IOTA Crypto Trading Guide: How to trade IOTA

While some may not consider IOTA (IOTAUSD) to be on the list of the most traded cryptocurrencies, this token and the blockchain designed for the Internet of Things (IoT) can offer unique trading opportunities.

Let's get into the world of IOTA trading:

TL;DR

• IOTA is a Distributed Ledger Technology (DLT) designed to enable secure and fee-less data and value transfers within the Internet of Things (IoT).
• IOTA's native cryptocurrency, also called IOTA, facilitates seamless data and service exchange among people, businesses, and devices.
• Traders can trade IOTA's price fluctuations over the short term without owning the cryptocurrency by trading Contracts For Difference (CFDs) on crypto on platforms like Plus500.

Understanding IOTA: What Is IOTA?

Before discussing IOTA trading and what influences the price of cryptocurrencies, let's review the basics of the IOTA network.

What Is IOTA?

As the world becomes increasingly interconnected with billions of devices exchanging data and value, IOTA provides key infrastructure for this new digital age, suitable for supporting a wide range of applications, from the Internet of Things (IoT) to complex Web3 ecosystems.

How Does IOTA Work?

IOTA distinguishes itself from traditional cryptocurrencies like Bitcoin (BTCUSD) by employing a unique distributed ledger technology known as the Tangle. Unlike blockchain, which relies on miners and blocks, the Tangle operates as a Directed Acyclic Graph (DAG) consensus algorithm, which allows transactions to be added in parallel without using a blockchain.

This innovative approach eliminates transaction fees, reduces computational demands, and facilitates seamless integration with IoT devices. By removing the need for intermediaries and minimising costs, IOTA aims to be optimally positioned to power the future of the Internet of Things.

IOTA's Historical Prices

Since its inception in July 2016, IOTA has exhibited a volatile price history, characterised by alternating periods of bullish and bearish momentum:

• All-time low: $0.1095 (March 2020)
• All-time high: $5.17 (December 2017)

This extreme price fluctuation underscores the speculative nature of crypto trading and highlights the importance of robust risk management strategies.

What Are the Primary Drivers of the Value of the IOTA Cryptocurrency?

IOTA's price can be influenced by a variety of factors, which can include the following:

• Tech Advancements: IOTA's progress and development can impact the price of its token.
• Adoption Rate: Wider real-world use of the blockchain can positively influence IOTA price.
• IoT Coin Competition: The performance of other cryptocurrencies whose blockchains are based on IoT projects, like VeChain (VETUSD) and Fetch.AI (FET), can affect IOTA.
• Regulations: Changes in crypto regulations can significantly impact major coins like Bitcoin and Ethereum, as well as smaller tokens like IOTA.
• Market Sentiment: News, rumours, and overall market conditions can influence IOTA price.
• Economic Conditions: Recession, inflation, and interest rates can impact the overall crypto market.
• Geopolitical Events: Global events can create market uncertainty and affect cryptocurrency prices.

What Can Attract Traders to IOTA?

The IOTA token possesses several distinctive features that appeal to investors:

• IoT Focus: Tailored for the Internet of Things, IOTA offers data integrity and secure machine-to-machine communication.
• Versatile Applications: IOTA's technology is adaptable across various sectors including global trade, industrial automation, healthcare, identity management, and border control.
• Innovative Tangle Architecture: Built on a Directed Acyclic Graph (DAG) known as the Tangle, IOTA boasts scalable transaction processing, unlike traditional blockchain structures.
• Decentralised Structure: IOTA operates without relying on external validators or miners, enhancing its decentralisation.
• Fee-less Transactions: Eliminating transaction fees due to the absence of miners or validators makes IOTA coins a good option for micropayments and IoT applications.
• Quantum Resistance Focus: Initially designed with a strong emphasis on quantum resistance, IOTA utilised the Winternitz One-Time Signature (W-OTS) scheme for security.

What Are the Potential Risks of Trading IOTA?

Trading IOTA, like any cryptocurrency, involves significant risks such as:

• IoT Dependency: IOTA's success is closely tied to the development and adoption of IoT technology, which may take time to fully materialise.
• Market Volatility: Cryptocurrency prices, including IOTA, can fluctuate rapidly and unpredictably due to high volatility.
• Market Manipulation: Due to its relatively small market capitalization, IOTA can be susceptible to price manipulation.
• Limited Liquidity: Compared to more established cryptocurrencies, IOTA may have lower trading volume.

What Is IOTA Trading?

IOTA trading involves actively buying and selling IOTA tokens with the aim of profiting from short-term price fluctuations. Like trading other assets such as stocks, indices or Forex, it requires careful analysis, informed decision-making, and effective risk management. Traders often employ technical analysis or fundamental analysis to predict price movements and time their trades accordingly.

IOTA CFD Trading vs. IOTA Exchange Trading: What Are The Main Differences?

IOTA exchange trading involves owning the underlying tokens, while IOTA CFD trading is a contract-based type of speculation on IOTA price movements without owning any coins. With CFDs, you can also trade rising and falling markets with leverage, which means that both your profits and losses can be amplified.

How to Trade IOTA CFDs on Plus500 (Step-by-Step)

Here's a basic outline to guide you through the initial steps of IOTA CFD trading with Plus500:

1. Understand Cryptocurrency Basics: Familiarise yourself with fundamental cryptocurrency concepts and terminology.
2. Grasp CFD Trading: Learn how Contract for Difference (CFD) trading works, including leverage, margin, and potential risks.
3. Develop a Trading Plan: Outline your trading goals, risk tolerance, and trading strategies in your trading plan that defines how to buy, sell and trade crypto.
4. Open and Fund an Account: Create a Plus500 trading account and deposit funds.
5. Learn How to Trade CFDs on Cryptos on Plus500: Take time to get familiar with the Plus500 platform and features to trade cryptocurrencies with Plus500.
6. Start Trading IOTA with CFDs: Open and manage your IOTA CFD positions based on your trading plan and money management rules.

Are you ready to put your IOTA knowledge to the test? Start trading IOTA with CFDs on Plus500.