Cryptocurrency Trading

Table of contents:

Trading crypto currency: Tips for trading with crypto currencies and derivatives

Cryptocurrency trading has been possible since 2009, i.e. since the “birth” of Bitcoin and the first transactions with BTC. However, the first digital currencies, Bitcoin and its immediate imitators, did not attract much attention at first, and certainly not in the financial world. Only since the price increases of the strongest crypto currencies in 2016 and 2017, which came as a surprise to many, have investors and traders become increasingly interested in the opportunities offered by trading crypto currencies. The number of tradable coins is also running into the thousands. Financial service providers are responding to this interest with corresponding products. How can one trade, and how can beginners learn to trade crypto currencies?

  • Numerous Altcoins except the Bitcoin are tradable
  • Trading crypto currencies directly or with derivatives
  • Access to crypto trading via exchanges and marketplaces
  • Derivatives trading via brokers

Trading with Crypto Currency: How digital currencies work

Who wants to trade crypto currency, finds on the one hand elements from the classical Forex trade again, on the other hand in addition, numerous characteristics. This is due to the technology on which most digital currencies are based – namely the block chain. The first digital currency ever, Bitcoin, was developed in 2009 in response to the global institutional quake of the financial crisis. The concern of the developer(s) behind the pseudonym Satoshi Nakamoto was to create a decentralized currency that, unlike fiat currencies, was to be tamper-proof and user-oriented. Bitcoin is not only the unit, but also the software client and the chain of data blocks it creates.

All users on whose PCs the client software is installed participate in Bitcoin and most other block chain-based coins. They can pay or receive payments with the crypto currency, all these transactions are recorded in data blocks, which in turn must be located and processed. The computing power of this “digging” is remunerated with newly created Coins or their fractions. The processed blocks are added to the “chain”, which is thus constantly extended. At the same time, the block chain is continuously updated on all computers in the network. A subsequent change or manipulation of individual transactions would therefore not be possible.

Crypto currencies as recognized financial products

The crypto-currencies of the first hour, i.e. the Bitcoin, Ethereum, Litecoin, in addition, Forks (in German “Abspaltung”) of the Bitcoin, like the Bitcoin Cash, reached in the meantime a high market capitalization. Coins and tokens with an interesting business model, such as Ripple, have also caught up strongly. The prices for BTC or ETH and other Altcoins in the Top 10 are now considerable, and Bitcoin in particular has established itself as a leading currency on the crypto market and is considered “digital gold” by its followers. Strong price gains are also expected in the future, if experts can believe them.

  • High market shares for the most important crypto currencies
  • Still potential for price gains
  • Long-term investment opportunities
  • Short-term trading with crypto-derivatives

It is unlikely that crypto currencies, especially those with a high market share, will disappear again. The physical acquisition and the reproaching of such Coins is quite suitable for the long-term investment. Likewise in question interesting new acquisitions, which are to be had still at favorable exchange rates and have in the near future good prospects to increase strongly. However, those who do not want to commit themselves for the long term can make use of other options. One can trade crypto currency namely also at short notice by means of derivatives.

Trading crypto currency: There are these possibilities

With the trade with Kryptowährungen investors have two alternatives: the Coins can be acquired just like Fiatgeld “physically” – in this case a sales with profit is possible after a course rise. Here, however, there is a real risk of loss when prices fall, unless you can afford to “sit it out” and wait for the price to recover.

Another possibility is speculation on the price development via derivatives such as CFDs, certificates and futures. Here the investor does not buy the Coins, but only a financial product with which he participates in the price development – not only on rising but also on falling prices. It can be said that the physical holding of digital currencies in many cases tends to be associated with long-term trading strategies. Financial derivatives, on the other hand, are suitable for short-term strategies within the framework of so-called day trading, in which positions are opened and closed within a short time, usually on the same day.

Physical crypto currency trading: How you get the coins

Various technical requirements are necessary for direct trading with digital currencies. These include a so-called wallet. The electronic wallet makes the transfer and possession of crypto currencies possible in the first place. However, the wallet does not store coins, but only the “keys” with which access to the credit balance is authorized. These keys are only strings. These include

  • The public key: the “account number” of the crypto account
  • The private key: Allows access to credit and authorizes transactions
  • The digital signature: provides information about the account balance

All three details are required to process a crypto payment. The wallet does not contain any further information, especially no details about the owner. This is because most blockchains are explicitly designed for anonymous payments. This makes it all the more important to secure the wallet well and not to lose the keys under any circumstances – otherwise the digital credit will be lost. A wallet can be managed in the cloud, on a USB stick, but also by writing down the strings on a piece of paper. Once you have one, you can start buying digital currency. This can be done via specially set up trading places, namely crypto exchanges and marketplaces.

CRYPTO CURRENCY TRADING ON A STOCK EXCHANGE

Convenient trading with crypto currency is possible on corresponding online exchanges. Interested users must first register for access, usually through a multi-stage process that begins with the entry of a few contact options and can end with a video ID legitimization. Those who go through the entire registration process can use all the trading options of the exchange, can also convert large amounts of money and pay with their credit card. After registration, you will have a trading account with the exchange, which must now be capitalized. While with some crypto stock exchange in addition Fiatgeld can be deposited, others accept only strong digital currencies, in particular the Bitcoin. In this case BTC must be acquired first over a portal that specializes in the trade of Bitcoin against Euro. After that, the BTC can be transferred to your own account at the Crypto Exchange. Now the selected digital currency can be purchased. In crypto exchanges, investors can specify the desired parameters, for example the amount of coins (or their subunits) to be purchased and the maximum prices the buyer is willing to pay. The exchange takes care of everything else – as soon as the entered conditions are met, the purchase or sale is automatically processed. However, there are processing fees for this – the service has its price.

CRYPTO-MARKETPLACES

Similar, but not fully automated, trading takes place on the marketplaces. Supply and demand are also matched here. Also with a market place a registration is necessary, like with a crypto exchange. Afterwards the user has the possibility of determining over the search function offers which correspond to its desires. By filters the search inquiries can be specified. However, the list of results must be viewed by the user himself and the purchase or sale must be initiated personally. A contact between buyer and seller and the arrangement of details is possible. More personal initiative, therefore, but the fees for marketplaces but also lower than the trading costs at an exchange.

With marketplaces in many cases no capitalization of the trading account is necessary, usually the indication of a reference account is sufficient. The location of the house bank has a considerable influence on how quickly a purchase or sale can be completed. If both banks are located in the same country, the conditions are optimal.

Trading on short notice: Trading crypto currencies via derivatives

To become acquainted with the physical trade with crypto currencies, to set up a Wallet and to register itself at a stock exchange is surely not everyone’s thing. Because not only are the most well-known Coins in the meantime an expensive affair, with which one binds much capital on a long-term basis, in case of course losses also the investor lost. An alternative is the trade with financial derivatives, without actually acquiring the underlying crypto currency.

CRYPTO CURRENCY TRADING WITH CFDS

Among the most popular instruments on crypto courses are contracts for difference. Contracts for Difference, or CFDs, were created to avoid the UK stamp duty that applies to stock transactions. CFDs now exist on tens of thousands of underlying assets, including currency pairs of crypto and fiat currencies such as EURBTC. With such a CFD, the holder does not acquire a digital currency. Instead, he speculates on the price development between the time of purchase and sale. And this is also possible on falling prices!

When crypto-trading via CFDs, the so-called levers can also be used. Here, the trader deposits only a fraction of the converted capital. With crypto-CFDs, however, the leverage is only 1:2, since the underlying assets are already considered to be very volatile. Traders gain access to over-the-counter CFD trading via a Forex and CFD broker, whose trading offer also includes crypto-CFDs.

FUTURES ON CRYPTO CURRENCIES

Futures contracts originate from commodity trading and are among the oldest financial instruments in the world. Using standardized contracts, the sale of an asset is agreed at a certain price and at a predetermined time. What was historically a hedge for producers and processing industries, especially in agriculture, allows profits in rapidly changing markets, prevents excessive price fluctuations and helps to counteract shortages – it is therefore not surprising that futures contracts are now also used for trading with crypto-currencies.

Futures, like CFDs, are derivatives; their price is derived from an underlying asset, including crypto currencies. Futures can also be traded via online brokers, provided the broker offers these products.

TRADE CRYPTO CERTIFICATES

Another, still quite young financial instrument that makes crypto trading possible are certificates. These relatively new products have only been around since 1990. Certificates are issued by financial service providers, mostly banks, and technically represent a bond issued by the issuer. However, the popular financial products are completely dependent on the solvency of the issuing bank! Since they are not considered as special assets, investors can therefore lose their deposits in the event of insolvency. Nevertheless, certificates are worth considering if you want to trade in crypto-currency, because with the help of these products you can speculate with or without maturity, with leverage and on rising or falling prices.

Trading crypto currency: Do not forget taxes!

Before the entrance into the trade with crypto currencies it applies to consider thus which investment horizon is applicable and which financial products are ideal for the conversion of the own strategy. Last but not least, there is the question of taxation. How the profits from the crypto trade are estimated and which tax rates are incurred depends on how the trade is conducted. The tax authorities clearly differentiate between direct trading and the most popular form of crypto trading via CFDs.

DIRECT TRADING WITH “PRIVATE MONEY

Profits from the direct trade with crypto currencies are not considered as income from speculation and capital assets. Therefore no final withholding tax is to be paid here. In addition the legislator does not regard digital currencies so far yet as means of payment. Instead, coins are equated as private money with “other economic goods” for tax purposes. The same tax conditions apply to private purchases and sales of coins as to the purchase or sale of an antique, a piece of jewelry or a painting. The income from the transaction must be declared as “other income” in the annex SO of the tax return. The following can be taxable

the sale of a coin against Euro or another recognized means of payment
an exchange of one crypto currency for another crypto currency
the purchase of real goods or services in exchange for digital advertising

CRYPTO TRADING WITH CFDS: WITHHOLDING TAX OF 25 PERCENT

The situation is different when trading in crypto-CFDs, as these are considered futures transactions for tax purposes. Therefore, profits from CFD trading fall under the final withholding tax like many other capital gains. This tax amounts to a flat rate of 25 percent of the profit, plus solidarity surcharge and church tax, if applicable. Brokers based in the Federal Republic of Germany pay the withholding tax directly. When trading crypto-CFDs with a broker outside of Germany, traders must take care to tax the income themselves.

Conclusion to trading with crypto-currencies: Many possibilities for different investment horizons

As it was shown, different possibilities are offered for interested investors to trade with crypto currencies. Whether it concerns thereby the direct trade in own initiative or around the Trading of crypto CFDs and other derivatives over a broker, in each case a still recent and sometimes very volatile property is traded. Even who already brings along experiences from the financial industry and in the Trading, should be clear about the fact that one must learn crypto currency traden. The information offers of CFD brokers, the trade over free demo accounts with virtual capital and the readiness to deepen itself into the background of the selected crypto currencies should bring along investors, so that the own strategies in the trade with digital currencies merge.

Trade crypto currency: Traders have these chances

Crypto currency trade – chances for it there are for the traders at world-wide over 20.000 markets as well as with over 2.900 crypto currencies. So the traders can trade for example at a stock exchange directly crypto or turn with a broker to the speculation on the course of the price by means of CFDs. Crypto securities can also be interesting for long-term oriented traders, where they can also collect dividends. We show where the traders have optimal chances to trade with crypto currency and which challenges exist here.

  • At Exchanges, traders can trade more than 2,900 crypto currencies
  • A wallet is required for Trading Crypto Exchange
  • Crypto trading is also offered by brokers with various financial instruments
  • Trading with crypto currency can be practiced with demo account first free of charge

Crypto currency trading made easy

If traders would like to trade a crypto currency, there are numerous possibilities. Meanwhile the list of Internet currencies has increased to more than 2,600 since the introduction of Bitcoin. In addition there are innumerable Trading places, with which the dealers on international level invest directly into the Coins and Token and can sell it as profitably as possible. So that trading with crypto currency is actually promising, there are some things to consider. Apart from the selection of the correct crypto stock exchange also the procurement of capital, the course analysis as well as the selection of alternative financial instruments rank among it. We look at how traders can trade successfully with crypto currency and where there are actually the optimal conditions for it.

WHERE TO TRADE CRYPTO CURRENCY – STOCK EXCHANGES AND BROKERS IN COMPARISON

Trading of Bitcoin and Co. is possible either directly at crypto exchanges or with brokers. The investment and investment possibilities could not be more different, however. While the traders need a Wallet with an Exchange, in order to be able to trade with crypto currency, this is not necessary for example with brokers. Since the coins are not directly offered for sale or purchase at a crypto broker, but the traders speculate on the price development or use crypto securities for the investment, the wallet is not required, but the account with the broker is.

Note: Traders who want to trade flexibly on the crypto-market and do not want to commit themselves to buying only a certain currency can look around the Broker. There, for example, speculation possibilities on the price development of Bitcoin and Co. with CFDs are offered.

Trade crypto currencies: Why is the Exchange a good choice?

For traders, the question is where to invest their capital in order to increase it in the best possible way. Those who decide to trade on a crypto exchange actually want to own the coins and then either pay with them or use them profitably as an investment. The payment procedure is however so far possible with Bitcoin, because the remaining crypto currencies are not considered as means of payment in the Shops. Thus Bitcoin is not a recognized means of payment, as for example euro and other Fiat currencies, nevertheless the Coins are meanwhile with many offerers also as payment possibility certified. Away from Bitcoin, merchants can use the crypto currencies primarily as a means of investment. Crypto act means expensively to sell and before as favorably as possible the Coins to acquire. For it the traders need:

  • Wallet
  • sufficient equity
  • trading strategy at best

Trading with crypto currency requires a sufficient amount of equity, especially with expensive currencies like Bitcoin. Not each Trader can raise such a sum, in order to acquire for example a Bitcoin for 19.000 euro. Such prices are the exception also for Bitcoin, nevertheless the crypto currency is most expensive compared with other Coins. Litecoin, Dash, Ripple or Bitcoin gold can acquire the Trader however already for clearly less. So that the sale is more easily profitable possible, the purchase prices should be naturally as favorable as possible. It is optimal to wait for a downward trend and then strike.

Trading with crypto currency at the broker

Where to trade crypto currency? – When answering this question, we must not forget about crypto brokers. The increasing interest of investors in Bitcoin and Co. has also prompted numerous brokers to offer interesting financial instruments to the crypto-market. Especially the crypto CFDs or crypto securities are in the focus. In contrast to the stock exchange, there is a significant difference. With brokers, trading crypto currency does not mean keeping the wallet available and actually buying the coins, but the traders speculate primarily on the price developments. Thus for example the volatility can be particularly well used, which still occurs with many crypto currencies again and again. Apart from the enormous course fluctuations it can also be observed that long pronounced sideways trends in the chart of Bitcoin and Co. show, which is disadvantageous for the trade at the crypto stock exchange.

USE SIDEWAYS TREND AND VOLATILITY FOR TRADING AT BROKER

Traders can take advantage of a sideways trend to profit from the price even under such difficult market conditions. Experience has shown that a sideways trend is much more difficult to trade on the exchange, because the price hardly moves at all meaningfully, so that the time for entry and exit on the market is more difficult to determine, if not impossible. Contracts for Difference play out their great strength in such market movements, because the traders themselves can only hold the positions for a short time. This enables them to take advantage of even the smallest price fluctuations. Important for successful trading activities is above all the analysis of the price, which is much easier with the support of tools and indicators.

Trade crypto currencies and use short analyses optimally for this

The crypto price or its consideration and prognosis play the essential role in successful trading. Only if the traders actually manage to forecast the price correctly, trading successes at the crypto exchange or the broker can actually result. The technical and fundamental analysis of crypto prices has proven itself due to its complexity and significance.

TECHNICAL ANALYSIS ALSO FOR TRADING BEGINNERS

The technical analysis is much easier to implement than the fundamental analysis, so that it can be used by the less experienced traders. With its help, traders analyze historical data and try to draw conclusions about future price developments. In doing so, the traders make the following assumptions: A trend repeats itself at some point and reverses itself again and again. Technical analysis mainly uses indicators and tools, for example to transfer past patterns to the future and use them for forecasting. Although this is easy to use, there is still room for improvement here because the current market situation is not taken into account.

FUNDAMENTAL ANALYSIS AS AN ADDITIONAL FORECASTING AID

While the technical analysis only considers past price data, the fundamental analysis uses the current market situation. Its complexity is much higher, which makes it much more challenging for traders. After all, the current data must be compiled and analyzed, which often leads to difficulties for less experienced traders during the first fundamental analyses. However, those who stay on the ball and practice fundamental analysis and technical analysis become more adept at the procedure and make decisions with more confidence.

Trading crypto currency: Which Internet currency is suitable?

The list of crypto currencies has grown abruptly since the emergence of Bitcoin. Nearly monthly there are new Internet currencies at the market, which are all however not always successful and fall immediately into the eye of the broad public. Frequently it takes somewhat longer, until the crypto currencies establish themselves and by their characteristics in the way of use of themselves make talk. Exactly here the chance for investors lies: Because if a crypto currency comes only again on the picture surface, the prices for it are according to experience smaller. Remember we all of the introduction of Bitcoin, because at that time probably nobody had believed at it that the Coins could make their users millionaires one day. The first years were difficult for Bitcoin, because the uncertainty of the investors was large. Nobody really knew what to do with the cryptographic currencies, so that trading behavior was also restrained.

RECOGNIZE OPPORTUNITIES EARLY AND BUY CHEAP

Who recognized at that time with the introduction of Bitcoin the chances and believed in the development of the Kryptowährung, could acquire the Coins for few euro. After years they were then worth up to 19.000 euro and more. Suddenly the demand for Bitcoin rose and over night there were innumerable millionaires, who wrote a genuine success history by the sales of the crypto currency. Bitcoin is actually an exception, because such rapid course increases did not give it so far again, nevertheless the example shows that it is actually possible.

BITCOIN, DASH, LITECOIN AND CO. – THE TOP CRYPTO CURRENCIES ON THE MARKET

A good indicator for the currently best crypto currencies is a look at the market capitalization. There is a constant change in the ranking, because with supply and demand also the prices develop and change the position in the list. Nevertheless, there are some currencies that can hold their position in the top 10. The undisputed leader is Bitcoin, the crypto gold. Whoever invests in the coins needs a high equity ratio in order to actually be able to acquire a whole coin. Because Bitcoin costs depending upon market situation more than 5,000 euro. But traders have in their Wallet then in addition, the crypto currency absolutely.

MORE FAVORABLY IN CRYPTO CURRENCIES INVEST

Who cannot or would not like to raise as much own capital as for the purchase of Bitcoin, can invest also into other interesting Internet currencies. Ripple, Litecoin, Bitcoin Cash or Ethereum are only some of them. They cost significantly less than Bitcoin, but are no less promising. Of course, almost all crypto currencies on the market show volatility in the exchange rate development. With this knowledge the traders can act in addition, clearly more circumspectly and pay attention for example to the upward or downward trend, in order to obtain thereby their profits. Sometimes, however, it can take a little longer until the purchase or sale is actually worthwhile, because the market of crypto currencies is in constant motion.

With crypto currency trade & Coins free of charge secure – the secret tip

Many users want to trade crypto currencies gladly, because the market is extremely promising. What do the traders make however, if they have at present no own capital funds at all, in order to buy for example Bitcoin and CO. Theoretically they would have to begin then first with saving, in order to be able to afford sometime the Coins. But why wait so long if it is also easier? In practice, we have found some interesting ways for retailers to get to them without having to buy the coins directly.

CRYPTO FAUCETS AS A SECRET TIP

Krypto Faucets – they are the ultimate solution for all those who want to acquire Bitcoin and Co. without equity. They are various projects, websites or mobile applications that donate free coins. The intention behind this has many different forms. For example, it may simply be that the acceptance and distribution of Bitcoin and Co. is to be promoted; in other projects, users are to be encouraged to participate in surveys or give feedback on games or other applications. However, such faucets are offered free of charge, which is their great advantage. Although the distribution of coins is actually only carried out in very small quantities, users can still secure Bitcoin and Co. free of charge. All that is necessary for it is their time, some perseverance and a crypto wallet.

Note: To increase the efficiency of the faucets, we recommend using several of them in parallel. This speeds up the earnings process considerably, so that users can sell profitably earlier.

Conclusion: Crypto currency trading is also possible without much equity capital

Traders can trade with crypto currency especially at crypto stock exchanges. Who would like to invest in Bitcoin and CO. and acquire the Coins, needs for it a certain own capital funds portion. Depending upon the selected crypto currency the amount can vary however clearly, whereby Bitcoin is undisputedly the most expensive crypto currency to date. In addition to registration with the Crypto Exchange and equity capital, a Crypto Wallet is also a prerequisite for active trading participation. The purchased coins are stored and securely managed there. Apart from the purchase at the Crypto Exchange there are other possibilities to get the possession of the coins: the crypto faucets. Traders have the chance to get smallest amounts of different coins for free by answering surveys or giving feedback on applications. The earned coins can be collected in the wallet and later sold on the crypto stock exchange at the optimal time. Traders who don’t want to be involved in direct trading of the coins, but instead want to be more flexible in their trading activities on the crypto market, can use the broker to realize their profit goals. The options available there include crypto CFDs or securities.

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