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Cryptocurrency trading: What does this mean?
Written by Davies on / Reading time: 4 minutes.
Today, there are many cryptocurrencies with which you can trade, in which you can invest or exchange. The fact that it's digital money, since they're virtual currencies, doesn't differ from the fact that they can be used as we do with physical money. Each cryptocurrency has its own characteristics, but the main they all share is the use of the blockchain technology and its decentralized system. That is, they are not controlled by any institution or government. Many companies have made the leap to the use of cryptocurrencies for all the benefits and advantages they get.
In addition, many of them have their own mobile apps. An example? The DAVIES cryptocurrency, which, among all the things that it provides, we can highlight its immediate, secure and simple transactions. DAVIES has its own mobile app and is suitable for both Android and IOS system smartphones. There is also another one for you to use from your computer. As we already mentioned, each virtual currency has its features and DAVIES also has its own.
But… ¿what is trading?
Trading is a practice that carries out speculation and/or the business of various assets, including cryptocurrencies, within financial markets. Its goal? Generate short-term profitability. This aspect differentiates trading from investment, as this is a long-term process.
Decentralization in the virtual currency market
The fact that no government or financial institution has the power to regulate virtual currencies is a crucial factor because the world of cryptocurrencies has evolved a lot.
Factors such as supply and demand also drive the cryptocurrency market, but because they are based on a decentralized system, political and economic problems and catastrophes do not affect them as they do with conventional money. Other elements that are also involved in the price of virtual currencies in the financial market in addition to supply and demand are:
- Press: The information that is published in the media, as well as the image they present.
- Relevant events: These are important events that are related to cryptocurrencies. For example, when a regulation changes or economic catastrophes happen.
- Integration: At what level cryptocurrencies have been integrated into the infrastructure that supports them. That level of integration can be both high and low, which means it is good or bad respectively.
- Market capitalization: By this we mean the cost of virtual currencies.
3 benefits you get from cryptocurrency trading
Even though the cryptocurrency world is relatively young, if you trade with them you can get multiple benefits. Some of them are:
- Possibility to trade at any time: The usual thing is that you can trade at any time of the day from Monday to Sunday. That is, it allows you to carry out operations 24 hours a day.
- Possibility to trade faster: Buying or trading cryptocurrencies requires a digital account. Thanks to cryptocurrency trading you won't have to open, or manage any accounts, allowing you to trade in a fast timeframe.
- Volatility: Cryptocurrencies are very volatile. This fact is one of the reasons why the world of virtual currencies attracts so many people and passionate them.
4 concepts related to cryptocurrency trading
- Lot: is a group of tokens whose function is to equalize or normalize the size of trades that occur with cryptocurrencies. In addition, batches are usually small, although some virtual currencies are manipulated into large batches.
- Margin: This is the small amount of money you provide at the beginning of a trade to both open and maintain leverage.
- Leverage: It is a mechanism that allows you to develop to the maximum your exposure in the financial market, but on the condition that you provide at the beginning of the trade a small amount of money, which is the margin.
- Spread: This is the difference between the value that a cryptocurrency has when it is purchased and the value it has at the time of the sale.
Do you have any doubt? Tell us about it.