Cryptocurrency trading is the process of buying, selling, or exchanging digital assets such as Bitcoin and Ethereum through online platforms. Here you will find more information about cryptocurrency trading, how it works, and what drives the markets.
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Important Notice:
Cryptocurrencies are not regulated by the Monetary Authority of Singapore (MAS) as they are not legal tender or securities. Investors should be aware that they do not have any legislative protection when they deal with cryptocurrencies and related investment products. If you choose to invest in unregulated products, you will not be protected under MAS regulations. Please ensure that you are fully aware of the risks involving cryptocurrencies and if in doubt, you should consult an independent financial adviser under a separate engagement. To find out more information about cryptocurrencies and risks, you can go to the MoneySense website here.
Cryptocurrency trading involves speculating on the price movements of digital assets using trading instruments like CFDs or buying and selling the underlying coins on cryptocurrency exchanges.
CFDs (Contracts for Difference) are derivative instruments that allow you to trade cryptocurrency price changes without owning the underlying coins. You can:
CFDs use leverage, meaning you only need to deposit a small portion of the total position value (known as margin) to access the market. However, your profit or loss is calculated based on the full position size, magnifying both potential gains and risks.
When purchasing cryptocurrencies on an exchange, you own the coins. To trade on an exchange, you need to:
Exchange platforms typically require more time to master due to the complexity of the technology and the data involved. Additionally:
In 2024, the cryptocurrency market continues to evolve, offering traders new instruments like tokenized stocks, DeFi projects, and stablecoins. Popular platforms, including Binance, Coinbase, and Kraken, are introducing new analytical tools and features to make trading easier for beginners.
At the same time, cryptocurrency market regulations are becoming stricter, making it essential to use verified platforms and follow financial regulations to ensure the safety of your investments.
Cryptocurrency markets are decentralized, meaning they are not issued or controlled by a central authority like a government or central bank. Instead, they operate through a network of computers. Cryptocurrencies can be bought and sold on exchanges and stored in digital "wallets."
Unlike traditional currencies, cryptocurrencies exist purely as digital records of ownership stored on a blockchain. When one user wants to send cryptocurrency to another, the transaction is directed to the recipient's digital wallet. The transaction is considered complete only after it has been verified and added to the blockchain through a process called mining. This same process is typically used to generate new cryptocurrency tokens.
Blockchain is a decentralized data storage technology that is a sequential chain of blocks containing information. Each block is linked to the previous one, which ensures transparency, security, and immutability of data. Blockchain is the basis of cryptocurrencies such as Bitcoin and Ethereum, but its applications extend far beyond financial markets.
How does a blockchain work?
Data is written into blocks:
Each block contains three main elements:
Adding a block to the chain:
Once a block is filled, it is added to the end of the chain. For this to happen, the network must agree on its legitimacy using a consensus algorithm, such as:
Storing data:
The blockchain is distributed across all network participants (nodes). Each node stores a full copy of the blockchain, making the data transparent and protected from changes.
Security:
If someone tries to change the data in a block, this changes the block hash. Since each block is linked to the previous one via a hash, changing one block breaks the entire chain. Other nodes will easily detect such an attempt, and the system will reject it.
Unique Security Features of Blockchain Technology
Decentralization and Network Consensus
Instead of storing a file in one place, the blockchain is distributed among many computers (nodes) in the network. This provides a high level of transparency and makes the data extremely resistant to changes. An attempt to hack or modify requires synchronous intervention in most nodes, which is almost impossible. In addition, the absence of a single point of failure protects the system from human errors and cyber attacks.
Cryptographic Protection
Each block in the chain is linked to the previous one through cryptographic algorithms, which are complex mathematical calculations. Any change to the data inside a block leads to a change in its cryptographic hash, which breaks the connection with subsequent blocks. The system immediately recognizes such actions as fraudulent, and the network nodes automatically reject them.
These features make the blockchain one of the most reliable technologies for storing data, ensuring its protection from hacking, counterfeiting and loss.
Cryptocurrency mining is the process of creating new blocks in a blockchain and verifying transactions, during which network participants are rewarded with cryptocurrency.
Miners use powerful computers to solve complex mathematical problems that confirm transactions and add them to the blockchain. This process, known as Proof of Work (PoW), requires significant computational resources and electricity. In return, miners are rewarded with newly created coins and transaction fees, making mining a crucial component of the network's sustainability.
Modern networks also use alternative mining methods, such as Proof of Stake (PoS), where participants lock their coins in the network to validate transactions. This approach reduces energy consumption and makes mining more environmentally friendly.
Cryptocurrency markets are among the most dynamic and volatile in the world, and their movements are determined by a number of factors that affect supply, demand, and overall market activity. Below are the key drivers that influence pricing and activity in the cryptocurrency markets.
Cryptocurrency markets are driven by a combination of technological, economic, and emotional factors. Understanding these drivers allows traders and investors to make more informed decisions, minimize risks, and effectively exploit the opportunities that digital assets present.
Cryptocurrency trading is the process of buying, selling, and exchanging digital assets for profit. To understand it, it is important to look at the key aspects that determine how this market works.
Cryptocurrency trading is done through:
Cryptocurrency exchanges: For example, Binance, Coinbase, Kraken. On these platforms, users can buy and sell cryptocurrencies such as Bitcoin and Ethereum.
CFD platforms: For example, eToro, Plus500. These platforms allow users to trade the price change of cryptocurrencies without buying the coins themselves.
Decentralized exchanges (DEX): Such as Uniswap and PancakeSwap, where users trade directly with each other without intermediaries.
The spread is the difference between the buy (ask) price and the sell (bid) price of a cryptocurrency. Exchanges and brokers often set the spread as a way to make a profit.
Example: If the Bitcoin purchase price is $20,000 and the selling price is $19,950, then the spread is $50.
A narrow spread indicates high liquidity of the asset, while a wide spread indicates low liquidity or high volatility.
A lot is a standard volume of an asset used in trades. In cryptocurrency trading, lots can be fixed (for example, 1 Bitcoin) or fractional, which allows traders to trade small parts of the asset.
Leverage allows traders to open trades worth more than their deposit by borrowing funds from a broker.
Example: With 1:10 leverage, a trader with a $1,000 deposit can trade $10,000.
Benefit: Potential profit increases.
Risk: Losses also increase proportionally to leverage.
Margin is the amount a trader must put up as collateral to open a trade using leverage.
Example: With 1:10 leverage, a $10,000 trade would require $1,000 margin. If the market moves against the trader, the margin is used to cover losses. If losses exceed the margin, a margin call may occur and the position will be automatically closed.
Pips are the units used to measure movement in the price of a cryptocurrency, and refer to a one-digit movement in the price at a specific level. Generally, valuable cryptocurrencies are traded at the ‘dollar´ level, so a move from a price of $190.00 to $191.00, for example, would mean that the cryptocurrency has moved a single pip. However, some lower-value cryptocurrencies are traded at different scales, where a pip can be a cent or even a fraction of a cent.
It’s important to read the details on your chosen trading platform to ensure you understand the level at which price movements will be measured before you place a trade.
Immediate FastX offers users a convenient way to dive into the world of cryptocurrency trading, providing access to advanced tools for effective market performance. The platform simplifies key aspects of trading, such as spread management, lot size selection, leverage, and margin calculation, making it suitable for both beginners and experienced traders.
With Immediate FastX, users can trade with minimal spreads, which increases the profitability of trades. The ability to choose fractional lots allows you to start trading with a small amount, reducing initial risks. Leverage on the platform helps to scale trades, giving traders the opportunity to open positions significantly larger than their deposit. In addition, the automatic margin calculation and risk management system protects users from unexpected losses, including margin calls.
With Immediate FastX, traders also have access to analysis and forecasting tools that allow them to track price movements, including pips, and calculate trade results as accurately as possible. These features, combined with an intuitive interface, make Immediate FastX a solid choice for those looking to get started in the cryptocurrency market.
What distinguishes a digital currency from a cryptocurrency?
The primary distinction lies in decentralization. Cryptocurrencies operate on decentralized networks of computers and are not controlled or issued by a central authority such as a government or central bank. On the other hand, digital currencies share similar traits with traditional money but exist exclusively in digital form and are issued and regulated by a central authority.
What types of cryptocurrency wallets are available?
Cryptocurrency wallets come in four main forms: desktop wallets, mobile wallets, online wallets and hardware wallets. Wallets are essential when purchasing cryptocurrencies and are used to securely store, send, and receive digital assets.
Which cryptocurrency was the first?
The first cryptocurrency was Bitcoin. The domain for Bitcoin was registered in 2008, with the first transaction occurring in 2009. It was created by an individual or group known as "Satoshi Nakamoto." However, the true identity of Nakamoto remains a mystery, as it is widely believed to be a pseudonym for either a single person or a collective team.
Are cryptocurrencies considered real money?
Cryptocurrencies serve as an alternative to traditional money, with some businesses accepting them as payment. However, unlike conventional assets, they are intangible and highly volatile. While they can be used for transactions, cryptocurrencies are primarily utilized by traders to profit from fluctuations in their value.
How many cryptocurrencies exist?
There are over 2,000 cryptocurrencies available for trading, although most hold minimal value. Among these, Bitcoin, Ether (the token of the Ethereum network), Bitcoin Cash (a Bitcoin fork), and Litecoin rank among the most valuable based on market capitalization.
What cryptocurrencies are available on Immediate FastX?
The Immediate FastX platform offers a wide range of popular cryptocurrencies, including Bitcoin, Ethereum, Litecoin, Ripple, and many others. This allows users to diversify their investments and choose assets that best suit their strategies and market expectations.
How to register with Immediate FastX?
To register with Immediate FastX, you need to fill out a simple form on the official website, indicating your name, email address and phone number. After confirming the data, you will be given access to the platform, where you can make a deposit and start trading.
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The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
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