Cryptotrading is a process in which market participants aim to profit from fluctuations in the exchange rates of digital currencies. A cryptotrader is an individual engaged in speculation in the field of virtual money, aiming to earn income.
There are various methods of trading cryptocurrencies, with the most popular among traders today being:
- Manual trading, where the trader independently makes decisions about executing trades;
- Algorithmic trading, where trading operations are carried out using software bots that either help the trader make informed deals or fully automate the trading process.
The trader chooses a strategy and direction for trading and can make deals with different time horizons: from short-term to long-term, with the main goal being to maximize profits.
Cryptocurrency exchanges were the first platforms to offer the opportunity to trade virtual currencies, often in pairs with fiat money. Over time, more opportunities have emerged to exchange one cryptocurrency for another. As cryptocurrencies became more popular, traditional trading platforms, which had previously offered trading exclusively in fiat currencies, commodities, and securities, also began to offer cryptocurrency trading services.
The peak of cryptocurrencies’ popularity came with the introduction of Bitcoin futures trading on the major commodity exchanges.