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Cryptocurrency trading

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Cryptocurrency trading

How to buy, sell and trade cryptocurrencies.

There is a difference between buying/selling cryptocurrencies on an exchange and trading cryptocurrency CFDs on a CFD platform. Both activities are done with the intention of making a profit by trading on the crypto market, but the processes involved are different. This post describes how cryptos are bought and sold, as well as the specifics of trading cryptocurrency CFDs.


Buying and selling cryptocurrencies

Buying and selling digital cryptocurrencies is essentially about exchanging a cryptocurrency like Bitcoin for another cryptocurrency like Ethereum on a buy or sell basis. The process involves finding a cryptocurrency pair to perform a crypto-to-crypto exchange or exchanging crypto for fiat or fiat currency for cryptos. The transaction is carried out twice and in opposite directions in order to profit after the completion of an exchange cycle.


Trading site

The buying and selling of cryptocurrencies takes place on cryptocurrency exchanges. A trader must open an exchange account by filling out an online form. Most exchanges have an order book that indicates which traders are buying and selling and where they are doing so.


Making deposits and withdrawals in cryptocurrency trading.

Cryptocurrency exchanges usually accept deposits and withdrawals in two ways. A small number of exchanges (mainly in the U.S. and the U.K.) allow fiat currency deposits or a mix of fiat and cryptocurrency methods. However, the majority of exchanges around the world accept crypto-based transaction methods, as such operations on operational accounts are restricted by banks. If the exchange only accepts cryptocurrency deposits/withdrawals, the cryptocurrency trader must also create a third-party digital wallet that will be used to process the deposits. The most common cryptocurrencies used for deposits are Bitcoin, Ethereum, and Litecoin.


To make deposits, one would need to purchase BTC, ETH, or another third-party cryptocurrency and have it transferred to the third-party digital wallet. The money would then be transferred from that wallet to another digital wallet provided by the crypto exchange for depositing that cryptocurrency. If you use this method, you should make sure that the wallets are properly addressed when performing the transactions, because cryptos transferred to an incorrect address cannot be retrieved.


The cryptocurrency trading process

Once your digital wallet has been replenished, you can buy and sell cryptos by trading the pairs that contain your chosen deposit currency. BTC and ETH usually have the largest number of pairs on an exchange, so you certainly won't lack for a viable choice. You can use limit orders ('close at profit'), stop loss orders ('close at loss') or futures to buy or sell your preferred digital currencies.


WebTrader screen of Litecoin and 3 persistent cryptocurrencies: Bitcoin, Litecoin and Ethereum.

Prices for illustration.


Cryptocurrency CFD trading.

Trading cryptocurrencies can be done speculatively, usually by trading crypto prices via contracts for difference (CFDs). Here, the actual cryptocurrencies are not owned or exchanged by the trader. The process involves buying or selling contracts based on the price movements of the underlying cryptocurrency.


Where can I trade cryptocurrency CFDs?

Trading cryptocurrency CFDs is done through online platforms of CFD issuers such as Plus500. The trader needs to open an account by filling out an online form. Verification of identity and residential address is a mandatory legal requirement. Funds can only be deposited into the CFD trading account using fiat currency methods via various payment methods.


How are deposits and withdrawals made when trading cryptocurrency CFDs?

Brokers offering cryptocurrency CFDs can only accept fiat currency methods for deposits and withdrawals. Therefore, bank transfer options, credit/debit cards, and/or e-wallets like PayPal, Skrill, and Neteller are often used for transactions on these platforms. The money must be transferred from sources that bear the account holder's name, as anonymous funding is not allowed. Third-party payment methods are also not allowed. Certain transaction limits apply to each deposit method. Deposits and withdrawals via bank transfer underli






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