How to trade well in cryptocurrencies?

When you start trading crypto assets like Bitcoin or Solana, the choice of trading platform should be seriously considered. It is not only transaction costs to take into account, but also security. Each cryptocurrency trading platform thus offers a variety of services that are more or less adapted depending on whether you are a beginner or an experienced trader. trading cryptocurrencies consists of buying and selling cryptocurrencies using, for example, futures contracts. Today, many platforms allow you to trade cryptocurrency, with a wide variety of derivatives and tutorials explaining how to use them.

By Bertrand Dubourg

Update on cryptocurrencies in 2022

Cryptocurrencies are constantly evolving. So the promising digital currencies in 2022 may not be in 2023. Every week, new protocols irrigate the crypto-sphere and dethrone yesterday’s former kings.

To be wrong (as little as possible), it is better to invest in cryptocurrencies with the following characteristics:

– Volume of cryptos in circulation

– Transaction speed

– Popularity and reputation

For example, Bitcoin is the flagship cryptocurrency in the crypto ecosystem. It is the most traded digital currency, so much so that some consider it digital gold.

However, Bitcoin remains extremely volatile and can suffer from long down cycles. Nevertheless, some crypto experts believe that Bitcoin could exceed $100,000 in a few years.

Ethereum, the second best known digital currency, also enjoys the confidence of industry analysts.

In general, the list of the best cryptos at the moment is:

– Bitcoin (BTC)

– Ethereum (ETH)

– Avalanche (AVAX)

– Litecoin (LTC)

-Wrinkle (XRP)

– Cardano (ADA)

Trade cryptocurrencies through derivatives

Trading cryptocurrencies through derivatives consists of speculating on the rise or fall of a 2.0 currency. Derivatives mainly fall between:

– future contracts

– the options

“Futures” contracts The purpose of futures is to hedge against: ? Asset Volatility? Risk exposure. Futures contracts are therefore dependent on their underlying asset. In general, this allows you to bet on a rise or fall of a digital currency. Through futures contracts it is possible to activate the leverage effect to amplify price movements on the underlying asset. thus significant risks if the market goes against the trader’s outlook.

CFDs, “contract for difference”

CFDs are derivative products that allow the trader to speculate on a leveraged cryptocurrency. More generally, the CFD is therefore a derivative product that aims to mimic the performance of a cryptocurrency, with or without leverage. CFDs allow you to trade cryptocurrencies with fiat currencies.

Nevertheless, CFDs are risky, especially at the time of liquidation, if the movements do not follow your intuition and therefore your positions.

The options

An option is a financial instrument that allows speculation on an underlying asset such as BTC or ETH until a predetermined date, at a predetermined price.

By buying a call (option to buy) you buy the underlying asset, while by buying a put (option to sell) you bet on the fall of the underlying asset.

The main types of orders on trading platforms

The “market” order

It allows you to buy or sell a desired number of cryptocurrencies with immediate execution at a fixed price.

The order of the “trigger threshold”

It allows to buy or sell a desired number of crypto currencies from a defined threshold. For example, in the case of a sale: The order becomes a “market” order if the price of the cryptocurrency falls below the defined threshold.

The “trigger range” sequence

This order adds a price limit to the purchase or sale of cryptocurrency.

How do you choose the right crypto platform?

Before jumping in at the deep end, you should consider several criteria:

– Platform security (AMF regulation)

– Fees (spread) applied to trades

– The services offered (strike, wallet)

– The number of cryptocurrencies offered on the online platform;

– All promotional offers

3 Tips Before Choosing Your Crypto Platform

Before choosing a trading platform to speculate on crypto currencies, you should follow 3 tips:

Compare crypto trading platforms with each other

That is, analyze:

– expenses

– Available languages

– customer service

– Safety

Only invest money you can lose

Cryptocurrencies are risky assets. Investing in crypto can be lucrative, as well as high losses.

Choose a fully secured platform

Always choose a cryptocurrency trading platform that is approved by the AMF and various international authorities.

Ultimately, when you start trading cryptocurrency, it is better to start with a demo account to learn about derivatives. Remember that leverage magnifies the gains, but also… the losses. In addition, it is important to develop a trading strategy in advance that is adapted to your investor profile.

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