The following article was written by blogger and trader Investor Greg.
The Concept
Cryptocurrency trading offers great opportunities to today’s traders and investors. Main cryptocurrencies such as Bitcoin (BTC) and Litecoin (LTC), are traded every day, in various strategies. Traders who use technical analysis tools believe that cryptocurrencies obey technical analysis more than classic markets do, because they have not been taken over by large bank algorithmic trading yet. Others prefer cryptocurrencies because trading is available 24/7, and also because there is more flexibility offered. On platform based trading, traders can trade cryptocurrencies quoted ether in USD or against another Cryptocurrency, and this offers much more flexibility and potential for hedging strategies.
In general, people are interested in cryptocurrencies because they think they are still undervalued, so one could buy actual crypto coins through an exchange such as Poloniex or Bitmax, and hold onto these coins until their value increases many times over. The other choice is trading through an online broker, through instruments such as CFDs, in this case not actual coins are ever owned, but the CFD contracts mirror their price movement down to the smallest increment. Platform based trading is safer from exchange based trading, as far as hacking attacks are concerned, because if you ever lose the single hash code representing your crypto coins, you can never recover your investment. Actual crypto coin codes are secure and impossible to crack, but today’s hackers don’t have to crack them to cash them out, they simply hack your computer, and steal these codes, once this has happened it’s game over, the coins can never be recovered.
What to Do to Stay Safe
There are security steps to follow, in order to prevent your crypto coin codes from being stolen, or lost, this is how serious Cryptocurrency investors operate. In most cases, it’s wise to never have more than $500 worth of crypto coins kept on any online exchange wallet. Amounts higher than that should be kept in separate, more password protected wallets in your PC, or in offline wallets. In platform based trading where you trade CFDs on cryptocurrencies, there is no risk of getting hacked, the only risk is the market risk due to leverage, if high leverage is used. High leverage can lead to sudden overexposure, and forceful closure of the open trades. Cryptocurrencies tend to be much more volatile, but also more profitable than many classic markets, if you happen to trade BTC you will see how volatile it can become. Bitcoin is actually volatile, and also profitable, but it also has a relationship to Ethereum and Litecoin, this is where things get more interesting.
The top cryptocurrencies are expected to go up in value, and they will look like bubble investments, but actually will not be. They will keep on rising and rising until people lose interest. But to evaluate the trend, you only need to pay attention to how people and businesses react, if more and more people accept cryptocurrencies as a way for payment, this means that the uptrend is solid. If usage stops expanding, it may signal that there will not be a solid rally ahead. So do pay attention to Cryptocurrency usage trends.
In terms of actual trading, long term value is important because it allows CFD traders to assess where price finds real support, and adjust their trades accordingly. The Investor Greg website offers some valuable insights into CFD trading and chart analysis methods.