Through trading digital coins or commodities, traders can speculate the ups and downs of price with ease. They leverage these price fluctuations and earn quick returns.
What’s digital coin trading?
Cryptocurrency trading means taking a financial position on individual cryptocurrencies against fiat currencies or another crypto’s price movement. CFDs are a popular way for crypto trading because it allows greater flexibility, leverage, and the chance to take long as well as short positions. Digital coins are created using cryptography or blockchain technology that ensures tight security.
Cryptocurrency differs from fiat currencies in many ways. They are intangible as they are generated from bits & bytes of data. There is no central body to regulate the cryptocurrency landscape like the central bank. They are not regarded as legal tender because the government does not issue them. You need a crypto wallet to store and trade with cryptocurrencies. For example, on ZenGo X you can download a tether wallet to store USDT or Dogecoin wallet to transact with DOGE coins.
In a global economy, cryptocurrencies are not approved as legal tender but have the potential to change the financial landscape, so it is hard to overlook them. Nevertheless, blockchain technology, the foundation of cryptocurrency formation has given traders new investment opportunities to capitalize on. There are myriads of cryptocurrencies made available but traders are interested in a few including Bitcoin, Ethereum, Litecoin, etc.
What’s commodity trading?
In commodity trading variety of commodities and their derivatives are purchased and sold. Commodity trading allows traders to diversify their portfolios. Commodities are regarded as a hedge against price inflation. It allows for maintaining buying power parity. Due to natural disasters or war or economic crises, the supply disruptions can push commodity prices up. Commodities trading help to protect against the loss by strategically leveraging the price swings.
Common commodities types include raw materials that can be purchased or sold like metals [gold, silver, copper, lead, aluminum, etc.], agricultural products [cereals, pulses, rubber, spices, etc.], and energy [coal, crude oil, natural gas, etc.].
Commodity values surge like cryptos but are not used as a currency. A commodity is a tangible item with use-value. The use-value is transformed into exchange value that is reformed by market expectations.
Crypto’s value on the other hand is determined totally by market expectations. It has no underlying use-value but only an exchange value. However, some advantages of crypto trading are –
- A sudden price fluctuation is risky but is exciting for traders to capitalize and earn profits.
- Traders can trade 24/7 and earn profit.
- Better liquidity means trades can be concluded quickly and at a low cost.
- Leverage sudden price shifts and go long or short.
- You need to trade & withdraw earnings in your currency of choice [fiat or crypto].
Crypto trading seems attractive. There is a need for thorough research to understand the mechanism. You will also need a crypto wallet to buy, sell and store your tokens or coins.
