How to Trade Polygon: A Step-by-Step Guide
Comprehensive Guide to Trading Polygon in 2021
Are you interested in learning how to trade Polygon Token but unsure what to do or even where to start? Well, this guide might be precisely what you need!
Polygon trading is pretty straightforward once you get the hang of it.
Formerly known as the Matic Network, Polygon is a Layer-2 scaling solution for Ethereum. This project is working towards promoting mass adoption of cryptocurrencies by resolving the industry’s existing challenges.
As a functional and innovative token, Polygon is expected to perform exceedingly well in the crypto market.
If a lack of knowledge of how cryptocurrencies work is stopping you from trading this digital token, then don't worry - we will walk you through everything you need to know.
Our How to Trade Polygon Guide will introduce you to the basics of this digital asset, the fundamentals of trading it, and some beginner-friendly strategies that you can use to mitigate your investment risk.
- How to trade Polygon in 5 Easy Steps:
- What is Polygon Trading?
- How Does Polygon Trading Work?
- How to Trade Polygon Online - Setting up a Trade
- How to Make Money Trading Polygon
- How to Trade Polygon - Step-by-Step Walkthrough
- How to Trade Polygon Guide - The Verdict
How to trade Polygon in 5 Easy Steps:
To trade Polygon, the first step is to Open an accout with a regulated exchange, depost funds, select Polygon from the platform list, and lastly Buy MATIC (go Long) or sell MATIC (go short).
This guide on how to Trade Polygon will break everything down in Layman’s terms so that you do not trade blindly. But, if you don’t quite have the time to read it all of the ways through, this is what you need to do to trade MATIC now.
Step 1: Open an account with a regulated broker
Step 2: Funds your account with a debit/credit card, e-wallet, or bank transfer
Step 3: Choose how much Polygon you want to trade
Step 4: Buy MATIC (go long) or sell MATIC (go short)
Step 5: Confirm the trade
What is Polygon Trading?
Let us start by explaining why Polygon is emerging as one of the most popular digital coins. If you didn't know this already, Ethereum is among the most well-established cryptocurrencies, as it enables smart contracts and facilitates decentralized apps.
However, this level of activity also comes with exorbitant costs when the Ethereum network becomes overloaded This is where Polygon comes into play.
Clients of this network can use Polygon to execute and work with different Ethereum-based decentralized apps without having to pay high transactional fees. The MATIC coin is the native token and the base resource of the Polygon ecosystem.
So, now that you have somewhat a basic understanding of what Polygon is all about, let us consider how you can trade it. If you have engaged in financial trading in any capacity before, then dealing with cryptocurrencies will not be an entirely new lesson for you.
Regardless, keeping beginners in mind, we will start with the basics. When trading Polygon, you are looking at it as a financial asset, trying to predict what its future value is going to be.
- At the starting of 2021, Polygon was priced at $0.01. (Since the value is presented in US dollars, you will see the pair denoted as MATIC/USD).
- Let's suppose that you predicted the price of Polygon would rise and decided to invest $100.
- By May 18, 2021, the value of this token had increased to an all-time high of $2.42.
- If you had chosen to cash out in May - this could have gained you a profit of over 14,000%.
In this hypothetical scenario - since you made the correct speculation, you ended up making some substantial profits. Had you been wrong, you would have been looking at losses instead.
So the question is, how can you speculate correctly? For any financial asset, let alone Polygon, its ultimate market value is determined by supply and demand.
If your research shows that there will be a strong upcoming demand for Polygon, then there is a high chance that the price of this coin will increase. If the interest from traders is likely to drop - so will the value of the MATIC token.
More importantly, when considering how to trade Polygon, you should also be aware that cryptocurrencies are inherently volatile. In other words, the price of Polygon will keep shifting throughout the day.
This means that you will need to be extremely cautious with your trading decisions - trying to reduce the risks and prevent any potential losses.
How Does Polygon Trading Work?
The trading of financial assets has been around for a long time. However, when compared to the likes of stocks, forex, or commodities, cryptocurrencies such as Polygon are a relatively new addition to the arena.
Regardless, the fundamentals of trading continue to remain the same. If you are a rookie, then it is best that we discuss some of the basic concepts that will be helpful when you are learning how to trade Polygon.
Polygon Trading Price Movements
For a cryptocurrency trader, it is crucial to track the price movement of the chosen asset - in this case, that of Polygon. As we discussed earlier, this shift in the value of the MATIC token is driven by its supply and demand in the market.
Additionally, as we covered earlier, crypto assets are also associated with excessive volatility. For new entrants, this might come across as a negative connotation that discourages one from testing this market.
However, when learning how to trade Polygon - there are several ways for you to use these price fluctuations to your advantage.
Another point to notice is that due to this volatility, the price of Polygon quoted across the different crypto platforms will also vary. For instance, one broker might display the value of Polygon as $1.027, whilst on another, it might be $1.025.
Such minor variations cannot be avoided and will not be an obstacle to you making any potential profits on Polygon.
Polygon Trading Pairs
When dealing with Polygon, a 'trading pair' is a term you will come across frequently. These are assets that can be exchanged for each other on cryptocurrency platforms.
You can either exchange Polygon against another cryptocurrency like Ethereum or a fiat currency like the US dollar. These are called 'crypto-crypto' pairs and 'crypto-fiat' pairs, respectively.
To explain further, if you come across the pair MATIC/USD - this means that you will be exchanging Polygon against the US dollar. On the other hand, if you are trading MATIC/ETH - this means you will be trading Polygon for Ethereum coins.
When you are choosing a trading pair, the most important thing is to consider how you can speculate on the exchange rate. For example, it will be easier for a beginner to predict how the value of Polygon might shift in terms of a fiat currency - like euros or US dollars.
On the other hand, if you choose to trade Polygon against another cryptocurrency, you will have to evaluate the price movement of both the cryptocurrencies involved.
As such, it is suggested that new traders start with a crypto-fiat pair, which will give you more grasp on the inner workings of the cryptocurrency market and make speculation easier.
Additionally, it will also be easier to deal with highly liquid pairs. For example, when trading Polygon against a fiat currency, you will find that US dollars offer the most liquidity - as it is the global benchmark currency. It will also get you access to lower trading fees and tighter spreads.
That said, it is not uncommon for online crypto brokers to offer pairs such as MATIC/EUR (euro), MATIC/GPB (British pound), or even MATIC/AUD (Australian dollar).
The key is to consider your expertise in understanding the market and making correct predictions before investing money into a Polygon trading pair.
Don't Miss: Polygon Price Predictions
Long or Short-Term Trading
When you are devising a plan on how to trade Polygon, you will need to first think of your financial goals. This will help you identify whether it is best for you to choose a long-term or a short-term strategy.
Let us explain the difference in detail.
- In a long-term investment plan, otherwise known as 'HODLing', you will be buying and holding Polygon for a few years. Think in terms of three years or more. You will be storing your MATIC tokens in a digital wallet until you are ready to sell them at a profit.
- In a short-term strategy, you will be targeting trades with a smaller duration - those that last for a few weeks, days, hours, or even minutes. You will also be placing trades frequently, targeting fractional profits.
As you can imagine, when choosing a short-term investment method, you will be required to follow the market closely, watching even the slightest price movements of Polygon. In this strategy, traders rely on technical indicators, real-time market analysis, and other tools.
In comparison, a long-term approach might prove to be more suitable for those who are just beginning their trading journey. This is because you do not need to worry about the short-lived volatility of Polygon and will be able to reap profits with minimal effort.
Trade and Own Polygon
As we have already established, in a long-term method, you will make an investment, wait for it to gain more value, and cash out your profits. In order to do this, you will need to buy Polygon and take its ownership.
As with any financial investment, you need to be careful about how you do this.
Preferably, when thinking about how to trade Polygon with a long-term goal in mind - you want a crypto provider that can facilitate the convenient and cost-effective purchase of MATIC tokens. In that regard, we suggest that you opt for only a regulated broker, like eToro.
This brokerage site is excellent for investing and trading cryptocurrencies like Polygon, owing to the fact that it is incredibly beginner-friendly. eToro has several features like CopyTrading and CopyPortfolios that enable newbies to mirror the strategies of experienced traders.
And perhaps, most notably, when trading Polygon via eToro, you can also evade commissions. In addition, long-term investors can also benefit from the inbuilt digital wallet that allows you to store your MATIC tokens for free.
You might now be wondering whether you need not take ownership of Polygon when trading short-term. Typically, when using strategies like day trading and swing trading, investors will be placing multiple trades within the day.
In this case, it can become complicated to transfer your MATIC tokens to and from your wallet for every trade.
Therefore, seasoned traders prefer to engage in Polygon trading using CFDs. These financial instruments give you the opportunity to speculate on the price fluctuations of Polygon without having to actually buy it.
Instead, you will simply predict whether the value of the token is going to increase or decrease. Since you do not own Polygon, you will also be able to speculate during bearish MATIC markets. This is called 'going short' on an asset.
One additional benefit of using CFDs is that it allows you to access leverage - which we will discuss later in-depth. Although leveraging is advantageous, if your prediction goes wrong, it can also lead to significant losses.
For this reason, CFDs are not legally accessible in every country. Furthermore, we should emphasize that even if you are able to trade Polygon CFDs where you live, it is essential that you use only a regulated broker.
Unlicensed exchanges that offer attractive leverage limits are not uncommon, but placing Polygon trades in this way will only add more risk.
How to Trade Polygon Online - Setting up a Trade
So far, our How to Trade Polygon Guide has discussed the investment strategies you can use and how you can choose the right trading pair. Now, let us move onto perhaps the most critical part of trading Polygon - how to set up a trade.
Polygon trades are facilitated through the trading orders you give to your broker. You can look at this as instructions that will allow your chosen brokerage platform to open and close positions on your behalf.
There are several distinct orders that you can use, each serving a specific purpose. Here is an account of the most important among them that you need to know of.
Buy or Sell Order
The first thing you need to do when setting up a Polygon trade is to indicate to your broker whether you are looking to buy or sell MATIC tokens.
- If your speculation is that the price of Polygon will rise, you will want to open your trade with a buy order. When the value of Polygon increases, you will create a sell order to close your position at a profit.
- While trading Polygon CFDs, you will also be able to capitalize on a bearish market. In this case, you can enter the market using a sell order first. When the value of Polygon drops, you can close your trade with a buy order. Meaning, you will buy the tokens at a lower price than you sold them for - thus making a profit.
The key is to remember that a buy and sell order works as a pair. That is, if you open a Polygon trade with one of these orders, you will need to use the other to close the position.
Once you have chosen whether you want to buy or sell Polygon, the next thing is to consider at what price you want to execute your order.
To do this, you can choose between a limit order or a market order.
A limit order can be used to open a trade at a specific price.
- Suppose that Polygon is trading at $1.01.
- But you want to buy the asset when the price increases to $1.05.
- Hence, you can place a limit order at $1.05 to buy Polygon at this price.
- Your broker will execute the order only when your specific price level has been attained. If it doesn't, the order will be kept pending, and you will need to cancel it manually if required.
A market order is used when you want to buy or sell Polygon at the quoted price on your brokerage platform.
- Let's say Polygon is trading at $1.01.
- You place a market order to buy MATIC tokens.
- Your broker immediately executes the order - securing you the next available price.
- You complete your buy order at $1.02 per token.
In this example, you would have noticed the slight price difference called 'slippage' - occurring due to the volatility of Polygon. The advantage of a market order is that it will be carried out right away.
If you want to avoid this 'slippage,' you can always use a limit order. However, you cannot be sure of when your order will be fulfilled or whether your specific price will be attained at all.
Similar to entry strategies, you will also need a plan to close your trade in a way that aligns with your objectives.
Here are the two most widely used trading orders for this purpose.
- A take-profit order is used to close your position at a profit. You can specify to your broker at what price you want to exit the trade, and it will be carried out as per your instructions.
- A stop-loss order can help you limit your losses by specifying when you want to close the trade if it goes against your prediction.
In order to help you get a better grasp of these different trading orders and how to use them together, we have put together an example here:
- Let's say you want to trade the pair MATIC/USD - priced at $1.5000.
- You speculate that the value of this pair is going to go down.
- So you want to open your position with a sell order.
- You want to execute the trade immediately, so you set up a market order with your broker.
- Your broker carries out the trade right away, securing you a rate of $1.5100 per MATIC token.
- In order to lock in your target profit, you set a take-profit order at 2% below the entry price - at $1.4798.
- To avoid losing too much money, you place a stop-loss order at 1% above your entry price - at $1.5251.
This trade can go in two ways:
- The price of MATIC/USD drops to $1.4798 - triggering your take-profit level. Your broker will execute your order and close your trade.
- The price of MATIC/USD rises to $1.5251 - triggering your stop-loss level. Your broker will carry out your order and automatically close your trade.
The key takeaway is that by using the right trading orders, you will be able to automate the process, saving you both time and effort.
Read Also: Can Cryptocurrency Trading Make You Rich?
How to Make Money Trading Polygon
When creating an investment plan for how to trade Polygon, your aim is to make sustainable profits. As we have established, if your prediction about the future direction of this token turns out to be right, you will achieve this goal.
However, how much you profit will depend on a few other aspects of your trades - which we will discuss in this section.
Your stake in Polygon trading is the amount you risk on each trade. A higher stake will lead you to more profits. But if the market goes against you, your losses will also be magnified.
Choosing your stake amount can be challenging, especially for new traders. It is possible for you to be swayed by your emotions and invest large sums - which could increase your risk exposure.
For this reason, you might want to think of a bankroll management strategy when considering how to trade Polygon.
This way, you will limit yourself to risking only 1% or 2% of your total trading amount on a single position (or any amount of your choosing). Such methods are often used by even the most seasoned traders to keep their risks to a minimum.
Polygon Trading Leverage
Another method to amplify your profits is by applying leverage to your trades. This strategy is mainly reserved for short-term positions using CFDs.
Essentially, leveraging allows you to buy or sell Polygon with more than what you have available in your account.
For example, suppose you have $1,000 in your account to stake on Polygon. You can apply leverage of 1:10 - meaning, now your total investment comes to $10,000.
So whatever profit you make from this trade will also be multiplied by 10x. That said, if the market goes the other way, you will also be facing losses that are magnified by the same multiple.
As you can see, it is easy for beginners to apply leverage to their trades and lose sight of the risks involved. This is why leveraged crypto CFDs are prohibited in countries like the US and the UK.
Even then, you will still be able to find exchanges offering leverages of up to 100x. However, as these are unregulated platforms, it is best not to engage.
Fees to Trade Polygon Online
Any profits you make from your Polygon trades are inclusive of the fees and commissions charged by your crypto broker.
In other words, you want to find a brokerage platform that charges you low rates so that you can keep most of your gains to yourself.
With this in mind, let us walk you through the common types of fees you will find on Polygon brokers.
Polygon Trading Commission
Commissions are either charged based on your stake amount or as a flat fee per Polygon trade.
- For instance, let’s say your broker charges a commission of 2% on cryptocurrencies.
- So, if your stake is $1,000 - you will end up paying $20.
- In addition, if your Polygon trade is worth $2,000 at the time of closing the order - this will cost you another 2% - at $40.
This is why you might want to look for a low-cost broker like eToro, which allows you to trade Polygon at a commission rate of 0%.
When engaging in short-term Polygon trades, another fee you should be wary of is the spread. This is the difference between the buy and sell price of Polygon.
As each brokerage will be quoting a slightly different price for Polygon based on its trading volume, the spread will also change from one to another.
- For example, if the buy price of Polygon is $1.10 and the sell price is $1.15 - the spread comes to $0.05.
- This means any Polygon trade you place will need a profit of a minimum of $0.05 per token to cover the cost of the spread.
The wider the spread, the higher the fees. Typically, highly liquid pairs such as MATIC/USD tend to have narrow spreads, whereas exotic pairs like MATIC/BTC tend to be much higher.
Other Polygon Trading Fees
Your brokerage platform can also charge you an assortment of other minor expenses in the form of administrative and transactional fees. These could include any costs for processing deposits and withdrawals along with additional inactivity fees for not using your account for a specified period of time.
In case you are trading Polygon CFDs, you might also have to pay 'swap fees' for the positions you keep open overnight.
You will have to take account of all these factors, as they can have a significant impact on the final take-home profit from your Polygon trades.
Check Out: Should You Buy Polygon (MATIC)?
How to Trade Polygon 2021 - Step-by-Step Walkthrough
Our How to Trade Polygon Guide has covered all the fundamentals you need to know to get started with your trading journey.
Before you place any Polygon trades, make sure that you have invested sufficient time to learn about the asset and its market. When you are ready, you can follow the steps outlined here.
Step 1: Choose a Polygon Trading Site
By now, you should know the importance of choosing the right brokerage platform for your Polygon trades. Not only can your provider determine the safety of your investments, but also how much you will pay in fees.
However, it can be a daunting task to figure out which broker is the best, especially when you are bombarded by dozens of options online.
So to help you through, here are some questions that will help you figure out whether a brokerage platform is suited for your Polygon trades.
- Regulation: Is the platform licensed by any reputable financial authorities?
- Fees: What fees are you liable to pay when trading Polygon on the brokerage platform?
- Payments: How can you deposit and withdraw funds?
- Minimum Deposits: Does the broker have a minimum investment policy for Polygon trades?
- Polygon Pairs: Which Polygon-crypto and Polygon-fiat pairs are supported by the broker?
- Trading Platform: Is the trading interface easy to use for beginners?
- Mobile Application: Can you place Polygon trades using a mobile version of the trading platform?
Your ideal broker would be one that fits all your requirements in each of these criteria. If you have to make compromises, make sure that it is not regarding safety or convenience.
To help you save some time, we suggest that you consider making your first stop at eToro. This trading platform is heavily regulated by the FCA, ASIC, and CYSEC. In addition, it also offers commission-free Polygon trades, as well as a beginner-friendly interface.
Above all, you can also start trading Polygon from $25 on eToro.
Step 2: Open a Polygon Trading Account
Set up your brokerage account on your chosen platform by providing your basic personal information - such as your full name, contact details, and email address.
Regulated brokers like eToro are also required to perform an identity verification of all its registered users.
Meaning, you will need to provide a copy of your government-issued ID - such as a passport or driver's license, along with a recent utility bill or bank statement to complete this verification process.
This is an automated step that will take you only a couple of minutes, and upon completion, your account will be fully verified.
Step 3: Add Funds
Fund your brokerage account by making a deposit through one of the available payment methods. E-wallets offer you a choice between debit/credit cards, bank transfers, and e-wallets like PayPal or Skrill.
Step 4: Choose a Polygon Trading Market
To get started, you will need to choose which Polygon pair you want to trade. Upon deciding, you can simply search for the chosen pair on your brokerage platform to arrive on the respective trading page.
Step 5: Place Polygon Trade
This is when you use the trading orders that we discussed earlier in this guide. Remember to choose a combination of buy/sell orders, limit/market orders, take-profit, and stop-loss orders when placing your Polygon trade.
You should also mention how much your stake amount is and whether or not you want to leverage your position. If this is your first trade, it is best to avoid using leverage.
Lastly, take a look at everything you have entered, and when ready - confirm the order to complete your Polygon trade.
How to Trade Polygon Guide - The Verdict
As a beginner, you will first want to spend some time understanding what Polygon is all about and how it is relevant in the current crypto market. Once you do, you can start devising a trading plan that fits your financial goals and risk propensity.
As emphasized throughout our How to Trade Polygon Guide, make sure that you pick a regulated broker for trading Polygon. Choosing a platform like eToro can give you access to commission-free trades, as well as a high level of security that comes from heavy regulation.
eToro – Best Platform to Buy Polygon
eToro have proven themselves trustworthy within the crypto industry over many years – we recommend you try them out.
Virtual currencies are highly volatile. Your capital is at risk.
What is the total supply of Polygon?
Polygon has a fixed supply of 10 billion MATIC tokens.
How should I trade Polygon?
To trade Polygon, find a regulated broker like eToro that offers safe and convenient access to MATIC on a commission-free basis.
How can I sell Polygon tokens?
Polygon can be bought and sold at cryptocurrency exchanges and brokers like eToro.
Where can I trade Polygon CFDs?
Crypto CFDs are prohibited in the UK and the US. If you live elsewhere, you will be able to trade leveraged Polygon CFDs through regulated brokers.
How much money do I need to start trading Polygon?
On eToro, you can start trading Polygon from $25.