A cryptocurrency is a digital asset designed to work as a medium of exchange using cryptography to secure transactions and control the creation of additional currency units. Crypto trading is a process that is analogous to stock trading, with the main difference being that you are trading digital assets rather than stocks and shares. Like in traditional exchanges, the price of cryptocurrencies can sometimes be volatile.
Cryptocurrency exchanges are websites where you can buy and sell cryptocurrencies on demand. To trade on these sites, you first need to register with them and deposit funds onto your account so that they know what currency you want to trade in. Here are the steps to use so you can begin crypto options trading.
1. Register a Trading Account
Select the trading platform where you wish to trade, and click the button marked ‘Register.’ Follow their instructions to register your account. This can include:
Provide a username, official name, email address, contact number, and password. You will need to validate your email address by clicking on the link sent to you in an email from the exchange.
Upload an identification document, either a photograph of your passport or an ID image. Provide a phone number and your account’s current address.
2. Choose the Contract You Wish to Trade in
The purchase of a cryptocurrency contract can be done in two ways.
You can choose to open a ‘Buy’ contract and hope the price of the cryptocurrency will rise, allowing you to sell it at a higher price. Or you could choose to open a ‘Sell’ contract and hope the price of the cryptocurrency will fall, allowing you to buy it at a lower price.
The second option is more advantageous because you are guaranteed to make money if your prediction is correct.
Now you need to choose which cryptocurrency you wish to trade in. You will see a list of the different cryptocurrencies on offer, and you can select the one you wish to trade in.
Cryptocurrency contracts are sometimes called CFDs, which stands for contracts for difference. A CFD is similar to a futures trading contract where an investor does not own any of the underlying assets but instead pays a small fee for the ability to profit from its movements.
3. Adjust Position Mode
The system will then show you several contract positions where you can choose to open and close the position differently.
In this example, the account holder has chosen to open six contracts, with no position in any of them. You cannot sell more currency than what you have bought. In this case, the account holder spent $2,000 on three contracts and closed half at 100 x Bitcoin (BTC) each, leaving half as a loss. The total value of the position will be $6,000.
4. Transfer Assets into the Account
You can transfer assets into your account with various payment methods. These are:
Wire transfer, where they will debit your bank account and credit your trading account. There is sometimes a processing fee for this service.
Transfer money from other cryptocurrency exchanges that support the currency you wish to trade in or from merchant processors like PayPal, Venmo, and Google Wallet, using a cryptocurrency exchange like Coinbase or Kraken. You can now go ahead and start trading.
5. Open Position
To start crypto options trading online, you need to open a position.
The first step is to find the desired contract and click on the link with that contract. Then, enter your desired amount of currency and choose the trade mode you wish to apply. You can also set stop loss limits, your risk level, and if you want to place an order for a market or limit order. You can confirm your order by clicking on the ‘Confirm’ button.
If you have a confirmed order for a position, your selected cryptocurrency will now be sold or bought at the market price to open that position. The contract will then be shown as open in your account, and you will see how much is yours after the trade. Your account’s holdings are updated in real-time as soon as transactions occur.
6. Monitor the Position
While the position is open, you can monitor its performance by clicking on the ‘View Positions’ button.
You will then see a chart showing how high the cryptocurrency price has risen or fallen since you bought it. You will also see how much profit or loss you have made. This can help you to decide if you wish to close your position and cut your losses or leave it open and hope for more profit in the future.
7. Close Position
Simply click on the ‘Close Position’ button to close the position.
You will then be prompted to enter your position’s name and order details. This order remains open until you cancel it. If you complete it, you will receive a positive or negative return in your account depending on how well the position did or how much profit or loss was made. Pay attention so that you can set a stop loss if need be.
Once the position is closed, your account will show you the total value of all your holdings and any transaction fees you may have incurred.
Conclusion
Now that you have completed this step, you can start trading and making money online.
A cryptocurrency exchange like Tidex or Poloniex is a website where you can buy, sell, and trade cryptocurrencies with other users. It functions much the same way as an online stock market does. Along with exchanging one cryptocurrency for another, cryptocurrency exchanges allow people to deposit money into their accounts and trade with it. Some exchanges even allow users to sell their cryptocurrencies to make money from them.