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Trading Cryptocurrency in the Philippines

28 August 2020 by Joseph Reyes
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Crypto trading in Philippines
Crypto trading in Philippines
Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. At average of 83% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Content on this page is intended for information and educational purposes only and should not be considered investment advice or investment recommendation.
Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. At average of 83% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Content on this page is intended for information and educational purposes only and should not be considered investment advice or investment recommendation.
Cryptocurrency began with the birth of bitcoin in 2009. Since then, there has been over 1000 other cryptos that have entered the market. While bitcoin still tops the lot, it is becoming increasingly clear that crypto is here to stay. The Philippines and more across the world are starting to gain interest in this type of currency.

Many countries are still on the fence about this type of currency and have not accepted it as legal tender. This is becoming harder to do though, as the influence and value of these currencies continues to grow.
One sector that has shown particular interest in these assets is the cryptocurrency trading market, with millions around the world making deals on their changing values.

What is Cryptocurrency?

A unique and volatile digital asset with a rapidly growing community
We have all heard of it but let us discuss what exactly cryptocurrency is and how it leads to trading cryptocurrency. First off, they are a completely digital and decentralised set of assets. This means that there is no regulatory body or authority that has control over it. Regular currencies must answer to the government and their respective central bank, but crypto does not.

This makes them fairly volatile assets, affected by other factors around the world and without an entity to keep them in line. On top of this, they are created through a system called blockchain, which connects all the coins and their owners together in a secure network. This network also requires processing power to create, so computers have to 'mine' each of these coins through this.

As more and more computers work together to mine a particular currency, more of those specific coins are created and the blockchain network grows. This is a finite system however, so there is a fixed amount of possible coins available for each currency. After a while, though this hasn't happened for any crypto yet, all the coins will have been mined and no new coins can be produced for that chain.
There is a lot of potential around crypto and how it operates in our modern markets.
Crypto asset information
Crypto asset information

Types of Crypto

To begin cryptocurrency trading Philippines, it is crucial to acknowledge the various assets involved.
We are very likely all familiar with the main one, bitcoin. This first digital currency to enter the market, bitcoin is still easily the biggest contender in this market. With a single coin worth over $10 000, this is a highly sought-after asset and the reason bitcoin trading is so popular.

Besides the main one, there are several other notable cryptocurrencies on the market. Second in line after bitcoin is ethereum. Even though it is the second most powerful crypto, it is significantly behind the leader. Behind this are the likes of tether, polkadot, litecoin, ripple and many, many others.

Each of these assets behave differently in the market and have their own degree of volatility. This makes diversifying trades across the various currencies incredibly worthwhile. Investigating these in detail before trading is highly advised. Let's now ask how does cryptocurrency trading work in practice.
Types of crypto
Types of crypto

Ways of Trading Crypto

There are two notable ways to actually trade cryptocurrency in the marketplace.
The first is through an exchange. In this scenario, traders actually sell and buy cryptocurrency. Profit is made when the currency bought goes up in value and then sold at that higher price. This operates much the same as the stock market.

An exchange, however, can be difficult to manage. Storing crypto requires a specialised e-wallet, which is tricky to set up and, depending on the type, can be vulnerable online or hard to operate. On top of this, the volatility of cryptocurrency makes actually owning any of them very risky. If the crypto market suddenly crashed, that once expensive coin could be worth nothing.

That last reason is why most people employ the second method of crypto trading, through CFDs. A CFD is a contract for difference and uses derivative trading instead. This means that traders are not buying or selling the actual asset and rather trading on the fluctuations of the values of them.
In terms of risk, CFDs are a lot better when dealing with the volatile crypto market.

Crypto Options Trading

Crypto trading through CFDs is clearly the most popular way to go.
We already know that in this type of trade, the trader does not gain control over the asset itself. They are simply speculating on the price and striking a deal with their broker over how it might change.

After selecting the asset to trade on, you must choose whether you think the value of it will increase or decrease in the future. When you make the trade, you are essentially locking in the current value of this asset, allowing you to 'buy' or 'sell' it in the future, at that future value. Then, if you are correct about the decision it moves in, you can terminate the contract at any time and make a return relative to this price change and your investment.

Even though you don't ever own the asset, you are making money out of the changing value of it. This serves to reduce risks because the maximum you can lose is the investment made to obtain this CFD. You are also able to profit out of an asset that is losing value as long as you predict that this would happen. This is the best answer to how to trade bitcoin and other crypto assets.
Derivative trading releases a lot of the potential risk around cryptocurrency.

Factors Affecting Crypto

With a high volatility, knowing what determines their value is a considerable benefit.
We have discussed bitcoin trading Philippines, except for the aspects that shape and change their value. As we know, they are not governed by a single entity, and are therefore volatile to certain impacts in the market.

  • Public Opinion. Perhaps the biggest determiner in the value of these digital currencies is the level of trust and support that people around the world provide. By their very nature, they require an understanding and acceptance of their value and use, otherwise they are worthless. They are operating as a promise of value and therefore require that everyone agrees that they have value.

  • Regulations. We have mentioned before how distrusting many countries' governments are about cryptocurrency. Some ban crypto and others simply have not set up regulations for its use. If more countries start accepting it as a legal currency, the price of it will increase. If further restrictions are applied, then the price will drop.

  • Competition. With over 1000 different cryptocurrencies in the market right now, there is certainly no lack of competition amongst them. Since they all serve the same purpose, one crypto's gain is inherently another one's loss. This competition also extends to standard currencies that provide the same role again. This is certainly a factor to consider when selecting crypto trading platforms Philippines.

  • Limited Supply. It is easy to forget that there can only be a fixed amount of a certain cryptocurrency. We know that supply directly affects demand and their relationship dictates the value. How many units are currently in the system and the speed of this change, are all factors that weigh into the total value calculation.
Each of these and more factors are always affecting the value.
Factors affecting Bitcoin's value
Factors affecting Bitcoin's value

Picking a Cryptocurrency Platform in the Philippines

To enter the market, you require a cryptocurrency trading platform in Philippines, or at least one that can grant you access.
This is an important step because it will define the experience you have when trading. Joining one is a straightforward process but knowing which one to select and for what reasons takes some understanding. We can look at a few of the aspects that go into a top crypto broker.

  • Diversity of Assets. Having a greater variety of the various crypto assets you can trade enables you to develop better strategies. You can mix and match the assets and follow those that seem like they will present the best opportunity. More choice is always better and picking a broker that provides this choice will allow you to experiment much more with the way you want to trade.

  • Regulatory Body. In order to keep the many brokers in line, there are certain regulatory bodies that are tasked with monitoring them. These serve as a stamp of trust and approval for the services that the broker provides. By checking that they have these certifications and are willing to demonstrate them to you, they are proving that they are reliable and can be trusted.

  • Cost of Entry. Each of the different brokers will have their own deposit requirements before you can start trading for real money. This means you must make a deposit before you can even start trading. There are many that have very low deposit requirements though and this can be beneficial to new traders. With less start up costs you can also test out more trades and get more chances at success.

  • Mobility. This refers to the access to bitcoin trading apps, particularly mobile and tablet ones, that allow you to enter the market with considerably greater ease. Apps of this nature are also dedicated to the task at hand and perform the job better than most browser options. With timing so important to trading, it can be very useful to have market access so close at hand all the time.

  • Demo Account. A demo is used on many top brokers' platforms because it provides free access for traders to practice and learn. These usually have no requirements and can be used immediately. They are great at understanding the layout and mechanisms of the particular platform you are using. Also, this virtual playground allows you to test out and experiment with different strategies.

  • Support Teams. A hands-on support team and features is extremely useful on these sorts of platforms. Whether it is to get help or advice, it is great to have an extra layer involved to support you while you trade. Really good support teams offer multilingual help and even provide training on how to become a pro trader.

  • Payment Services. Since most of the time spent on these platforms will be focussed on managing and making money, it is crucial to ensure there are the necessary payment options for you to make deposits and withdrawals safely. You want to make sure that your earnings are always protected, and a good broker will demonstrate this through reliable systems such as these.
Combine your favourite features to find the broker that suits you.

Creating Strategy

Build a reliable strategy to help in dealing with the marketplace.
Once you have vetted the broker you want to try, it is a matter of jumping into the action. This means developing a tactical approach to the way you deal with the marketplace. It is a critical part of being successful in this type of venture.

The most obvious thing new traders must focus on is learning as much as possible about the assets they are dealing with. Information quite literally is power in these instances. The faster you can access this info, the faster you can react to changes and, more importantly, before them.

Use a demo account to put the gathered information to the test and also get the hang of the process. Even when no money is involved, you can generate a similar intensity and build up your experience for the real thing. This is important because when money is on the line, it can be hard to remain focussed and think critically.

Diversify when possible. This means spreading your interest and investments across as wide an array as you can while still giving each the appropriate attention they require. The expression don't put all your eggs into one basket comes to mind here and it very much applies. This can often lead to making more trades so it would be worth ensuring you are working with minimal fees here.

There are many other tools that can automatically terminate trades or warn you when certain events are happening that can also push the profit margins skyward.
The most important rule of all though, keep practicing.
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