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Cryptocurrency trading is the act of speculating on cryptocurrency price movements via a CFD trading account, or buying and selling the underlying coins via an exchange.
CFDs trading are derivatives, which enable you to speculate on cryptocurrency price movements without taking ownership of the underlying coins. You can go long (‘buy’) if you think a cryptocurrency will rise in value, or short (‘sell’) if you think it will fall.
Both are leveraged products, meaning you only need to put up a small deposit – known as margin – to gain full exposure to the underlying market. Your profit or loss are still calculated according to the full size of your position, so leverage will magnify both profits and losses.
The cryptocurrency space is essentially a decentralized platform and gives the user control over the assets that they own. In Cryptocurrency, you own and store your assets without having to involve a third party.
This is quite different from the traditional investment space where third parties play a very powerful role in asset ownership. In crypto trading the value of your assets is not determined by an exchange or a middleman, rather traders have the freedom to get maximum profits from the prevailing exchange rates.
We all want to make profits off our investments, hence profit-making is the major motivator that influences people’s cryptocurrency investment. Money makes the world go round. The possibility of high returns on investments in cryptocurrency as compared to investment in stocks is higher. One can make enormous profits from just one trade in cryptocurrency because of the high volatility.
The volatility is in both ways. One can also lose everything in a second hence traders need to have an effective risk management strategy to limit losses.
Investments in cryptocurrency are viewed to be extremely beneficial in the long term notwithstanding the volatility and fluctuations that characterize the crypto market.
The value of a coin can increases by thousands of percentages in the long term and thus can act as a reasonable source of savings for your post-retirement phase of life or give you some much-needed financial buffer during a sudden economic crisis.