With the advent of bitcoin, the world first encountered digital currency and blockchain technology. Initially, large investors considered cryptocurrencies a trifle. A lot of time has passed since then and the cryptocurrency markets have grown by leaps and bounds.
The main purpose of trading cryptocurrencies is similar to the purpose of trading traditional stocks: both are used to earn money. Therefore, more and more investors are adding cryptocurrencies to their portfolios.
With digital assets, investing is easier than ever. High volatility creates more income potential. And if you add to this the possibility of trading around the clock, a high leverage, low commissions, and thresholds for transactions, it will soon become clear why so many new investors and experienced stock traders are starting to switch to cryptocurrency. It is also an advantage to use such an automated platform as https://stoic.ai/ to earn money.
Buying cryptocurrency is like buying stocks
After all, buyers exchange funds with sellers of digital assets, and the price of these assets is determined by supply and demand. Transactions are carried out online, and both types of these investments entail certain risks.
Cryptocurrencies and stocks behave in a similar way. If you have worked in the stock market or forex, then you will have unconditionally no problems with the interface of any cryptocurrency exchange. Also, it is worth noting that although a fundamental analysis of a cryptocurrency or a token is somewhat different from a stock analysis, the underlying trading mechanism and general technical analytics are almost identical.
For example, similar order types are available in both markets. Market orders are either bought or sold at the current market price. Limit orders have a set price at which a trader wants to buy or sell an asset. A stop-loss order works in the same way as a market order: it is executed only after a certain price value is reached.
The main differences between cryptocurrencies and stocks
The main differences between cryptocurrencies and stocks are best seen when considering the following characteristics:
- Liquidity. Crypto markets are inferior to stock markets in this indicator, as stock markets have higher trading volumes, and, as a result, higher liquidity.
- Possession. The shareholder is entitled to various privileges, such as capital gains or losses, dividends from profits, as well as the right to vote in various matters of the company. visit here
- High volatility. Stock markets fluctuate only during the trading day. Cryptocurrency markets, in turn, never close and are subject to the influence of other digital assets, events in the crypto space, and changes in global stock markets.
- Free cryptocurrency market. Stock markets are regulated by law and margin requirements are quite strict.
- Lack of diversification. Stocks and bonds are affected by inflation and monetary and economic policies.
When choosing an asset for trading, it is worth starting from your experience, trading strategy, and the amount you are going to invest. Stocks are better suited to those looking for predictable, limited investment growth over the long term in a low volatility environment. Cryptocurrencies, on the other hand, are better suited for those who want to diversify their portfolio and insure it against inflation and factors that negatively affect financial markets.
