Trading digital currencies works much like forex trading: you can buy one digital asset against another, or simply purchase and hold a cryptocurrency. For example, if you trade EUR/USD and buy EUR, you’re buying euros and selling dollars. In crypto, with a pair like LTC/BTC (Litecoin/Bitcoin), buying Bitcoin means you’re selling Litecoin to acquire Bitcoin.
The value of a crypto pair is calculated from the prices of both assets. If Litecoin is priced at €52.00 and Bitcoin at €4,000, the pair’s rate is determined by dividing the price of Litecoin by the price of Bitcoin.
52 / 4000 = 0.013
Leverage is the extra buying power your broker provides based on your account balance. Leverage can range from 10x to 400x your funds, allowing you to take larger positions in the market. This can be especially useful in strong market trends.
Suppose you open an account with €1,000, which equals 0.25 BTC if Bitcoin is €4,000. Without leverage, you can only buy a fraction of a Bitcoin. With 100x leverage, your buying power increases to €100,000, letting you trade up to 25 Bitcoins.
Leverage lets you access more markets and potentially boost your returns. However, it also increases your risk, so it’s important to manage your trades carefully.
Once your account is active and you’re connected with your account manager, you’ll have access to a variety of trading tools and strategies tailored to your preferences.
Trading is accessible to everyone, but finding the right approach is key. Here are some common trading styles:
