When trading cryptocurrencies such as Bitcoin or Solana, the choice of trading platform should be seriously considered. In fact, it is not only transaction costs that are taken into account but also security. Thus, each cryptocurrency trading platform offers a range of services that are more or less customized depending on whether you are a beginner or an experienced trader. Trading in cryptocurrencies consists of buying and selling cryptocurrencies using, for example, futures contracts. Today, many platforms allow you to trade cryptocurrency, offering a wide range of derivative products as well as tutorials that explain how to use them.
By Bertrand Dubourg
Update on cryptocurrencies in 2022
Cryptocurrencies are constantly evolving. Thus, the promising digital currencies of 2022 may no longer be so in 2023. Every week, new protocols irrigate the cryptosphere and dethrone yesterday’s former kings.
To err (as little as possible), it is better to invest in cryptocurrencies with the following characteristics:
Amount of cryptocurrencies in circulation
– Transaction speed
– Popularity and reputation
For example, Bitcoin is the flagship cryptocurrency of 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 may suffer during long down cycles. Nevertheless, some crypto experts believe that Bitcoin could exceed $ 100,000 within a few years.
Ethereum, which is the second most well-known digital currency, also enjoys the trust of sector analysts.
Overall, the list of the best cryptocurrencies at the moment is:
– Bitcoin (BTC)
– Ethereum (ETH)
– Avalanche (AVAX)
– Litecoin (LTC)
– Cardano (ADA)
Trading cryptocurrency through derivatives
Trading cryptocurrencies via derivatives consists of speculating on the rise or fall of a 2.0 currency. Derivatives are mainly divided between:
– future contracts
“Futures” contracts The purpose of futures is to hedge against:? Active volatility? Risk exposure. Futures contracts therefore depend on their underlying asset. Overall, they allow you to bet on a rise or fall in a digital currency. Through futures contracts, it is possible to activate the leverage effect to amplify price fluctuations on the underlying asset. therefore significant risks if the market goes against the trader’s prospects.
CFDs, “contract for difference”
CFDs are derivative products that allow the trader to speculate in a cryptocurrency with a leverage effect. More generally, the CFD is therefore a derivative product that aims to replicate the performance of a cryptocurrency, with or without leverage. With CFDs, you can trade cryptocurrencies with fiat currencies.
Nevertheless, CFDs are risky, especially at the time of liquidation, if the movements do not follow your intuitions and thus your positions.
An option is a financial instrument that allows speculation on an underlying, such as BTC or ETH until a predefined 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
It allows to buy or sell a desired amount of cryptocurrencies with instant execution at a fixed price.
The order “trigger threshold”.
It allows to buy or sell a desired amount of cryptocurrencies 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 order of the “trigger range”.
This order adds a price limit for buying or selling cryptocurrency.
How to choose the right crypto platform?
Several criteria need to be considered before jumping into the deep end:
– Platform security (AMF regulation)
– Fees (spread) imposed on transactions
– The services offered (effort, wallet)
– The number of cryptocurrencies offered on the online platform;
– Any promotional offers
3 tips before choosing your crypto platform
Before choosing a trading platform to speculate in cryptocurrencies, you should follow 3 tips:
Compare crypto trading platforms with each other
– customer service
Only invest money you can lose
Cryptocurrencies are risky assets. Investing in crypto can be lucrative, as well as large losses.
Choose a fully secure platform
Always choose a cryptocurrency trading platform approved by AMF and various international authorities.
Ultimately, if you are starting to trade cryptocurrency, it is better to start using one demo account to learn about derivatives. Do not forget that the leverage effect amplifies the gains, but also … the losses. In addition, it is important to develop a trading strategy tailored to your investor profile in advance.