What is the best fiat to crypto exchanger

How to buy, sell and trade cryptocurrencies

There is a difference between buying / selling cryptocurrencies on an exchange and trading cryptocurrency CFDs on a CFD platform. Both activities are carried out with the intention of making a profit by trading in the crypto market, but the processes involved are different. This post describes how cryptos are bought and sold, as well as the specifics of trading cryptocurrency CFDs.

Buying and selling cryptocurrencies

Buying and selling digital cryptocurrencies is essentially about exchanging one cryptocurrency like Bitcoin for another cryptocurrency like Ethereum on a buy or sell basis. The process involves finding a cryptocurrency pair to perform a crypto-to-crypto exchange or exchange crypto for fiat or fiat currency for cryptos. The transaction is carried out twice and in opposite directions to benefit from after an exchange cycle has been completed.

Trading center

The buying and selling of cryptocurrencies takes place on cryptocurrency exchanges. A trader must open a trading account by filling out an online form. Most exchanges have an order book that indicates which traders are buying and selling and where they are doing it.

Making deposits and withdrawals in cryptocurrency trading

Cryptocurrency exchanges usually accept deposits and withdrawals in two ways. A small number of exchanges (mainly in the US and UK) allow fiat currency deposits or a mix of fiat and cryptocurrency methods. However, the majority of exchanges around the world accept crypto-based transaction methods as such operations are restricted on operational accounts by the banks. If the exchange only accepts deposits / withdrawals in cryptocurrency, the merchant must also create a third-party digital wallet for the cryptocurrency, with which the deposits are processed. The most common cryptocurrencies used for deposits are Bitcoin, Ethereum, and Litecoin.

In order to make deposits, one would have to buy BTC, ETH or some other third-party cryptocurrency and have it transferred to a third-party digital wallet. The money is then transferred from this wallet to another digital wallet that is provided by the crypto exchange for depositing that cryptocurrency. If you use this method, you should make sure that the wallets are properly addressed when the transactions are carried out, as cryptos that have been transferred to an incorrect address cannot be retrieved.

The trading process with cryptocurrencies

Once your digital wallet has been replenished, you can buy and sell cryptos by trading the pairs that contain the deposit currency you have chosen. BTC and ETH usually have the largest number of pairings on an exchange, so you certainly won't be short of a usable selection. You can set limit orders (‘Close at profit’), Stop-loss orders (‘Close at Loss’) Or use futures to buy or sell your favorite digital currencies.

Illustrative prices.

Trading cryptocurrency CFDs

Trading in cryptocurrencies can be done speculatively, usually by trading crypto prices through Contracts for Difference (CFDs). Here the actual cryptocurrencies are not owned by the trader or are exchanged by the trader. The process involves buying or selling contracts based on the price movements of the underlying cryptocurrency.

Where can I trade cryptocurrency CFDs?

Cryptocurrency CFDs are traded through online platforms from CFD issuers such as Plus500. The merchant needs to open an account by filling out an online form. Verification of identity and home address is a mandatory legal requirement. Funds can only be deposited into the CFD trading account using fiat currency methods through various payment methods.

How are deposits and withdrawals made when trading cryptocurrency CFDs?

Brokers offering cryptocurrency CFDs can only accept fiat currency methods for deposits and withdrawals. Therefore, bank transfer options, credit / debit cards and / or e-wallets such as PayPal, Skrill and Neteller are often used for transactions on these platforms. Funds must be transferred from sources bearing the account holder's name as anonymous funding is not allowed. Third-party payment methods are also not permitted. Certain transaction limits apply to each payment method. Bank transfer deposits and withdrawals are usually not subject to any restrictions, but limits set by the CFD provider may apply to bank cards and e-wallets.

The cryptocurrency CFD trading flow

After your CFD trading account has been funded using one of the deposit options listed on the provider's website or platform, you can trade cryptocurrency CFDs bidirectionally. In other words, you can take advantage of rising prices by buying low and selling high, or you can take advantage of falling prices by selling high and buying low. Conversely, positions would close at a loss if market prices move against you. You can either trade at current prices or use the futures function so that the position is only opened when the instrument has reached a certain price.

Conclusion

You can get active in the cryptocurrency market in two ways: by buying / selling on a cryptocurrency exchange or by trading cryptocurrency CFDs on an online CFD platform. If you are interested in the online option, opening a demo CFD trading account on Plus500 only takes a few minutes. A wide range of crypto-based instruments is then available to you.