Choose the Best Cryptocurrency Trading Platform
The first step is to choose the right trading platform. Cryptocointrade has divided the platforms into:
- Crypto trading platforms
- Crypto CFD trading platforms
Crypto trading platforms only offer crypto trading.
Crypto CFD trading platforms offer cryptocurrency trading among many other instruments. The CFD trading platforms have years of expertise in this field and can provide you with the benefits of cryptocurrency trading without the cumbersome user experience.
In addition, CFD trading platforms offer free educations such as webinars and ecourses. However, they are limited in the number of cryptocurrencies compare to pure crypto trading platforms such as Bitfinex or Poloniex.
CFD trading platforms offers derivative trading which means you don´t own the asset but you benefit from the price changes. Derivative platforms usually offers higher leverage opportunities, like BitMEX, AVAtrade, eToro and more.
Here are some important factors to consider when choosing the best cryptocurrency trading platform :
- Multiple / Customizable Accounts – A good cryptocurrency broker offers multiple account options to choose from, or some customizability.
- Currency Pair Selection – You should consider whether the broker can provide not only a wide selection of cryptocurrency pairs, but the particular pairs that you’re interested in trading. Bitfinex has many different trading pairs. Go to Bitfinex.
- Platform – Choose a broker platform that is straightforward and easy to use. Ideally, the platform should also offer advanced analytical and technical tools. eToro is a good platform for the beginner. Go to eToro.
- Customer Support – It’s important to choose a broker that offers 24/7 customer support. A live support person should be able to answer your questions sufficiently and in a timely manner. Give a potential broker’s customer service center a call to see what kind of service they provide. Additionally, look up reviews and testimonies from previous customers.
- Regulated Firms – You should make sure to only open accounts with a regulated firm to avoid safety risks and concerns. The majority of our platforms are regulated.
- Reputation – Consider whether the platform has been operating for a long amount of time. Additionally, find out if it is a reputable company with a history of good business practices. Many of our platforms have a good reputation.
- Security – Security is extremely important. Make sure to research whether the platform has any major security holes or has had security incidents in the past. You should know if they store customer coins in cold storage, and if they have security methods such as 2FA and IP withdrawal restrictions.
- Liquidity – Liquidity is a critical factor in successful trading, especially during periods of elevated volatility. Be sure to check the volume rankings of certain exchanges. Bitfinex has good liquidity. Go to Bitfinex.
- Trading Tools / Advanced Orders – Best cryptocurrency trading platform should offer these capabilities, including stops, OCO orders, and technical indicators. eToro, Bitfinex and AVAtrade has good trading tools.
eToro, AVAtrade, Plus500, and Markets.com are some of the top brokers for cryptocurrency trading. All of these brokers except one have a minimum deposit of $100. eToro – the world’s leading social trading platform – only requires a $50 deposit to get started. Poloniex, Bittrex, and Kraken are some of the top exchanges for trading in the U.S. Poloniex is the most liquid of all the exchanges in the U.S. and has the largest selection of altcoins to trade.
Kraken has a higher volume than Bittrex (although not as great as Poloniex), while Bittrex is known for its excellent customer support. Coinbase also has a highly liquid exchange, GDAX, for Bitcoin, Ethereum and Litecoin. However, if you want to trade other altcoins you should look for another platform.
Select Instrument and Currencies to Trade
Next step in cryptocurrency trading guide is to select which currencies you want to begin trading with. You can use a variety of methods to analyze current cryptocurrencies on the market. We will cover fundamental analysis and technical analysis in the final step.
We recommend trading your funds in a variety of currencies. (For example, do not keep your entire wallet in Bitcoin or Ethereum.) This mitigates risk and offers some protection when the value of a particular coin unexpectedly plummets.
You may want to consider margin trading to add leverage to your investment. This is an especially good idea if you have a limited amount of Bitcoins and altcoins. Margin trading increases the amount of your investment without you having to actually hold those assets.
If you open a margin position with 2X leverage and your base assets increase by 10%, your position will yield 20% because of the 2X leverage. In contrast, standard trading gives you a leverage of 1:1.
Automated (Bots) or Manual Trading
You can choose to manually trade your Bitcoin or altcoins. Or, an automated trading system can trade your coins for you. Automated trading systems are computer programs that will create orders and automatically submit them to a market center or exchange. These are commonly referred to as ‘bots.’ Bots are coded so that they will execute trades based on a certain set of conditions defined by the coder.
Automated trading accounts are beneficial because they need almost no intervention from you. You only need to check on a regular basis to see how your trade orders are performing. Consequently, automated trading is a great way to earn a passive income.
However, bots can never perform as well as an actual person. They lack the knowledge and intuition of an investor, especially when news breaks out that may affect the market. An investor can hear about this news and contemplate his or her next move accordingly. A bot can only react to current market conditions according to its code. Moreover, automated trading systems have the potential to malfunction, and they also require additional fees to use.
All things considered, automated trading may be worthwhile for you. It provides a convenient and consistent method of earning revenue from cryptocurrency trading.
Trading Strategies – Fundamental vs. Technical
Finally, consider whether to approach trading with a fundamental or a technical analysis strategy.
Fundamental analysts investing in traditional stocks measure the intrinsic value of that stock. They look at the financial soundness of a company and its business prospects. They also examine the overall economy and industry conditions. Technical analysts, on the other hand, analyze past market movements in the company’s stock, including past prices and volume. They identify patterns and trends that may suggest how the stock will perform in the future.
Fundamental analysis is a little more difficult with cryptocurrency, as there is no balance sheet of a company to study. Instead, fundamental analysists in cryptocurrency trading rely on the soundness of the asset itself. For instance, they analyze its technology, economics, and value proposition. They use this information to predict how well the asset will be adopted into the market.
Investors have typically viewed fundamental analysis as the only legitimate method in past decades. Technical analysis, however, is becoming increasingly prevalent. For example, automated trading relies solely on technical analysis, as it follows a computer algorithm. We believe that the best approach to manual trading incorporates a little bit of both fundamental and technical analysis.