Introduction
If you are reading this post, chances are this isn’t the first time you have come across the word ‘cryptocurrency’.
You might have heard about it from different sources. Maybe from the news. Or from one of the numerous cryptocurrency enthusiasts talking about it online.
Or even from your friend who claims it’s the best investment opportunity since Apple’s IPO.
It doesn’t matter how you heard about it, but it is important that you take advantage of the opportunities in cryptocurrency trading.
To help you begin, we will look at the basics of cryptocurrency: what it is, how it works, and how to start trading cryptos on Deriv.com.
Blockchain: the basics of cryptocurrency
The blockchain is a record-keeping technology that allows for the storing of information, including financial information, in a public database.
In this case, the stored data is referred to as blocks while the database is known as a chain. Thus, the term ‘blockchain.’
The beauty of this technology is that the record system and the transactions are not separate. Instead, both work simultaneously to ensure maximum security of transactions.
You can learn more about blockchain technology from this article by Investopedia, but for now, let’s look at the definition and examples of cryptocurrencies.
What is cryptocurrency?
For anything to be called a currency, it must be accepted as a medium of exchange by a group of people. For example, the US dollar is generally accepted in the US.
In the same vein, cryptocurrencies such as Bitcoin, Litecoin, and Ethereum have gained acceptance as a medium of exchange worldwide.
That said, the advantage of cryptos isn’t just the fact that they have gained acceptance among many people, but that cryptocurrency transactions are entirely anonymous, so users are guaranteed a high level of privacy.
Finally, cryptocurrency transactions are fully peer-to-peer, require no authorisation from a third party such as a bank, and are not controlled by any specific government.
How does cryptocurrency trading work?
Trading cryptocurrency on a platform like Deriv.com is like trading other financial markets such as forex, stock indices, and other financial instruments. All you have to do is predict cryptocurrency price movements.
You win when your speculations are correct. You don’t need to own a crypto asset to be able to trade and earn profits.
For instance, if you predict that the value of the base currency in a cryptocurrency pair, say BTC/USD, will rise, then you can make a buy trade and get a payout if your prediction turns out to be correct.
Similarly, you can go for a sell trade if you think that the value of the base currency will decline.
In a nutshell, cryptocurrency trading allows you to profit from the price movements in a crypto asset without buying the asset.
Learn more about trading cryptocurrencies.
How to trade cryptocurrencies on Deriv.com
If you are new to online trading, sign up on Deriv.com with your email, Google, or Facebook account.
After you have signed up, follow the steps below to set up your MT5 account to start trading cryptocurrencies.
Step 1: Click on the ‘DTrader’ tab and select ‘DMT5 from the drop-down menu.
Step 2: Select ‘Real account’ to trade with real funds, or ‘Demo account’ to practise with virtual funds.
Step 3: Create a Financial account by clicking the create account button and input password.
Step 4: Select Trade on web terminal option under Financial account.
Step 5: You now enter the MT5 web terminal.
Step 6: Add a cryptocurrency pair to your watchlist on the MT5 dashboard.
Step 7: Once you’ve selected a pair, right-click on it and select ‘New Order’.
Step 8: Then select either Market execution or Pending order.
Market execution
If you select Market execution, you need to determine:
- The size of your position (volume)
- The levels of your stop-loss and take-profit
Then, click either Sell by Market or Buy by Market to execute your preferred scenario.
Pending order
If you select a Pending order, you need to determine:
- The type of order you want to place (Buy/Sell limit, Buy/Sell stop, Buy stop/Sell stop limit)
- The size of your position (volume)
- The price at which you want your order to be placed
- The levels of your stop-loss and take-profit
Then, click on Place to execute your order.
As soon as your order is executed, it will appear at the bottom of your dashboard.
If you have more questions about MT5 or trading on the Deriv.com platform, feel free to reach out to us.
