WikiCrypto’s Beginner Guide for How to Trade AltCoins

WikiCrypto’s Beginner Guide for How to Trade AltCoins

Simple trading

The basic solution for how to trade AltCoins is to purchase them and then hope for the value to rise in the short term and then sell. It’s pretty easy to do, you can check out CEX.IO for the simple kind of trading. It’s easy to learn and you can use a few strategies that will help you understand how to trade altcoins on an exchange platform.

Unfortunately, this trading method only works if the market is rising. However, the volatility proves that the market can’t be rising all the time. Thus, you cannot make a profit in falling markets; you can only prevent losses. If you’re interested in trading this way, you should read about how to trade altcoins on CEX.IO and start trading.

Due to the low profitability of this regular way of trading, CFD trading was created. That’s why we suggest another method of trading; which is CFD trading. We’ll explain more about this in the following paragraph.

CFD trading

Contracts for the difference – a CFD – is technically a representative financial instrument that is traded on the platform. If you think that the price of an asset will rise, you purchase 10,000 units or CFDs to show that position in the market. Now, if the price actually does go up, you would make a proportional profit.

Conversely, if the market moves against you, you would be in a loss since your 10,000 CFDs have been devalued. When you trade CFDs, you’re not trading the underlying asset, there’s no real world market access. You only buy CFDs, a speculative representation of the asset. The best part about trading CFDs is that you can profit from falling markets as much as you can from rising markets. You can short the instrument and thus you will make a proportional profit if the market falls in the future. This is a short term method of trading but it’s highly profitable.

Why is CFD trading better?

CFD trading has many advantages, most notably leverage trading and margin trading. Leverage trading is essentially like buying assets on a loan from the platform. You need to put in around 50% of the trade, the rest of it is paid by the broker. In the case of CFD or margin trading, this ‘broker’ would be the platform itself. The Bitcoin leverage depends on the Margin that is available on the platform.  

It will allow you to trade Bitcoin on margin that you normally wouldn’t be able to. So the profit would be all yours, minus the capital that was borrowed. Therefore, it’s pretty useful to trade on margin since you can make higher trades. Higher margins give you better leverage. Think of it like this, the bigger the loan that the broker is ready to give you, the bigger your trade size can be. Thus, the bigger profit you can potentially make.

Which AltCoins to Trade?

Litecoin

Charlie Lee founded Litecoin after he left Google. He believed that there was a scalability issue with Bitcoin and thus they couldn’t rely on it for the long term. The currency featured new technology that had decreased block generation line and in 2013 reached a market cap of over $1 billion.

The currency will also have a maximum cap of over 84 million Litecoins, therefore, it has potential to be much bigger than Bitcoin. Litecoin also has better transaction times since it aims to process a block every 2.5 minutes compared to Bitcoin’s 10 minutes.

It also has almost zero payment costs which make the platform more attractive for users.

Litecoin is not that volatile compared to some tokens and some coins so it’s a pretty conservative currency to trade. You can be sure that the currency won’t come crashing down tomorrow. For people who want to know how to trade altcoins, you can trade Litecoin on eToro or Plus500.

Ethereum

Ethereum is the result of an innovative addition to the technology of Bitcoin. It was created by Vitalik Buterin and it’s the start of a revolution. The Ethereum blockchain features a system of smart contracts and tokens. Smart contracts are a great way to keep promises and payments in check, which prevents fraud. Another great feature that Ethereum has is tokens. You can issue tokens that represent a unit of value or an asset or share or you can build a central bank which can issue money. For people who want to know how to trade altcoins, you can trade Ethereum on eToro or Plus500.

Be careful of Ethereum though! Every week, you hear about some price drop in Ethereum but it climbs back in a few hours. Last weekend, the currency almost crashed because of a rumour of founder Vitalik Buterin’s death and has now climbed back to an average figure.

Because of this unpredictability, Ethereum is a risky but profitable currency for how to trade altcoins. You can make use of the volatility and trade leveraged CFD

How to Trade AltCoins on a CFD Platform

Plus500

Plus500 is the world’s leading trading CFD platform for financial instruments like commodities, stock and market indices.

The Plus500 website offers several features that set it apart from the rest. Firstly, the risk-management tools that are offered to each user are efficient ways to make sure that your money is not at risk. These tools allow you to minimize your loss when for example you speculate that Bitcoin prices will rise, and it eventually plummets, the program will automatically change your position when the price drops to a specific level.

The greatest feature by far on Plus500 is that it displays most of the world’s financial instruments market prices on the website in real time, this allows for better monitoring of the trades that you make.

Plus500 provides a solution for how to trade altcoins because it provides both Ethereum and Litecoin trading on its platform.

Plus500’s free account also offers a demo version of CFD trading. This is pretty interesting because Plus500 gives you $100,000 in virtual money to trade bitcoin. You can start practising on the Plus500 demo version and then choose if you want to invest or not.

Check out our full guide for how to trade Bitcoin CFD on Plus500

eToro

eToro is a platform on which people can trade CFDs on Ethereum. The company founded in Tel Aviv, Israel in 2006 as a website for social exchange between traders. On the website, you can trade Ethereum CFDs and connect with your favourite traders, you can follow them and their trades! Yes, you can actually copy trades that high earning traders are doing; since all of their trades are posted on their wall. You can comment on a trade, start a discussion and even message traders.

That’s what sets eToro apart from other Ethereum CFD trading websites since eToro has a strong community within it which helps beginners to start trading and helps create a strong network.

In order to make more information available for beginner traders, the eToro team also has a strong educational program within the website for registered users. These educational programs are really innovative for a CFD platform to include and it’s one of the greatest tools that eToro possesses.

I think that for a beginner the best website to learn CFD trading would be eToro, after which you can make your own choices. Since the world of financial speculation is pretty unknown to a majority of the population, the educational program benefits practically everybody who wants to invest in CFDs.

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About Article Author

Michael Serrano
Michael Serrano

Michael is an engineer and a bitcoin evangelist. He has been involved in cryptocurrencies since 2013. His biggest wish? 1 billion users of bitcoin, ether and litecoin by 2020. In the last 10 years he has worked for various early-stage start-up as a back-end developer.

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