Digital asset trading is a relatively new entry in the trading zone. The dawn of 2010s is marked by the foray of a new type of currency that is digital, not restrained to any particular national border, and is developed on a decentralized blockchain platform. This new type of digital asset is called cryptocurrency- a revolution in the payment, trade, and investment scene. Cryptocurrency is probably the most popular digital asset today. However, digital asset trading also includes NFT trading as well. Interestingly, NFT trades are executed through cryptocurrency. Read more here https://multibankfx.com/products/digital-assets
The post below sheds light on various aspects of digital asset trading aka crypto trading, followed by a brief on NFT trading.
Types of digital asset crypto trading
The crypto trading zone follows the same trading strategies that you see in the traditional trading sector. Here are a few words about the most popular trading methods for crypto digital asset trading.
In leverage trading, you trade with additional fund support from your chosen crypto exchange or broker trading platform. The leverage ratio will be calculated on the basis of margin or capital you would be able to provide for your trading account. So, if you can offer $1000 and you opt for 2x leverage, the total amount available for trading would be $2,000. It means, with leverage trading, you would be able to open a trading position worth $2,000 with just $1,000 from your own share.
Day trading is all about buying as well as selling cryptos within the same trading day. Unlike traditional trading markets, the crypto trading market is open 24/7- so, you will get a longer time for trading when it comes to digital asset trading.
In this case, you will trade within just a few minutes or seconds. This is a type of day trading only but scalping aims to make multiple trades all throughout one trading day. Thus, a scalper takes advantage of minimal price differences through multiple trades- and, when these little profits add up over the course of one whole trading day, the trader leaves with a decent accumulated amount.
This trading method is all about making the most of the available opportunities, even if that means hopping through exchanges. It’s to note here that all crypto exchanges might not offer the exact same rate for a particular crypto at the same time. Thus, arbitrage traders always take a comparative study between 5-6 leading exchanges before making the trade. They choose the exchange with the lowest price of the lot and buy preferred crypto from the platform. Then, they look for an exchange that is offering a higher price compared to other exchanges. Now, the traders will just sell all the crypto at that exchange and make higher profit than what they would have got after selling at other exchanges.
HODLing refers to long-term digital asset trading.
In this case, traders purchase crypto and keep them on hold. Then, as the market rises to their target price after a few years, they sell it off.
Digital asset trading platforms
When it comes to crypto digital asset trading, there are different trading platforms to choose from. Now, it must be mentioned in this particular section, we are specifically talking about crypto assets. NFTs are not traded on the same platforms. The following section will discuss the trading platforms for NFT digital asset trading.
These are the trading platforms that are specifically meant for crypto digital asset trading. These are officially termed as “crypto exchanges”.
You have two major types of trading platforms to choose from here-
- Centralized exchanges
The centralized crypto trading exchanges are trading platforms that are governed by a single centralized entity. These platforms serve as custodian of user funds. Also, the CEXs follow detailed KYC procedures to weed out imposters before these nefarious elements get to sign up.
- Decentralized exchanges
The decentralized exchanges are the platforms that rest on a decentralized foundation – and are not governed by a centralized authority. Also, the DEXs don’t hold custody of user funds. Again, DEXs don’t follow KYC procedures and the registration process is thus faster and more convenient. It must be mentioned here that DEXs assure better safety from hacking attacks in comparison to centralized exchanges.
Other trading portals
The other portals for digital asset trading are OTC platforms and P2P trade platforms.
As mentioned above, digital asset trading is not just about crypto trading. It also covers NFT trading.
NFTs are, essentially, non-fungible tokens- the tokens that are exclusive, rare, and cannot have another authentic copy. The NFT market has started gaining momentum since the year 2021, although NFTs have been in the scene for a while now. There are dedicated NFT trading marketplaces online where you can trade NFT. You could be a creator looking to sell your NFT. In that case, you will have to list your NFT in an online NFT marketplace that will help you to meet with potential buyers. Otherwise, you could be a NFT seller who already has a NFT and you want to sell it now.
When it comes to NFT digital asset trading, focus on NFTs that are driven by some solid use cases, as otherwise, the NFTs will be unable to fetch value in the coming years. In other words, look for low-priced and highly potential ones. Most of the NFTs that are selling for millions today were less than $50 a few years back.
After the NFT, you can also flip. This is a form of trade that takes place at very short intervals. Or else, you can opt for HODLing with NFTs as well.
While use cases for NFTs are vital to pull in market demand, the NFTs should be visually appealing as well to attract attention in the market.
The digital asset market, especially the crypto market, is wildly volatile. Thus, be careful about the amount you wish to invest in the digital asset trading market. Do not invest more than 2-5% of your trading and investment capital in the digital asset trading market.