The popularity of cryptocurrencies has skyrocketed. As investors continue to be intrigued by this digital currency trade, there is an increasing number of opportunities that are available in the market. However, instead of entering the market with half-baked knowledge, it is wiser to learn how cryptocurrencies are traded before actually putting your money at stake. Don’t know how to go about this? Find all you need below:
The starting point
Identify your preferences for crypto trading: Is it your style to speculate on prices through CFDs? Would you want to directly buy the tokens expecting their value to rise?
Trading cryptocurrencies using CFDs
What is a CFD? Simply put, CFDs are contracts wherein you give your consent to exchange the price difference which arises from when you open your position versus when you close it. Here, instead of actually buying and owning a cryptocurrency, you’re simply speculating on the market prices. So in a long position, when a cryptocurrency’s value rises you earn but when the price dips, you incur a loss. In the case of a short position, it is vice versa.
Buying cryptocurrencies via an exchange
The other option is to buy a cryptocurrency through an exchange or a third-party website or app that facilitates this. In such a case, you take possession of a cryptocurrency entirely or of a fraction of it in a bid to earn profits. Also remember here, that you would have to store this asset in a digital wallet and to start trading, you will need an active account with a crypto exchange.
Steps to consider:
- Cryptocurrency market and how it operates
You will discover with time that the cryptocurrency market is quite not the same as traditional financial markets. Therefore, it becomes very important to be familiar with the market functions and all the associated jargon used before you start trading.
As you may have learnt by now, the cryptocurrency market operates on a peer-to-peer network. This makes it a decentralized financial market as the transactions are verified on the shared network and not through a central server or authority. When you trade cryptocurrencies by buying or selling them, each transaction is recorded on the blockchain. This blockchain is a shared ledger where data blocks are added through mining (link article). Also remember, that the crypto market is very volatile and hence it helps to know what factors can cause a stir. Keep your eyes and ears open about any update or new information that comes up about ICOs, blockchain forks or any news that indicates changes in government rules.
- Open an account
The next step to start crypto trading is to open an account. If you want to trade sans the hassle of having a digital wallet and actually buying cryptocurrencies, you may opt for CFDs. As discussed earlier, CFDs allow you to open and start trading much faster, especially when you open an account with a reputed and leveraged trading provider like Multibank.io.
- Build a trading plan
Never underestimate the importance of a good trading plan in any financial market. This is especially important in a volatile market like crypto as the volatility is a gamechanger: it can lead to exponential profits and losses. While this might make it look like trading is a tough job, having the right risk management strategy and tools at your disposal can be helpful. In addition to this, you must also have a clear view of the goals you want to achieve and a subsequent action plan which indicates when to enter or exit the market.
If you’re familiar with forex trading (interlink), you would understand how important fundamental and technical analysis are for your trading strategy. As long as you understand the market sentiment and are aware of macroeconomic factors that may impact your trade, you should be in a position to take wise trade calls.
- Choose your cryptocurrency trading platform
When you choose a good trading platform, you allow yourself to trade cryptocurrencies via CFDs in a quick and smart way. Besides getting access to the market through the web, mobile apps, and third party-platforms, depending upon your platform, you may also get:
- Personalized alerts
- Interactive charts
- Built-in risk management tool
How to trade cryptocurrency in UAE?
The UAE is one of the fastest-growing cryptocurrency and blockchain centers in the world. For anyone in the UAE, buying digital assets like Bitcoin could get any easier. All you need to do is look for a regulated broker online, preferably one that offers low fees, and purchase your digital currency. Did you know that you can use Bitcoin to trade all cryptocurrencies? Here’s how:
- Step 1: Open an account with an online, well-regulated broker and share the necessary personal information with them.
- Step 2: Add funds to your account through net banking, credit/debit cards, or e-wallets. Check what’s the minimum account balance required with your broker.
- Step 3: Look for Bitcoin by searching for BTC in the search box and then click on TRADE to process the order.
- Step 4: The final step: buy bitcoin by entering your investment amount. Note that you may start with an amount as low as $10 but this would depend on your broker.
Ways of Buying Bitcoin in the UAE
There are numerous ways of buying BTC in the UAE. Every payment method may appear unique with varying processes for the time required and the fee needed. The top two options are mentioned below:
Buy Bitcoin With PayPal
Even though you may have to incur a small fee for PayPal transactions, it is a hugely popular way of buying Bitcoin in the UAE. Being a trusted name, it further secures all Bitcoin purchases.
Buy Bitcoin With Credit Card
Cryptocurrency brokers often charge steeply for deposits done through credit and debit cards, which is often a pain point for many investors. Therefore, instead of going for a broker who operates with a third party for payments, it may be wise to save time and money by opting for a broker that offers low transaction costs.
