How to trade Polygon coin (2024)

How to buy Polygon (MATIC): investing vs trading

Investing means buying and owning MATIC outright, while trading means speculating on its price movements.

Trading MATIC with CFDs

You can speculate on the MATIC coin price with us via CFDs. These are a type of derivative that enable you to trade on the price movement of underlying asset – in this case Polygon.

You can go long if you think the price of the cryptocurrency will rise or go short if you think the price will drop. You’ll make a profit or loss based on the outcome of your prediction.

CFDs are traded using leverage, which means your position will be funded with a deposit (margin). This enables you to get exposure to Polygon with only a fraction of the total value of the trade.

Please keep in mind that margin opens you up to the risk of losing a lot of money if your prediction is incorrect. Your exposure is not limited to your margin amount. Always use sound risk management strategies, such as limiting the amount of exposure you can handle and setting up guaranteed stops on your trades.

How to sell or short Polygon

You’d short Polygon (also known as ‘selling’ or ‘going short’) if you’re expecting the Polygon price to drop. In this instance, you’ll make a profit if the price depreciates and a loss if it appreciates.

Note that shorting is an inherently risky strategy as the potential for loss is theoretically uncapped. This is because there’s no limit to how high a share price can rise, so always ensure you’re taking steps to manage your risk.

What is Polygon (MATIC)?

Polygon (MATIC) is a digital coin underpinning the network that carries the same name. The Polygon system was created to address the scaling issues on the Ethereum network and improve the overall interoperability on its blockchain. It enables users to add personalised protocols to the Ethereum chain where all transactions are recorded.

Unlike other cryptocurrencies, MATIC cannot be mined. It uses a ‘Proof of Stake’ (PoS) consensus mechanism to validate crypto transactions.

Polygon is referred to as a layer 2 scaling solution because it’s a third-party integration that functions on a layer 1 blockchain.

Since the Ethereum blockchain is decentralised, Polygon transactions can be validated in a faster and cost-effective manner. Users on this network can also create their own crypto tokens and be rewarded for validating transactions.

A brief history of Polygon coin

In its brief history, Polygon has grown in both popularity as well as market cap. Launched in 2017, it was formerly known as Matic Network, with the sole purpose of offering layer 2 scaling solutions. Later, its scope evolved to allow users to create their own cryptocurrency in an environment of collaborative blockchains.

Polygon’s meteoric rise happened in the space of five months. Its success was a result of more users becoming attracted to Polygon's lower costs, efficiency and scalability. Earlier in 2021, each token was traded at just $0.01 – fast forward to May 2021 and it reached an all-time high of $2.68 thanks to its effective rebranding exercise.

In the past, a mere tweet from Elon Musk caused the price of cryptocurrencies to rise or plummet. He sent the Bitcoin price crashing after he raised concerns over the crypto’s carbon footprint. After stating that Tesla wouldn’t accept Bitcoin as a form of payment for its vehicles, Musk endorsed another cryptocurrency – Dogecoin.

This has prompted Polygon’s founders to work on getting Elon Musk to endorse their cryptocurrency platform. It’s been said that Musk uses applications that apply the Polygon chain in the background.

How to analyse Polygon’s price movements

Extensive research needs to support your decision to trade or invest in Polygon (MATIC). Your evaluation can be differentiated into two main schools of thought: technical analysis and fundamental analysis

You’ll use technical analysis when you screen through chart patterns, technical indicators and historical price action
Fundamental analysis, on the other hand, focuses on the fundamentals of a company, such as its net revenue or profit and loss statements

Polygon trading strategies

Polygon is a relatively new cryptocurrency, which means it can be volatile. Certain trading strategies enable you to trade fast-changing price movements. We’ll unpack a few of these strategies below.

Day trading Polygon

While day trading is more of a style, it could be your Polygon trading strategy if you want exposure to the coin over the short term.

It involves opening and closing a position in a single trading day in an attempt to make profit based on the day’s events. In other words, you can trade the volatility of the price at a moment's notice, getting exposure as the fluctuations happen.

When day trading, you’ll avoid the extra cost of having your position open overnight after the market is closed

Scalping Polygon

Scalping involves opening and closing multiple positions in a day in an aim to make incremental profits. It relies on the idea of lower exposure risk, since the actual time in the market on each trade is quite limited, lowering the risk of an adverse event causing a big move.

The trades are typically kept open for just a few seconds (or minutes, at the most). It’s a popular short-term trading strategy, and it could be for you if you have time to watch the Polygon price very closely throughout the day.

Find out more about scalping strategies

Trend trading Polygon

This trading strategy consists of opening positions that are in line with the greater trend over a certain period. You’ll hold a position based on the trajectory of the overall trend line, despite smaller price changes occurring, based on your prediction that the Polygon price will continue to rise or fall.

Because trends can start at (and last for) any given time, this approach can be used as a short-term, medium-term and long-term strategy.

Learn more about trend trading strategies

Swing trading Polygon

Like day trading, swing trading is a style – but can also be employed as a Polygon trading strategy. It’s based on the assumption that prices never go in on direction in trend.

If you decide to trade ‘swings’ in the Polygon price, you’ll have to spot price reversals in the price ahead of time – you can do this with the help of technical indicators and charts.

While there is no prescribed time span for a swing trader to close or open their position, you could use this strategy if you want to trade both the upward and downward Polygon price movements that occur in a somewhat shorter timeframe.

Here’s more about swing trading strategies

How to trade Polygon coin summed up

MATIC is the digital coin that underpins the Polygon network – a framework that enables users in the Ethereum blockchain to solve scaling and fees issues
Investing in Polygon is a long-term strategy to own the underlying asset outright and sell it for a profit
Trading Polygon means predicting the upward or downward movements on the MATIC price
You can speculate on the Polygon price with us using CFDs

Footnotes:

¹ Cryptopolitan, 2021