How to Trade Cryptocurrencies on Forex?
In the foreign exchange market, cryptocurrency trading is no different from regular trading. Just like before, you get to work with currency pairs, charts, use a trading plan and a strategy. Depending on the amount of time you plan to spend looking at the charts, you can become a day trader or a scalper. In other words, if you are familiar with Forex trading you have all chances to build a successful career in cryptocurrencies.
What Affects the Price of Cryptocurrency?
When trading in regular currency, a trader always needs to stay up to date with the major economic news. Since cryptocurrency is a decentralized system, the economy and politics have no influence on it. Here’s what you should look at:
- Market capitalization. This is the total market value of a particular cryptocurrency.
- The number of available coins. All cryptocurrencies have limited amounts and usually enter the market gradually.
- Integration. The introduction of cryptocurrency into payment systems, the ability to pay for goods and services with the cryptocurrency, etc.
- Important events in the world of cryptocurrencies. These include changes in regulation in different countries, successful attempts to hack systems, etc.
- Public opinion. Follow the discussions in the press because even that can affect the cost of the cryptocurrency.
The Advantages of Crypto Trading in the Forex Market
Today, you can make a profit on cryptocurrency in several ways: mining, speculation in exchangers, etc. Let's take a look at the benefits of making money in the Forex market:
- High volatility. Due to quite strong fluctuations in the market, you can get significant profits even in short trades on a daily basis.
- Decentralization. Since no one controls the cryptocurrency, no bank can artificially influence its price.
- Low costs. Due to the lack of banks as intermediaries, the total cost of each transaction is usually quite low.
- Easy access. To start making money you need only a small starting capital and Internet access.
- No economic impact. Cryptocurrency is not affected by most of the incentives that all other currencies are subject to.
- Security. When depositing and trading with cryptocurrency, you don’t need to provide details of your bank account or debit card.
- Lack of borders. Cryptocurrency can be freely invested from anywhere in the world and traded with a broker from any country.
- Low starting capital. On Forex, you can dive into trading even with small amounts of money.
The Risks of Crypto Trading in the Forex Market
Just like any type of speculation, cryptocurrency trading involves specific risks:
- Hacking. Since cryptocurrency is completely virtual, your wallet may well be hacked and your funds might be stolen.
- Technical failures. Problems with the blockchain or any other system failure can lead to unexpected losses. You can completely lose your funds simply by losing access to your wallet.
- High volatility and leverage. As with regular Forex trading, if the market goes against you then volatility and high leverage can lead to significant losses.
Why Do You Need a Broker?
Today, exchangers offer unlimited opportunities for making profits on cryptocurrency. However, due to the frequent technical failures and cases of fraud, it is much safer to trade cryptocurrency with a broker. It is important that you choose a proven company with many years of experience, which puts the safety of its customers in the first place.
In general, if you want to get consistent profits on cryptocurrency trading, you just need to behave like a professional Forex trader. Take into consideration the high volatility of this market and choose the appropriate trading strategy, develop a good plan and always follow it. That’s it. Believe me, you have everything you need for a successful career in the field of cryptocurrencies.