As you must already know, bitcoin is the first cryptocurrency to emerge. It was launched in 2008. But since it was the only crypto available at the time, you could not exchange it with another cryptocurrency.
It wasn’t until several years later, when other cryptocurrencies were created, that people started trading, as they do with stocks. The idea is very simple, you exchange one cryptocurrency for another, in the hope of making a gain with the one you have just acquired.
This concept is exactly the same as the stock market in the physical world.
If you want to trade cryptos, you must do so on a specialized site, which is the equivalent of the stock market, but for cryptocurrencies. That’s how buyers and sellers can be matched. We suggest reading the Voytegeon Review to grasp the concept of an online broker offering crypto trading.
If you hold bitcoins and want to sell them for Ethereum, a crypto exchange site will help you find an Ethereum seller to trade with.
Nothing is free, crypto exchange sites will charge you a fee for this operation. Normally it is a micro percentage, for example 0.1% for each transaction.
The crypto-currency trade has exploded and today billions of euros are bought and sold every day. Not bad when you consider bitcoin was worth pennies in the beginning.
Many online traders make cryptocurrency trading a full-time job. They only live from that, and for the best they live well!
Now we will tell you about the 2 main types of trading:
- short term trading
- long term trading
Short term crypto trading
Short-term trading involves buying a cryptocurrency and holding it for only a short period of time. It can be a few minutes, a few hours, a few days or a few weeks.
The principle is that you will buy a cryptocurrency because you are betting on a rapid increase in its value and therefore a short-term profit. In this case, you aim to resell it for a quick profit, as soon as you think the price will drop again.
Long term crypto trading
Have you ever read or heard the expression “HODL”? If not, then we imagine you haven’t gotten into crypto trading yet.
You won’t find this word in any dictionary, but you will often read it in crypto forums and newsgroups.
“HODL” is part of the crypto jargon (see my crypto dictionary) which means to hold a crypto for the long term rather than selling it quickly.
It’s the acronym of the formula: “Hold On for Dear Life”. Usually, long-term crypto trading means holding a coin token for a year or more.
The idea is that while there will always be volatility, the price should rise to a large extent over the long term. A bit like gold speculation, which is played over 3, 5 or 10 years for guaranteed profits.
A good example is the lucky investors who bought bitcoin in 2011 when it was only €0.25. If they had kept it until, say January 2021, they could have sold their tokens for almost 25,000 euros each. It represents 100,000 times their initial investment!