How to trade Altcoins online

Blockonomics is a decentralized and permissionless bitcoin payment solution
How to trade Altcoins online
Blockonomics is a decentralized and permissionless bitcoin payment solution

How to trade Altcoins online, a step-by-step guide

Step 1

Find a CFD broker

Day trading refers to using CFDs (contracts for difference) to buy and sell coins many times during the day. This strategy requires an online broker. You want to find one that offers free trade or charges a low fee per trade; otherwise, it can be a very expensive method.

Brokers are easier to use than stock exchanges. You can buy or sell coins directly at a fixed price and never have to deal with cryptocurrency. Instead, a CFD is just a contract that represents a coin price and you make money based on how it changes. The two brokers listed below provide this type of trading with some of the lowest costs available.

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eToro

eToro is a CFD broker that lets you trade all the leading cryptocurrencies. You can register and get started very easily and shop either online or through their excellent app. It also has a social trading feature so you can discuss tips and learn from other users.

Plus500

Plus500 is another CFD broker that offers Cryptocurrency as well as a number of other assets. You can create an account in seconds and then start trading CFDs on all the best cryptocurrencies.

Step 2

Create and fund your account

You must create an account before you can use a broker. The process is about the same as for a stock exchange, where you have to provide personal information, and contact information, and attach a form of photo ID. Then you can deposit money into your account via a bank transfer, a card payment, or by sending money from PayPal or another payment provider.

Step 3

Find how to do technical analysis

Price analysis is the basis for a successful day trading strategy. This means studying historical price tables to look for trends and then using these to predict how the coin may perform in the future. The most fundamental of these is “support” and “resistance” levels, which are typically used as buy and sell signals, respectively.

There are several indications in total, which you may mix and combine to construct your own unique approach. You can read more about the different forms of analysis in detail in our training section, or take the course on short-term trading to learn how to interpret them.

Step 4

Clearly define if you want to purchase or sell

An advantage of CFDs compared to buying coins directly is that they give you more flexibility. You can use them to clear an asset, which means that you are selling CFDs now to be able to buy them back later at a lower price, as well as to buy them. Choose which position you want to take based on your analysis. If it makes you believe that a coin will rise in value, you should take a long position (buy). If the opposite is more likely, you should blank / short (sell).

Step 5

Perform the trade

Choose how much money you want to bet and then press “buy” or “sell” to complete your trade. It is now shown in your account’s “open positions” section. However, your work does not end there. You should immediately start analyzing the price again to figure out when to close the deal by taking the opposite position.

This is because an important part of trading is to be active and stick to your plan. The idea is to make lots of trades and make a small amount of money on each trade, rather than making one or two big profits.

Should I invest in altcoins?

It depends on the situation in the Cryptocurrency market and whether you have a particular coin in mind. Altcoins work better collectively when the whole market goes up and they are often the first to lose value when the market winds turn. Take the time to research a coin before investing money in it so that you understand the factors that can affect its price.

Day traders should also keep track of the latest news and trends as hype plays a significant role in how an Altcoins price fluctuates. Many of them have a small market value, which makes them more volatile against small disruptions in activity. A single tweet from a famous name or a few posts on a forum can cause dramatic price fluctuations.

Still confused

If you are still not sure if altcoins are for you, do not worry. It is a good idea to take some extra time before putting your money on something new. Here is a list of their main advantages and disadvantages, followed by some final questions to help you decide.

Pros

  • There are thousands of different altcoins available
  • Many coins are cheap and can see dramatic increases in value in a short time
  • You can receive interest or other benefits for keeping certain coins.
  • Some coins can be used as a means of payment to buy goods online

Cons

  • Altcoins are volatile and there is a risk that you will lose your money
  • The Altcoin market has seen many “pump-and-dump” scams.

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