What is crypto trading, and how does it work?
It is probably not a secret that cryptocurrencies are one of the biggest innovations in the world of finance. That is why investors all over the world are always searching for different ways to profit from the high volatility of digital assets. Buying and selling crypto on an exchange is one way to trade crypto, but many professional traders choose to trade as CFDs with the help of a crypto broker.
Crypto trading
Simply put, day trading in crypto is when the trader seeks to profit from the price differences of specific crypto assets. As a trader, you will be open to trading one day and not stay over to the next trading day. Furthermore, you should know that if you choose to trade with a broker, some brokers do not allow trading on weekends.
How does it work?
As we already mentioned, there are two main types of crypto trading. The common type includes buying and selling actual cryptocurrencies, and the more advanced type involves trading crypto assets as CFDs with the help of brokers. In that case, the trader doesn’t own the asset. The broker gives the trader access to buy and sell crypto with the option of leverage. Those types of traders use more than one trading strategy.
Is there the best time for day trading?
While crypto trading may sound easy, it is actually a serious business for professional traders aiming to profit from the financial market in the long term. Of course, to achieve this goal, it is important to have control over trading costs. When trading with a broker, he will charge you fees, which will be different across different trading times. Usually, this difference is due to differences in liquidity, volatility, and trading volume.
The best time to trade crypto is considered to be between 8:00 a.m. and 4:00 p.m. local time. However, it is important to know that the liquidity and volatility of crypto assets are very unpredictable. Most of the brokers give access only to the most popular cryptos, such as bitcoin, ripple, ethereum, etc. Of course, they could also swing from great highs to ridiculous lows in a short period of time.
When to avoid crypto trading?
Of course, winning in trading sounds great, but losing trades are also real in the world of crypto, and it is better to be prepared. And while this is normal, when it is part of a trading strategy, it is annoying to lose a trade just because you didn’t pay attention to market liquidity, volatility, and trading volume.
As we already said, some brokers don’t allow traders to trade on weekends, and there is a reason for that. During that time, many traders are out of the market, causing low trading volume. This affects mostly day traders rather than swing traders, as they aim to profit from small price movements.
Final words
Crypto trading seems, and really can be, an interesting and profitable process. However, it comes with both great opportunities and major risks. That is why we always advise you to do proper research before investing in crypto projects and strategies, and to never invest more than you are willing to learn.
Cryptoarbi.com is a triangular crypto arbitrage platform. All you need to do here is choose the right subscription plan, and we will do the work for you!