Benefits of cryptocurrency trading
How leveraged bitcoin trading works ??
Bitcoin contracts for difference (CFDs) give you exposure to the bitcoin price without having to actually purchase the underlying asset. This gives you additional confidence because you don’t hold any actual bitcoins, meaning you don’t need to use a wallet to store them.
Bitcoin is usually quoted against the US dollar — so when you buy bitcoin on an exchange, you are selling USD and buying bitcoin. If bitcoin’s price rises, then you can sell it for a profit because bitcoin is worth more USD than when you bought it. If bitcoin’s price falls, then you make a loss.
When you buy bitcoin with IG, you’re doing the same thing. But instead of taking ownership of bitcoin, you’re opening a position that will increase in value as bitcoin’s price increases against the dollar. If bitcoin’s price falls, then your position will lose value.
There may be a finite supply of bitcoins – 21 million, all of which are expected to be mined by 2040 – but even so, availability fluctuates depending on the rate with which they enter the market, as well as the activity of those who hold them.
Do your research
When it comes to interpreting bitcoin’s behavior, charts can also be an invaluable tool. Past data can help you make sense of how the market is moving, while comparing timeframes may provide a closer insight into emerging trends and patterns.
Build a trading plan
You’ve chosen a trading strategy, but if you’re new to the markets you might want to consider a trading plan as well. A trading plan can help you make objective decisions even when the stake is high, so that you don’t leave trades open too long – or close them too early.
Here are a few tips for creating a plan:
- Set out what you want to achieve from your trading, broken down into short and long-term goals Decide your acceptable risk from each trade, as well as how much you are willing to risk overall
- Pick a risk-reward ratio, so you know how much potential profit you need to justify your potential loss Choose which markets you want to trade. Do you want to start with just bitcoin, or try a few more?
Transaction speed and scalability
As the adoption of cryptocurrencies accelerates, transaction speeds and their ability to handle a high volume of transactions are likely to come under increased scrutiny.
Scalability could also be influenced by blockchain size and security, as these factors will affect the profitability of mining, speed of the associated network, and willingness of users to buy and use coins.
Traders should, therefore, pay attention to software updates and forks to see how scaling technology evolves.