Crypto trading, and with it crypto trading products, is catching like fire amongst the known community. Unless you are living under the rock, you will know this. So far, the market has seen tens of billions traded. In spite of this, the market is miniscule as compared to any traditional market.
It all started with Bitcoin: the first fully functional digital money of the internet in 2009. Now, CoinMarketCap is flourishing with 2,000+ crypto coins and tokens.
Of course, not all cryptocurrencies are the same, but one takes advantage of the initial volatility and trade them to make decent profits.
There have been many cryptopreneurs who have done this successfully and made a niche for themselves. But laypeople remain unaware of various types of crypto trading products available in the market.
That’s why we wanted to share various types of crypto trading products available for anyone interested in this niche:
1. Spot Trading
Spot trading, as its name suggests, is the act of trading one crypto to another on the spot itself. Many exchanges are providing this service, namely Binance, Huobi, Kraken, Bitfinex, etc. and now, according to the largest crypto exchange list in the world, there are more than 550 different exchanges where you can trade crypto.
This is the purest form of crypto trading where you have order books maintained by the crypto exchange operator and spreads decided by the individuals placing the trades.
The spot trading exchanges operate based on a nominal maker and taker fee model. But, those fees can be compensated if you use their charts/tools to do accurate technical analysis of your positions
You also have many mobile apps to spot trade cryptocurrencies, and there are more than 20,000+ pairs trading right now on the crypto market. Some popular ones are BTC/ETH, BTC/USDT, BTC/LTC, BTC/XRP, etc.
Margin trading is not everyone’s cup of tea, and it is meant to be like that for good.
In other words, it is also known as leverage trading where you can get a leverage borrowing of an extra amount of cryptocurrencies to gain greater exposure to your trades.
For example, if you have 1 BTC available with you and you are trading on an exchange that provides 100x leverage, you can get a total of 100 BTC to position your trade.
So here, based on just 1 BTC, you were able to borrow other 99 BTC to position your trade.
This leverage can be used in spot trading as well as derivatives trading but is only recommended for experienced traders. If you are newbie, we will advise you to follow some crypto trading signal groups created by active traders on Telegram channels, which has mainly started proliferating after the crypto boom of 2017.
3. Derivatives Trading
Next up is the hot product of crypto derivatives.
Their recent shoot-up in the interest could be attributed to several matured crypto traders in the market. Also, the crypto traders who were trading on the spot since the early days of 2015 have figured something out. Namely, how the crypto derivatives markets work.
Crypto derivatives are normally either Bitcoin settled or cash-settled depending upon which crypto derivatives platform you choose to trade on. But futures and options can be lethal if not done right.
Yes, it has the potential to hedge your positions. But, it also has a high chance of disrupting your portfolio. This is because here, the underlying asset isn’t trading, and slippages can cause you irreparable damage.
Plus, you quickly get leverage on derivatives because that has been the norm from the traditional trading industry only. So once you have some amount of cash or crypto, you can easily get 20-100x of leverage on it to positions your derivatives trades.
4. Crypto Paper Trading
Last but not least if my favorite one because I have used this crypto trading product the most.
Many of you might have heard of demo crypto trading products or platforms that help you trade cryptocurrencies on real prices with virtual money. We call this paper trading. Many services have started to come up with this feature because paper trading products will give confidence to amateur investors to try their hands on cryptocurrencies with wagering the real money.
This type of product will go a long way in bringing stability and much more liquidity to cryptocurrency markets, which is relatively a tiny market when compared to traditional finance.
Conclusion on Crypto Trading Products
There are many more types of crypto trading products which you can expect to come in this decade because crypto is just starting.
No one is late.
The volatility is not likely to subside any time soon. That’s why many more traders will look for ways to benefits from it, and there these crypto products will play a critical role.
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