How to become good at cryptocurrency trading

Many Norwegians have opened their eyes to cryptocurrency trading. For many, cryptocurrency is much more than just a means of payment – it is an investment.

In this guide you can learn more about what cryptocurrency trading is and how you can start crypto investing yourself.

What is cryptocurrency trading?

Cryptocurrency trading involves speculating in the currency’s price movements through a trading platform. This can mean that you sell or buy cryptocurrency on a crypto exchange, or that you use CFDs where you invest with borrowed money .

Let’s take a closer look at the two different forms of cryptocurrency trading. You will see that there are big differences between them when it comes to potential returns and risk.

Cryptocurrency trading through buying and selling via the stock exchange

If you trade cryptocurrency on an exchange, you will buy the coins and own them yourself. To be able to do this, you must first create a user account with the trading platform.

To start cryptocurrency trading, you must then enter the entire value of the relevant asset, so that you can open a so-called position. You can then store your cryptocurrency tokens in a digital wallet. Here you can have them until you want to sell them.

Remember that the stock market may have certain restrictions when it comes to how much money you can deposit. There may also be fees associated with having a wallet.

Cryptocurrency trading through CFDs

There are also some who prefer cryptocurrency trading using so-called CFD (Contract for Difference). CFDs can be described as derivatives, which means that one can speculate in cryptocurrency price changes without owning the underlying cryptocurrency.

CFDs are geared. This means that you only have to make a small deposit (margin requirement), but that you will also get maximum exposure on the market. Higher gearing means potentially greater gains, but the loss can also be much greater. You can shift both high and low.

CFDs are generally associated with high risk, and are in a sense gambling with the money. Only just over 30% actually profit from CFD trading with crypto.

What is meant by long and short in cryptocurrency trading?

In cryptocurrency trading, people often talk about “long” and “short”. Long means that you buy cryptocurrency or choose to open a long position. When you buy in the long position, this implies an expectation that the cryptocurrency will rise in value.

You then wait to possibly sell the cryptocurrency until it has risen in price, so that you get a profit. Short means that you sell cryptocurrency when the price is high, with a desire to be able to buy it back when the price goes down.

Most people who trade in cryptocurrencies want to buy cheap and sell expensive (long). With short, you have shuffled to order, and thus choose to sell expensive and then shop cheap.

Spread in cryptocurrency trading

It is also wise to familiarize yourself with the spread of cryptocurrencies. Spread is simply the difference in the exchange rate of the cryptocurrency from the time of purchase to sale.

You receive two courses as you open a position in the crypto market. If you open a long position, you will trade until the purchase price exceeds the market price. If you have opened a short position, you will trade until the selling price is lower than the market price.

How to get good at cryptocurrency trading?

It’s not necessarily that easy to actually make money on cryptocurrency trading – at least not if you do not know what you are doing. However, to increase your chances of succeeding in crypto-trading, there are some tips you can keep in mind.

For example, it is always an advantage to know how the cryptocurrency market works. By knowing the factors that can increase the value of a cryptocurrency, you can sell the crypto at the right time.

Know the cryptocurrency market

There are a number of factors that can affect the value of cryptocurrency, which is good to know a little about before you start cryptocurrency trading. It is mainly supply and demand for cryptocurrency that controls its value.

Cryptocurrency is decentralized, which means that the authorities and the central bank’s decisions will not directly affect the value of the currency. For example, the central bank’s interest rates will not have a direct impact on crypto.

However, there are a number of external factors that can affect the value of the cryptocurrency, in that supply and demand are affected. Here are some of the key factors:

• Press and social media coverage: How cryptocurrencies are mentioned in social media and the press can directly affect demand.
• Market value : Whether consumers want to invest in cryptocurrency may depend on the value of existing coins, as well as consumers’ perception of further value development.
• Addition of new currency units : How quickly new coins are issued (through eg mining) can affect offers.
• Integration options : Demand can be affected by how easy it is to integrate cryptocurrency in e-commerce and the like.
• National economy : If the national economy of a country is doing badly, there may be greater demand for cryptocurrency.

Use copy trading

You can also increase your chances of success with cryptocurrency trading if you copy the actions of crypto investors who know what they are doing. This is also called “copy trading”, and is something that is offered with the crypto platform eToro.

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Copy trading means that “everyone” can start cryptocurrency or stock trading, without having much knowledge from before.

Is cryptocurrency trading for you?

Trading cryptocurrency can probably be a bit complex if you have not done so before. There is a lot to get acquainted with, including positions, spreads, CFDs and risk.

You may want to start with copy trading, so that you get acquainted with the crypto market before you try it on your own. Cryptocurrency trading can be potentially lucrative, but there is always some risk involved.

FAQ

[sc_fs_multi_faq headline-0=”h2″ question-0=”Hva betyr giring innen kryptovaluta-trading?” answer-0=”Giring innebærer at en ikke-profesjonell krypto-trader kan få økt eksponering og investere høyere beløp, uten å betale den fulle verdien på posisjonen umiddelbart. Man låner penger.” image-0=”” headline-1=”h2″ question-1=”Hva er en kontrakt innen kryptovaluta-trading?” answer-1=”Kryptovaluta blir i mange tilfeller tradet via «lots» eller «kontrakter». Dette er samlinger av tokens som benyttes til standardisering av handelens størrelse.” image-1=”” headline-2=”h2″ question-2=”Hva er et marginkrav innen kryptovaluta-trading?” answer-2=”Et marginkrav utgjør det originale innskuddet man gjør i forbindelse med giret kryptovaluta-trading. Kravet oppgis som regel som en prosentandel av en total posisjon.” image-2=”” count=”3″ html=”true” css_class=””]