Why do people trade crypto?
Why do people trade crypto?
You’ve heard of all the money being made in the crypto space. You know that a growing number of traders now prefers working with crypto over forex and stocks. You’ve seen the rising tide of dozens, if not hundreds, of crypto token exchanges available online.
The question is, why?
Why are so many people and organizations choosing to trade crypto or serve the people trading it?
In this article, we’ll give you a few answers by explaining how crypto is different to other assets from a trader’s perspective. We’ll start with…
Crypto markets are open 24 hours a day. This means you can set your own work hours and trade whenever you want to. It also means you can take advantage of market changes as they happen instead of waiting for opening hours.
This is very different from trading, say, stocks. Exchanges like the NASDAQ are only open from morning hours ‘till the early afternoon. This means that a crypto trader has far more time flexibility than a stock trader.
In this sense, crypto also has an edge over commodities. Commodity markets have “limit up” and “limit down” periods wherein rapid price changes shut the market down temporarily. This doesn’t happen with crypto exchanges, meaning traders can continue to work at all times.
Trading commodities or stocks often requires a minimum budget in the 4, 5, or even 6-figure range. This means that small-cap traders can’t work with these asset classes effectively.
With crypto exchanges, you can usually get started with as little as $100. Moreover, you can use leverage to trade crypto profitably with a small budget because tokens are volatile, meaning there’s more potential to win money. This is another important reason traders prefer crypto over other assets.
When you’re working with stocks, commodities, and forex, you’re competing with private individuals as well as funds, banks, and other massive organizations. Many of these entities have incredibly deep pockets and very sophisticated tools, which makes competition intense.
Things are different with crypto. If you start trading today, you’ll only be competing with individuals; not megafunds or banks. This means your odds of winning are more predicated on your individual skill, giving crypto traders more of a chance to succeed.
Some traditional markets, like commodities, can be very volatile. Having said that, few asset classes are as volatile as crypto. Since volatility is usually correlated to profitability, this means that crypto has an earning potential not seen with forex, stocks, etc. This is arguably the main reason so many traders are now working with tokens.
Arbitrage is the process of buying an asset, then re-selling it elsewhere for an instant profit.
Arbitrage is rare with stocks because you’re only working with one stock exchange at a time. You can’t just take your stocks and move them to another exchange and sell them for a profit. There’s no arbitrage opportunity. The same applies to forex and commodities.
With crypto, there are literally hundreds of markets out there, which means you can buy a coin where it’s cheap; send it to your own address on another platform; sell it for a more expensive price.
Would you like to learn more about crypto trading? Сheck out our educational platform Adara Academy
Get a free 1-on-1 trading session with our experts! Apply now to be one of the first 50 accepted applicants — Apply to join!