Know These Terms before You Trade Your First Bitcoin

You want to trade bitcoin and make money from it. However, your passion to trade digital currencies is not enough to make you successful in this financial market. Just like any other financial market and asset, you need to learn cryptocurrency trading before you can put your money at stake. Now, there are hundreds of places on the internet where you can find a lot of material to learn bitcoin and altcoin trading. However, before you even read those tutorials or watch training videos, you have to know some terms that will help you understand the material easily.

So, to help you with your trading career, neuercapitalreview brings you the basics terms you got to master before start trading Bitcoin.

Bitcoin

Of course, you first have to know what Bitcoin is. It is a digital currency, the first of its kind. It allows you to exchange monetary value on the internet and in the physical world without owning plastic or paper money.

Cryptocurrency

These are digital currencies, just like Bitcoin, which only exist in the digital world. They are created through cryptography, hence the term cryptocurrency.

The Blockchain

The blockchain is the main technology on which all the cryptocurrency are based. It is like a public ledger on which all the transactions that you do with cryptocurrencies are recorded. This is the heart of cryptocurrencies, and a technology that is supposed to change the way things work digitally right now.

Decentralization

This is the term that defines one of the natural ingredients of the blockchain and cryptocurrencies. Decentralization means that the record of cryptocurrencies is not stored by a particular company or entity. Everyone who uses cryptocurrencies has the record of every transaction that takes place on the blockchain.

Cryptocurrency Exchange

These are online platforms where you can buy and sell your favorite digital currencies. Cryptocurrency exchanges are just like any other exchange where you change the asset you have for another. Cryptocurrency exchanges are online, and while they allow you to buy and sell digital currencies, they also have online storage available for you to store your purchased coins. They make various methods available to you to buy cryptocurrencies i.e. through fiat currencies, checks, credit cards, debit cards, etc.

Online Broker

This is probably the most important term that you have to know if you are looking forwarded to trading cryptocurrencies. These are online entities that provide you with a trading platform, trading signals, and indicators to help you make money from cryptocurrency trading. The best thing is that they usually allow you to trade digital coins in the form of CFDs, which are contracts that help you exchange the value of digital currencies without owning them.

Spreads

Whenever you sign up with an online broker, you will have to deal with this term. So, when you buy an asset from an online broker, you pay a buying price. However, when you sell the same asset to the broker even if you do it almost instantly, you get a different price for the asset, which is lower. This price difference is what you refer to as a spread. Spreads allow brokers to make money. You want to pick a broker that offers tight spreads.

Leverage

That’s the contribution coming from the broker into your trade. When you open an account, you have a very small amount in your trading account. How do you enter a trade whose monetary volume is much bigger than the amount in your account? You use leverage. The broker agrees to contribute some money with you in the form of a ratio. For example, for every $1 you dedicate to the trade the broker might contribute $20.

Trading Signals

Trading signals are extremely important for you to know before you start trading. These are the outcomes of technical and fundamental analysis of various assets in the market. They tell you if you should buy an asset or sell it. Usually, you are recommended to trust them but they are never 100% correct.

Price Charts

These are the charts or graphs on which all the technical analyses are being done. Technical analyses take into account only the price and volume of a particular asset. When you are in the financial market, you have to keep looking at these charts and recognize certain patterns after which you can predict the price of an asset.

Stop Loss

It is a trading strategy, one that you should master as soon as you start trading. In this strategy, you work to reduce or stop the loss in a trade. When you enter a trade, you predict the price in a particular direction. However, the market can always go in the opposite direction. Worse yet, you don’t know how much the market will move in the same direction, which means you could continue to lose money if the market continues to move in the opposite direction to what you predicted. A stop/loss strategy stops you from losing money indefinitely in a trade.

Asset Index

This is one of the first things you will notice when you land on an online broker’s website. Asset index is the storage of assets that your broker is offering you to trade. An asset index can consist of commodities, forex currency pairs, energies, stocks, cryptocurrencies, etc.

Welcome

That’s something you should familiarize yourself with as soon as you land on a broker’s website. Knowing what it is will make you happy. Of course, you know what a bonus is, but what you need to know is what the bonus looks like in the cryptocurrency trading world. In this particular case, the bonus can be a small credit into your account from the broker. It is usually a percentage of the amount that you deposit in your account.

Final Thoughts

As you continue to trade, you will keep finding new terms that define different elements of cryptocurrency trading. It is highly recommended that you learn cryptocurrency trading properly through training materials provided to you buy online broker. Once you have learned it properly, you can put your money on the line and expect to make more money on your investments.

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