What is Cryptocurrency Trading?
The smart alternative of forex trading
Cryptocurrency Trading Overview
Cryptocurrency Trading is the Forex (Foreign Exchange) of cryptocurrencies. This means, you are able to trade different bitcoin and altcoin normally for USD and BTC. Cryptocurrency Trading is an alternative way to get involved in the Crypto-World! It doesn’t require mining hardware nor investing in bitcoin hyips or bitcoin cloud mining (which always has risk involved in their integrity).
Why trade bitcoin and not Forex?
Easy to enter
To start trading bitcoin and earning money, you really need less than an hour – for the how to steps, just scroll down. If you want to start trading Forex, you need to open an account – this takes several weeks until they send you the sign up forms and access code. Then it takes some days until you transfer some money from your bank account to your Forex Broker.
We should not forget, that crypto-trading is also easy to leave. You just transfer your bitcoins out of the exchange into your wallet and you are done. We don’t even want to start talking about how nerve-racking it is to quit your broker.
Smaller Spreads
One huge advantage over Forex are the low spreads. The spread is the difference between the ask and bid price of the market maker.
Spread Example: Let us analyse the spread of EUR/USD. The ask and bid are 1.0933 and 1.0931 respectively (data from 27.02.2016). The spread is 0.0002. Percent-wise, this is a spread of 0.0002/1.0933 = 0.018%
Now let us see the spread in bitcoin to USD. The ask price for 1 BTC is 429 USD, while the bid price is 428.999 USD (data from 27.02.2016). This equals to a spread of 0.001 USD or 0.001/429 = 0.0002%.
A smaller spread means, that when you exchange, you have made nearly no loss. On the contrary in Forex (btw. other than eur/usd have even higher spreads) after you exchange, you have already made a loss of 0.018%. Which is not insignificant.
Never the less, don’t forget to check your transaction fees at your exchange.
Margin at Cryptoexchanges
The features of leverage and margin trading is possible on some Forex as well as on Cryptocurrency Exchanges.
Margin Trading: You are allowed to use funding from peer-to-peer margin funding providers. This means, that you can borrow buying/selling power, but you need to alocate some funds (=margin) which won’t be accecible until you return the lending capital.
For example, you only have 429 USD but you want to buy 2 BTC. This is possible, but you will have to pay some interest after you close your position. For example, the BTC close at 450. So you have made 2*21 USD = 42$ winnings. Than you only need to subtract the low interest (about 2%) and you have your final earnings, which are higher, if you predicted the course of the trade correctly. Though you can lose more, when you have a losing position.
