Cryptocurrency exchanges are websites where traders can buy, sell, or exchange digital currencies such as Bitcoin and Litecoin for either digital or traditional currency such as the U.S. Dollar or the Euro. If someone would want to start trading professionally and gain access to innovative trading tools, the trader would likely need to use an exchange platform and be required to verify their identifications to open an account. However, some platforms do not require an account.
These exchanges come in different types, and each carries its policies and ways of conducting exchanges. The first type of trade is Trading Platforms, which are websites that connects buyers and sellers and takes a fee for each transaction. Then, there are Direct Trading platforms that offer direct person-to-person trading where individuals from around the world can exchange currency. However, Direct Trading doesn’t have a fixed market price; instead, each seller would set their exchange rate. Lastly, there are Brokers, which are websites that anyone can visit to buy cryptocurrencies at a price that is set by the broker. Brokers involved with cryptocurrency behave similarly to Forex dealers.
Before being able to start trading in cryptocurrency with these platforms, it is vital to check on a few things before making the first trade.
A highly reputable and registered platform must be considered to guarantee security over your funds in the event of an emergency. One way to find out about an exchange is by searching for reviews from individual users and established industry websites.
Most exchanges should have fee-related information on their websites. Before participating, consider and make sure that you understand its policies with deposits, transactions, and withdrawal fees which can differ substantially depending on the exchange.
• Payment Methods
Various payment methods are available on any exchange. Some ways could be through credit and debit card, wire transfers, or even Paypal. If an exchange has limited payment options, it might not be convenient for some people.
• Exchange Rates
Different exchanges have different exchange rates. It is best to check the prices as there would be opportunities where you can save and earn maximum profit in Bitcoin trading volume if the right exchange has been chosen.
Bitcoin Futures Trading
A futures contract is a technique employed to hedge positions and reduces the risks of the unknown. It is also used for arbitrating between current spot and futures current spot future contracts. In the case of Bitcoins, futures have been more associated with miners who face the risk of unknown prices in the future. An example of this is from a reputable futures marketplace called OrderBook.net, which was formerly known as iCBIT that sells millions of futures contracts each month. Their standard contract size (or tick size) is $10, and a typical Bitcoin trading view would look like this: BTC/USD-3.14. Where “BTC/USD” signifies the rate of exchange between Bitcoin and the U.S. Dollar; the number “3” would be the month (in this case March), and “14” signifying the year 2014. This would mean the trading symbol the trading view Bitcoin will show is BUH4. The letter “H” is a symbol for the month (as per Chicago Mercantile Exchange), the “B” from BTC (Bitcoin), the “U” from USD (U.S. Dollar), and the number “4” from the year.
In a futures market, if the price is $500/BTC, an investor would need to buy 50 futures contracts, each worth $10. If the investor wishes to open a favorable position, then he would go with “buy” deals and in the case of a contrary position, “sell” contracts. An investor’s situation can either be positive or negative for the same trading instrument.
Overall, with Bitcoin futures being offered by some of the most prominent marketplaces, investors, traders, and speculators alike are all bound to benefit. The launching of Bitcoin futures by Cboe and CME will facilitate price discovery and transparency, enable risk-management via a regulated Bitcoin product, and give a further push to Bitcoin as an accepted asset class.