In 2022, here's how to trade cryptocurrencies

In 2022, here's how to trade cryptocurrencies

You're still unsure how to trade cryptocurrencies in 2022? If you haven't already done so, now is the time to do so before it's too late. Continue reading to learn about cryptocurrency, the world's most exciting asset class, and how to trade cryptocurrency with confidence in 2022.

What exactly is a cryptocurrency?

Cryptocurrency is a digital asset type that has transformed the worldwide banking industry. It is a combination of the words 'cryptographic' and 'currency,' or 'crypto' for short. Since the establishment of the first cryptocurrency, Bitcoin, in 2009, the popularity of both trading and generating new cryptocurrencies has skyrocketed. In reality, the total value of the cryptocurrency market is already over $89 billion, and there are over 10,000 different cryptocurrencies, or 'coins,' on the market after only 13 years.

Despite the fact that each coin has its own set of characteristics, they all have one thing in common: they all use a technology known as "blockchain." A digital record of all transactions (and additional information, depending on the coin) of a particular coin is referred to as a blockchain. Blockchain is a distributed ledger that is held on a decentralised computer network. Decentralization is a sort of ownership arrangement in which ownership is distributed evenly among each node (in this case, a computer) in the network, as opposed to centralization, in which one node owns the majority or all of the network.This implies that each computer in the network has a copy of the blockchain and, most significantly, that the coin is not regulated by a central authority like a bank or government. "That sounds unsafe," you could say. Why should I bother about cryptocurrency if I'm pleased with my bank and trust it?" The reason is simple: cryptocurrencies offer their users a number of appealing benefits.

So, what are the benefits of adopting cryptocurrency? First, decentralisation eliminates most, if not all, of the expenses imposed by banks, making crypto transactions more affordable. This makes a big difference when it comes to foreign transactions, which can be costly when done through banks. Second, because it allows things like supply limits, set inflation rates, and loan contracts to be programmed into its code, blockchain technology automates economic regulation and eliminates the majority of bank functions. As a result, compared to centralised regulation, blockchain makes economic regulation more transparent, objective, and efficient. Third, because blockchain technology is highly encrypted, confidential, and decentralised, crypto offers greater security than banks.

Are you more engaged in crypto trading now? Continue reading to learn about the distinctions between trading crypto and other assets so you can decide if crypto is right for you.

Are you more engaged in crypto trading now

Cryptocurrency trading vs. other assets

So, how is crypto trading different from trading other assets?

The most significant distinction is that cryptocurrencies are significantly more volatile than any other asset class. It is not uncommon for a cryptocurrency to fluctuate by as much as 10% in a single day. On the one hand, more volatility entails increased risk. Higher volatility, on the other hand, offers for faster profit due to rapid price fluctuations. Furthermore, unlike other markets, the crypto market is open for trading 365 days a year, 24 hours a day. As a result, trading crypto has a lot bigger profit potential than conventional assets, but it also comes with a considerably higher risk.

Trading crypto is similar to trading other assets in terms of technical analysis, so you won't have to learn any new theory if you've used technical analysis tools before. Fundamental analysis, on the other hand, differs in that crypto is more susceptible to market sentiment and impacted by social media, particularly statements made by crypto superstars.

Are you all set to begin your bitcoin trading journey? Continue reading to learn how to trade cryptocurrency in 2022.

In 2022, how will you trade cryptocurrencies?

1. Sign up for an account with a cryptocurrency exchange.

The first step in trading crypto is to open an account with a crypto broker, who will allow traders to swap crypto for other assets and vice versa at the broker's specified prices.

On the web and on mobile, you may open a crypto account right here at FBS. Over 100 trading instruments are available on the FBS Crypto account, including coins, coin-coin, coin-fiat, and coin-metal. Furthermore, FBS provides ideal conditions for trading cryptocurrency, including minimal spreads, fixed leverage of 1:5, and deposits and withdrawals in both fiat (conventional) and cryptocurrency currencies.

You'll need to verify your identification with your passport or ID card before you can use your account. This assists us in preventing fraud and resolving disputes, allowing you to trade without worry. You can now deposit money into your account after your identification has been verified. You can fund your FBS Crypto account using a debit card, an intermediary such as Skrill or Neteller, or a crypto wallet. You may always register an FBS Crypto Demo account and try trading crypto with virtual money if you aren't ready to invest real money in crypto.

2. Select an online trading platform

You'll need to choose a trading platform once you've opened an account with a crypto broker. A trading platform is a piece of software that allows users to purchase and sell cryptocurrency, monitor live price charts, receive trading signals, and perform technical analysis.

Your crypto broker will determine which trading platforms you have access to. FBS Crypto is accessible on MetaTrader5 and FBS Trader, our proprietary trading platform. FBS Trader is more user-friendly, therefore it's a good choice if you're new to cryptocurrency trading. MetaTrader5 includes more extensive technical analysis capabilities, making it more suitable for more experienced traders.

3. Make a trading strategy.

The next stage is to develop a confident trading strategy to ensure a good start in bitcoin trading. To begin, select the coins you wish to trade. The primary differences between cryptocurrencies for traders are their volatility and popularity. Tether, a coin meant to be highly correlated (move in a similar fashion) to the US dollar, for example, is significantly less volatile than Bitcoin, which may swing dramatically. Furthermore, popular coins, like as Bitcoin and Ethereum, have higher liquidity (active trading) and are more commonly accepted on cryptocurrency trading platforms.

Another significant distinction is that some coins, such as Bitcoin, have a finite supply limit of 21 million units. Other coins, such as Ethereum, on the other hand, have an unlimited supply but a regulated inflation rate. The distinction between restricted and unlimited supply for traders is that coins with a limited quantity tend to increase in value over time as demand develops, because supply cannot be modified to keep up with demand. Limited-supply coins, on the other hand, are more volatile and thus riskier to trade. As a result, your risk tolerance plays a role in determining which cryptocurrencies you will trade.

Once you've decided which coins to trade, keep in mind that the volatility difference between crypto and other asset types is significantly bigger than the volatility difference between cryptocurrencies. As a result, to keep crypto's extreme volatility under control, your trading strategy should adhere to sound risk management standards. Most essential, for each trade you make, you should set a Stop Loss or

Take Profit.

After that, decide on certain trading techniques. A trading strategy is a set of guidelines that traders use to choose when to purchase or sell an asset. It can be based on technical or fundamental analysis. We advocate employing a combination of tactics that include both sorts of analysis to enhance your trading success. Remember that if you trade with FBS, you can always learn more about trading methods in our Education section, which is accessible on both the online and mobile platforms.

4. Finish your first trade.

You're finally ready to make your first crypto trade after you've developed a solid trading strategy. To get started, go to your trading platform and select the instrument you want to trade. The current purchase and sell prices will then appear. After that, you can decide on the magnitude of your deal and whether you want to buy or sell. Keep track of your current profit or loss after you've placed your order. Simply put an equivalent order in the opposite direction to close your trade.

That's it, you've completed your first cryptocurrency transaction! We hope you found this information to be helpful and that you are now better prepared to begin your crypto journey. Good luck with your trading!