Notes

Cryptocurrency trading is somewhat similar to forex trading

what is crypto trading


It's the same in the sense that often a cryptocurrency can be traded against another currency or cryptocurrency..


You can also apply leverage to your trades when you are actually trading with your broker to take a larger position..


However, keep in mind that you need to return the borrowed amount to your broker even if your trade fails, and therefore using leverage can be very risky..


Another similarity is that cryptocurrencies require less startup money than stock trading..


Cryptocurrency and forex are divided into smaller denominations than stocks, which makes them much cheaper to trade and allows you to better control the amount you want to trade..


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AVAILABILITY

Shares are limited in trading time depending on where the company is located. For example, if you wanted to trade US stocks, you could only trade when the New York Stock Exchange was open..


Cryptocurrencies, which are decentralized in nature, do not have this problem, and they can be traded at any time of the day, seven days a week, wherever you are..


However, with stocks, you will have a lot more choice than with cryptocurrencies. Some of the best brokers offer thousands of stocks to trade..


While there are also thousands of cryptocurrencies to trade, the vast majority are not as reliable as stocks..


STOCKS AND CRYPTOCURRENCIES CAN BE TRADED AS CFDS.

trading stocks and cryptocurrencies


There are many options for trading cryptocurrencies, and cryptocurrency exchanges are very popular..


However, trading on cryptocurrency exchanges is very risky, as they are vulnerable to hacking..


Perhaps one of the most famous cases is when Mt. Gox was hacked and lost about 850,000 bitcoins, which was roughly 6% of the currency in circulation at the time..


None of the victims of this attack saw their bitcoins returned, and Mt. Gox filed for bankruptcy shortly thereafter.


What's even worse is that due to the way blockchains work, you can't just return someone's stolen cryptocurrency..


In the case of Ethereum, after a big hack, Vitalik Buterin and his team decided to hard fork the Ethereum blockchain to turn back time and get back what was stolen..


The event led to the creation of Ethereum Classic, which uses an older blockchain that has yet to be hacked..


CFDs are a much safer way to trade cryptocurrencies, as you never own the underlying asset..


Instead, you have a contract with a broker to buy and sell market instruments at a certain price, which eliminates the risk of their theft..

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