizzying heights of $4,355.62 in
December 2017. Will we see BCH climb this high anytime soon?
Ethereum
(ETH)
Launched in 2014, Ethereum is the world’s
leading programmable blockchain. The local currency to the Ethereum network is
Ether. Ethereum’s goal is to truly decentralize the Internet.
Ethereum (ETH) is a decentralized,
open-source, and distributed computing platform that enables the creation of
smart contracts and decentralized applications, also known as dApps.
Smart contracts can not be altered – ensuring
a secure payment network.
Current ETH price is $161.05 and has a market
cap of $17,620,688,401.
The flexible network experienced an ATH of
$1,432.88 from a low of $0.420897.
The ROI for original investors would be a
mammoth 5,587.60%
This flexible product has applications such as
Crypto wallets, financial apps, games and much more showing true flexibility.
Surely there can only be further growth for this versatile, digital asset.
Ripple
(XRP)
Unlike Bitcoin and other Cryptocurrencies,
Ripple can not be mined. Mining is the process of completing complex algorithms
using high powered computers to complete mathematical equations and once
completed, miners are rewarded with Crypto.
What is noticeable is the sheer volume of CXRP
in circulation – 43,675,903,665XRP!
The price per XRP is $0.222813 making it
affordable to the masses and with plenty of volume, this makes XRP a suitable
trading option.
Sitting at 3rd in the Top 100 Cryptocurrencies
by Market Capitalization, the stable coin reached an ATH of $3.84 in January
2018.
Compared to BTC, transactions on the XRP
network are much quicker with transactions taking only a couple of minutes to
complete, unlike an average 70/80 minutes for Bitcoin transactions to be
confirmed on the Blockchain.
Summary
There is a vast array of Crypto that you can
trade. Not only hold onto coins but speculate on their value. What is important
before investing or trading is to research! Crypto trading is volatile!
Find a broker where you can deposit with
amounts you are comfortable with and to have available support if and when you
may need it.
New STP broker EagleFX provides a trading environment on
the MT4 platform where users can benefit from high leverage, free sign-ups and
generous leverage on a variety of assets including Crypto, Forex and Stocks.
Make use of the daily analysis features to be as informed as you can be before
entering a volatile marketplace.
Good luck!