Cryptocurrency trading is the most prevalent way to make money on e-currency, which is provided by its big volatility. On the one hand, this characteristic looks like a disadvantage, but it provides a great opportunity to earn a high income. The main thing in successful bitcoin trading is to choose the best algorithm and put it into practice.
How to Choose the Cryptocurrency Exchange?
There are a lot of cryptocurrency exchanges that offer different terms. They can be classified according to many conditions, as a type of trading, a way of centralization, or any others.
The common classification:
- Spot exchange provides for quick settlement during the transaction according to the current rate. Asset value is formed by demand and supply, thus this trade has a high level of volatility and gives process automation.
- Derivatives that include futures and options. In fact, it is a contract trading, where one participant gives to another its assets on the agreed time and at the agreed price.
- Margin trading is when the exchange platform gives a loan of funds, but this way is very risky for traders without experience. On the other hand, it increases the potential income.
- Peer to peer. This trade offers to buy and sell cryptocurrency for fiat money. The participant can make an advertisement with suitable conditions and just wait for the responses.
The spot trade is the best variant for beginners because it looks the most understandable.
Choosing an exchange to trade you should specify some details. First, it is the reputation of the cryptocurrency system, which includes user account protection and honesty platform owners. The best way is to choose the exchange with account verification for bitcoin trading and other financial transactions. Last but not least, the current exchange rate; you should select the most profitable one.
About Exchanging Commissions
All cryptocurrency exchanges charge commissions, if you don’t pay attention to these fees, later it may turn that they whip away a significant part of your income. As a result, this kind of trading can’t be beneficial.
The three kinds of fees to be considered:
- A trade commission.
- To account refill.
- To withdraw funds from the exchange.
The first one means fees for any exchange operation on the trading platform. It can be classified for makers (who make a trade by opening the limit order) and takers (who create market order after closing the limit).
Trading platforms’ owners try to promote the market formation using zero commission for makers; sometimes it even can be negative, when the position creator gets a reward for his actions.
Before bitcoin trading, you should replenish your account in the selected currency. Frequently the commission for this action is significant for fiat. Additionally, it depends upon the conditions of the payment provider.
Funds’ withdrawal from the exchange account almost always is subject to commission. For fiat, it is usually a percentage of the sum. When cryptocurrency — it is a fixed amount for most exchanges, which provides the profit of the trading platform.