Electronic or digital currencies are a group of
decentralized, encrypted currencies that can be traded between many people
around the world. These currencies are traded completely electronically, as
they are encrypted and intangible currencies, that is, they do not exist on the
ground, and therefore are similar to data and digital assets.
What is cryptocurrency trading?
Cryptography is originally a way to protect
information and data through the use of codes, so that only those who are
targeted by the information can read them or know their hidden content and have
the cipher key that enables them to process those codes to identify the
original information.
The word cryptography can be translated by
dividing it into crypt, which means hidden, and graphy, which means writing,
meaning that the term means that it is written content in a way that hides its
content.
Thus, electronic or digital currencies are done
faster than cash currencies that are made through banks, as the latter require
certain conditions as a minimum for fees and others, while digital currencies
do not need any conditions and do not require the presence of an intermediary.
Buying and selling cryptocurrencies takes place
within an electronic currency exchange, so a trader is required to open a bank
account on this exchange by submitting an online application.
How do cryptocurrency markets work?
If you are looking to make buying, selling or
exchanging cryptocurrencies, you first need to have a crypto wallet, through
which you can buy digital instruments for regular fiat currencies, which can
then be exchanged for any of the alternative currencies.
But if you are looking for how to trade with
electronic currencies, in this case you must register on the cryptocurrency
exchange so that you can then take advantage of the price difference when you
exchange it.
It is noted that there are a very small number
of exchanges in the USA and UK that accept deposits in the form of fiat or
cryptocurrency.
However, we find that the majority of exchanges
around the world accept deposits in the form of electronic currencies
independently, and the reason for this is due to the restrictions imposed by
many banks on the process of cash exchanges in bank accounts.
Hence, it was necessary for the trader to have a
special wallet for any of the cryptocurrencies he wished to trade in, and
perhaps the most famous and most common of these cryptocurrencies: Bitcoin,
Litecoin and Ethereum.
Once the balance is added to the trader's
wallet, the latter can conduct buying and selling operations and trading in any
exchange that he wishes to enter.
How to trade cryptocurrency without a broker
There are many options in which digital
currencies are traded without a broker, and through the following we explain
the most important of these methods:
Trading through the stock exchange
The method of trading via the cryptocurrency
exchange is one of the most popular methods of trading, and trading operations
are carried out just like ordinary shares, by waiting for economic fluctuations
throughout the day or week, which would affect the price value of the currency.
Thus, the trader can exploit the index of the
rise of the cryptocurrency by selling it, or keeping it in the event of a
decrease in its price value.
Trading via futures contracts
The process of trading through futures contracts,
or what is called derivative contracts, is the process of trading
cryptocurrencies at a specified price to be delivered in a specific time
future.
This (derivative) method is called by this name
because the financial value of these trading instruments is derived from other
assets of any kind.
Double Option Trading
This method of trading is done by determining
the expected price of the bug during a certain period of time, and at the end
of this period you have the option to buy the currency after its market value
increases.
Or resorting to the other option, which is not
to complete the purchase process, in the event that the price of the currency
is much lower than expected, and of course then the buyer prefers to keep the
shares of cryptocurrencies.
Trading by investing in funds
The method of using investment funds is one of
the easiest ways to trade digital currencies, in which investors can create
funds for these digital currencies, and among the most famous of these funds is
the GBTC Fund.
Is it possible to get profits from cryptocurrency trading?
By presenting the mechanism and the ways in
which it is traded, it can be said that the profit process is closely related
to the type of cryptocurrencies that will be traded and what are the correct
expectations in the future period for them.
In any case, it should be noted that digital
currencies are one of the most volatile investment from case to case, whether
in the long term or in the short term.