How to Start Trading in Cryptomarket With Minimum Investment?

Crypto Currency

Introduction

Nowadays Cryptocurrency is getting very popular among youngsters. 80 people out of 100 want to invest in Cryptocurrency, but they are not aware of how to start their investment journey. Most people don’t have a large amount of funds before investing in Cryptocurrency, for this reason everyone wants to know how one can start with minimum investment in Cryptomarket? 

Within this blog we will discuss each and everything which will help you to get relevant knowledge about “how to start trading with minimum investment in Cryptomarket?“. Cryptocurrency is a new industry which is emerging day by day and most people have predicted that it is the future. The market of cryptocurrency is totally different from the stock market.

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Because the cryptocurrency market is open to trade for 24*7, whereas the stock market of a specific country has a specific time to open and close. The time to trade within the crypto market is the same for all traders belonging from different parts of the world, which signifies that it never closes. The Brokers in the stock market charges brokerage fees on day trading from traders, and also offers margins to them. 

Everyday thousands of cryptocurrencies are emerging on different crypto exchanges. 

For making day trades you don’t need any demat account or something like that, but you are required to have an account on your favourite crypto exchange. While trading in the crypto market you are required to have great understanding of different cryptocurrencies and in depth knowledge of trading principles. The volatility of the crypto market is very high so you should never speculate in the cryptocurrency market. You need to have impeccable risk management skills and nerves of steel then only you will be able to take safe trades. 

How does cryptocurrency trading work?

With the help of a CFD account you can trade different cryptocurrencies. If you don’t know about CFD then let’s explain it to you. The full form of the term CFD is “Contract For Difference”. It is a kind of derivative product which is similar to the stock market that enables you to speculate on whether the price of your chosen cryptocurrency will rise or fall. You can never get the ownership of a single cryptocurrency as their prices are quoted in traditional currencies such as the US dollar, Euro, etc.

CFDs offer you a high leverage on each trade which means you are only required to deposit a little fraction of the full required fund. This leverage can be very lucky in case the market moves in your favour and sometimes can be very unlucky to you in case the market moves against you. 

Some Important terms used while trading Cryptocurrency

Spread: The difference between the prices of buy and sell for a cryptocurrency is termed as spread. 

It is somewhat similar to the stock market,  when you open your position in the market of cryptocurrency you will find two prices of a particular coin. If your analysis insit you that the market will go up then you will take trade at the buy price, which is slightly above the market price. But if your analysis says that the market will go down then you open a short position which means you trade at sell. 

Lots: It is termed as a collection of many tokens of a specific cryptocurrency as a Lot. While trading in the Cryptocurrency market you are required to buy a lot which consists of a collection of many tokens in one single lot. You can buy one or more than one lot at a minimum cost. 

Leverage: leverage is such a term which can be very dangerous and can be very beautiful to you. This signifies that it will magnify your profits and can also bring the risk of amplified losses to you. On individual trades it will also include losses that can exceed your margin. To deal with it you are highly required to have the skills of risk management. 

Margin: The exchange platform offers leverage for trading in cryptocurrency which means to gain the exposure to large amounts of cryptocurrency without paying the full required fund for a trade. All you need is just a small deposit which is termed as margin. Your profits and losses are based on the full size of an individual trade, during the closing of leveraged position. The size of margins vary depending on the selected broker, and how large your trade size is. Margin enables you to trade cryptocurrencies with less amount of money

Let’s us know margin with an example:

Suppose you have selected Bitcoin to trade so while taking trade you are only required to deposit only the 15% of the full trade that means you are only required to deposit $750 instead of depositing $5000. Margin is generally defined as a percentage of the full position. 

Pips: Pips are the units which are usually used by traders to measure the movements of the price of a specific cryptocurrency. It determines the price of a cryptocurrency by referring to a one digit movement in the price at a specific level. If a high value of cryptocurrency moved from a price of $120 to $121, then the difference between the last digits of the two values will be defined as a pip. So the traders will define this moment as cryptocurrency has moved a single pip. Well, the prices of different cryptocurrencies are not similar; they vary from each other depending on the demand and supply of the cryptocurrency. So those cryptocurrencies which have lower value will be traded at different scales, where a pip will be expressed as a cent or even a fraction of a cent in the price movement.

Conclusion:

Cryptocurrency trading involves a high risk if not done without having in-depth knowledge. As a cryptocurrency is highly risky due to its volatility as compared to the stock market. While taking trades in cryptocurrencies you are highly recommended to invest in safe coins which have their name in the market for a long time. In the beginning you must start your journey with less money in cryptocurrency trading. Keep in mind that day trades involve high risk so you should invest your money in cryptocurrency for the long term as it is much safer as compared to trading in Cryptocurrency

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