Trading strategies with stocks, currencies and cryptocurrencies – differences and similarities

Trading on the financial market is currently more popular than ever before. The numerous providers advertise themselves and their offers on many different communication channels, the returns are very high as well as promising and it is trendy to trade either as a sideline or to become active as a long-term investment. The focus of traders is mainly on three different trading products. These are stocks, currencies and cryptocurrencies. Of course, there are numerous other options for trading such as commodities or CFD, however, trading them is comparatively not as appealing. In the following article, we will once explain the basics of the three investment options, also highlighting the differences and similarities.

The share as an oldie on the financial market

A security is the oldest financial instrument that exists apart from normal money. The first share was already issued in the year 1200. It certifies the purchaser’s right to shares in the company. So, you can buy mtn shares, or Tesla shares, or shares in businesses you’ve never even heard of before! Buying shares refers on the one hand to a right of co-determination, which becomes more effective the more shares one owns, and on the other hand a right to a share in the profits. The profit arises from interest, dividends and realized profits on the market. The sale of shares provides the company with new liquid funds. The newly generated financial resources can be used to make new investments or realize projects. If the company is then successful and makes profits on the market, the value of the company increases and so do its shares. The increase in value also benefits the shareholders. They can then either wait for a further increase in the share price or sell the shares at a profit to other market participants. Therein lie the art and the risk of trading in shares. Because, of course, the value of the company and the shares can also fall. Through comprehensive information research, market analysis, as well as the correct use of technical analysis tools, one can predict the price trend. The result can be either that a sale is currently more worthwhile because the price is very likely to fall soon, or a further increase can be expected and the share remains in one’s own possession.

Trading with currency pairs

The activities and trading on the financial market is always determined by a price in a chart. The price trend is the determining factor for market analysis and trading. This is also the case with the Foreign Exchange market. Trading in currency pairs takes place on the Forex market. The basis for this is the currency rate as well as the future rate development. The special thing about trading with currencies and the big difference to buying a stock is that you can earn returns with rising as well as falling rates. The choice is either a call option, which is the option on a rising rate or a put option, which is the speculation on a falling rate. Currencies are mainly traded with binary options, hence either rising or falling rate. The starting point is always the current exchange rate. An example is the rate of the EUR/USD, which is currently at 1.15 points. If one assumes a rising rate, one chooses a call option and a time frame (e.g. one hour) and if the rate has risen by this time, a profit is made. The price can also be permanently below the value and only shortly before the end of the option upwards. The decisive factor is the initial value and the value at the end of the option. Another advantage of trading currencies and binary options is the high returns, with up to 95 percent, and the short time frames of a few seconds. Accordingly, one can earn several profits within a few minutes. Although trading with currencies and binary options sound very simple, there is a certain risk involved. The prices change every second and the market is very volatile. This is because market participants can quickly part with currencies. In addition, politics has an incredibly strong influence on the value of a currency.

The new opportunities with cryptocurrencies

Cryptocurrencies are a new type of currency. They created attention and excitement in actually all industries around the globe since the year 2009. Bitcoin fascinated investors with the best security and lightning-fast transactions. Trading them is also highly variable and yet very profitable. They have characteristics from trading stocks as well as currencies. One can buy shares of the cryptocurrencies and wait for an increase. If one trusts Bitcoin since the huge fall from almost 20,000 USD to about 6,500 USD currently, one can choose one of the many other cryptocurrencies. There is the Ripple, Ether, Cardano, and numerous others, which still have a low value and therefore the best prospects for high returns. However, for trading/investing in any cryptocurrency, you need to have a crypto wallet. For example, anyone who intends to purchase the Cardano cryptocurrency might require a Cardano Wallet. This can prove to be a noteworthy investment due to the favorable Cardano forecast and the technical features of this project. Presently, Cardano’s in-house currency ADA is known to be one of the top five global cryptocurrencies. Moreover, it has experienced an enormous boom in recent months.

But if you do not want to invest money in a cryptocurrency, you can also simply trade on the price developments. The already established digital currencies are particularly suitable for this. The reason for this is that the small cryptocurrencies with a value of, for example, 0.001 USD are subject to very large price fluctuations. Accordingly, trading is very risky.

How to trade successfully on the financial market

Risk is always a player in the financial market. There is no single product in which you can invest or trade without the possibility of losses. That is why it is important to constantly study the market and trading. This includes researching information about the different markets and evaluating the information. If one goes in search of news about trading in the financial market, one comes across tips and tricks on how to become successful in the financial market. These tips from financial experts help to find interesting investments and perfect one’s trading strategies. Another part is also the tax aspects of trading the financial products, as any kind of income must be taxed. Also, you need to prepare yourself for trading, this is the best protection in the market. Further topics about trading, the risk as well as the different financial products can be read on this website. The platform also provides more information about the success factors in the financial market as well as a list of all licensed online brokers.