Crypto-trading, what is it and what are the risks to consider?

Recently, the crypto-sphere has started to be affected by the global environment, of course, this also applies to other industries. But it’s worth understanding how the crypto industry works and what the risks are in it, how you can get into it without affecting the purchase of cryptocurrency.

The main roles in the crypto

Market Makers

These are professional traders who influence the price formation between the seller and the consumer, quoting the two parties at once and maintaining liquidity on the exchange as a whole.

Liquidity providers

This is the intermediary that works between the market maker and the broker. And the latter tries to provide more liquidity to traders, because otherwise the value will just slip through. The provider connects the broker and the professional, major player to fill the exchange glass. And it makes it possible to trade with a small spread.

Of course, all of this is only part of the institutional investors who operate not only in traditional trading, but also in cryptocurrency. In general, the financial market is also influenced by banking institutions, funds, traders or brokers themselves.

Retail investors

At present the category is usually divided into the types:

Investors.
Speculators.

As for investors, they make deposits for a long term and expect assets to grow and generate passive income.

If we talk about speculators, they often make money on price differences in the short term. They are always individuals in any situation, but they are far from being beginners.

Brokers and stock exchanges

If you take classical finance, these are two separate roles. In the crypto sphere, this role is played by operators of centralized exchanges. If you consider a decentralized exchange, there is no operator and the transactions are done via a blockchain rather than specialized software.

Entering the industry

There are several methods at the moment:

Direct investment in cryptocurrency. This is one of the most common working strategies where asset acquisition and storage is required. Both centralized and decentralized exchanges can be used for this, but there is no way to work without exchanging funds.
investing in companies with cryptocurrency assets. Indirect investing is another common strategy, and it is worth noting that numerous large companies do have these assets today, Squarelnc for example.
infrastructure investments. This is also indirect investment. There is also direct investment, namely mining, investing in the development of specialist platforms or services.
Investing in cryptocurrency ETFs. Over time, these are beginning to be used as they open up new opportunities for savers.

Each option has its own features, pros and cons, and it is better to understand them right away and understand how everything works.