Cryptocurrencies are one of the hottest trading trends at the moment. Here at Olsson Capital, we get questions almost daily from new traders, who want to kick-start their careers with cryptos, but are a little confused over what to do. So, we thought we would compile our advice on the topic to help you get started and advance your trading experience.
Why trade cryptocurrencies?
Cryptocurrencies are a hot topic of conversation. But, does this make them a good prospect to use in your trades? The answer is yes and here’s a few reasons why:
- Cheap fees and fast exchanges – platforms only take a small percentage as a commission payment for the service and these fees are usually much smaller than for fiat (standard) currencies. Also, transferring from wallets is cheaper than using a credit card or a bank transfer.
- Volatility – while some might see the volatility of the market as a bad thing, it can be a plus point. There is a big potential to make a profit and the constant change of the market makes it an ideal place to learn.
- All week trading – unlike stocks and commodities, which can only be traded during business hours, cryptocurrencies can be traded all week. So, if you want to trade on a weekend, these assets are ideal.
Why choose CFDs?
There are different options when it comes to trading in cryptocurrencies and all have their pros and cons. CFDs, or a Contract for Difference, are favoured by traders on Olsson Capital. It is an ideal way to start Trading Cryptocurrencies as well as to expand your trading experience for one simple reason – you don’t need the money to buy the entire asset, only a percentage of it.
This is particularly important with cryptocurrencies due to the way their price can fluctuate. If you buy Bitcoin today at a certain value and it suddenly increases, you can sell it for a big profit. But, if the value plummets, you have lost money. When you use a CFD approach, you are only committing a small percentage of the value and are less susceptible to changes in prices.
Long term or short term trading?
Another big area of consideration is whether to get into long term or short term trading with cryptocurrencies. Obviously, the answer depends on your goals and preference.
Long term traders buy and hold the currency for a long period which can be anywhere from weeks to months or even years. Their aim is to study price trends over a longer period and decide when to sell at the best possible price, while avoiding those sudden dips in value. It can be a slower way to make money but also less stressful.
Short term trading embraces the volatility of cryptocurrencies and dives into them. They make use of short term price swings and typically trades take place over the span of a day or even a few hours. Trades are quick and intense, potentially a little stressful but more exciting than long term trading. And there’s a potential for frequent profits in these approaches.
Do your research
It is still important to do your research and learning before you start trading with cryptocurrencies. There is always the potential to lose a lot of money and you need to have a considered, clear approach to your trades. Olsson Capital have a series of learning materials on the site to help you do your research and make your trades confidently – and increase your chances of success in your cryptocurrency trading experience.
