What is cryptocurrency trading?
Cryptocurrency trading involves trading on the price movements of a cryptocurrency. And this, from a CFD trading account. It also consists of buying and selling the underlying currency from an exchange platform. To succeed in this activity, a bitcoin and cryptocurrency trading robot is a great necessity.
Cryptocurrency trading on CFDs
CFDs are derivative products. They are intended to help you trade on the price movements of cryptocurrencies. The special thing about them is that you don’t need to hold the underlying virtual currency. If you think that the value of a cryptocurrency is likely to increase, you position yourself to buy. In the other case, if you think it will go down, you position yourself short.
With CFDs you only have to tie up a small part of your capital, as they are leveraged products. This will allow you to benefit from full exposure to the markets. However, your losses and gains are calculated based on your total position. Leverage therefore amplifies both losses and gains.
Sale and purchase of cryptocurrencies from an exchange platform
When you get cryptocurrency from an exchange, you are buying the currency itself. To trade virtual currencies this way, you will first need to open an account. Then you will have to immobilize the entire position. Finally, all you have to do is keep your tokens in your cryptocurrency wallet until you decide to resell them. It is imperative to familiarize yourself with the technology that exchange platforms use, and to learn how to extract useful information. Because they don’t work the same way.
How the cryptocurrency market works
Cryptocurrencies are not issued by a central authority, which means that their markets are decentralized. They pass through a network of computers. They can be sold and bought on exchanges and held on dedicated wallets. Unlike traditional currencies, they are only digital proof of ownership stored on a blockchain.
When a user wishes to sell cryptocurrency units to another, he must transfer them to the virtual wallet of the buyer user. The transaction is completed when it has been verified and added to the blockchain. This is done through a mining process. This is also how new tokens are created.
What is auto trading?
As its name suggests, auto trading consists of executing trades automatically using stock market software or robots. This form of trading is based on the use of an electronic platform whose algorithm decides on the various aspects of the order without you having to lift a finger. It is up to the program to take care of the execution of all orders, even when your computer is off.
Since the foreign exchange market is one of the largest in the world, there are several automatic trading options. For this purpose, followers of automatic trading generally use two methods. It is a platform pre-programmed by a broker and an automatic trading platform installed by a computer programmer. In the first case, you pay a commission for each transaction carried out. In the second case, you will need to subscribe to a platform that offers software with a trading environment adapted to your broker’s site.
The benefits of auto trading
Automated trading has a multitude of advantages. You will find among others:
- The resolution of the problem related to the psychological aspect of trading;
- Respect without qualms of all the rules of your trading strategy.
- No more uncontrolled impulse or Stop Loss;
- Never tires of carrying out your orders;
- Available 24 hours a day and never misses an opportunity;
- Thinks quickly and well, without making mistakes in his manipulations;
- Allows you to perform a multitude of operations per second;
- Allows you to act faster than others;
- Monitoring of several parameters and markets at the same time, etc.
The advantages of turning to a robot are multiple. If you want to succeed in this area, it would be very useful to turn to this strategy. You won’t have to get in the way, the program takes care of everything. However, it is recommended to use it cautiously and to have someone accompany you if necessary.