There is a huge difference between trading and investing. When you invest you buy and own an asset and hope it will appreciate in time.
While trading you are looking for assets that have volatility so that you can speculate on short term price moves either up or down to make profit. The most effective way that you can trade or speculate in Cryptocoins is with the use of what is known as a contract for difference. This is essentially a contract between you and your broker for the difference in price from when you open the trade to when you close the trade. This allows you to buy or sell a digital coin. In order to establish a price, you need to trade one currency against another. Even when you are investing in bitcoin, the price you are paying is quoted in your local currency. So, when you hear that bitcoin is at $4500 it means that bitcoins in US dollar is at $4500. You can trade coins against other coins or against fiat currency such as the euro and the dollar.
Crypto trading is also called margin trading, as this style of trading allows you to leverage or ramp up your capital using leverage. Leverage Trading is the possibility to trade an amount, which you don’t have at your disposal. Normally COINSTEC™ cryptocurrency exchange offer a leverage of 1:100. This means, that for each dollar you get 100 dollars of buying power. In conclusion this means a higher risk and a possible higher profit.
In every market, there are smart trades and stupid trades. Smart trades are trades where investors make money, while stupid trades are trades where investors lose money. And there are rational investors trading on economic fundamentals, and irrational investors trading on emotions.
Trading digital coins is no exception to this rule. The problem is that every trade looks smart at the time it is made, but only time can tell whether it will turn that way.
There are investors, for instance, who purchased Bitcoin at $200 a couple of years ago because they thought it was a smart trade. And they made tons of money -- if they sold it five or ten or twenty times the original price of the digital currency, as it soared over time. For them, what looked like a smart trade turned out to be a smart trade.
Cryptocurrency trading is the Forex 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.